Democratic Education Toolbox

What Top-tier Firms Can Learn from Worker Co-ops

Posted by Taliesin Nyala

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Nov 11, 2013 10:55:00 AM

What do co-ops & top-tier professional firms have in common? They're both more resilient, flexible, & accountable—but the firms still have a lot to learn from worker co-ops.

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A recent article in U.S. News and World Report highlights why we need more employee-owned businesses in the United States. The author makes interesting comparisons between top-tier professional firms that are run by partnerships and co-ops—how both are more accountable to their employees, more resilient in hard times, and more flexible when needed.

And the good news for proponents of democratic workplaces: the number of these businesses is on the rise. "The number of worker-owned business in the U.S. is growing robustly, around 6 percent per year, and these businesses now account for about 12 percent of the private sector workforce."

The big difference between partnerships and co-ops is that traditional firms, with their hierarchical structures, have a higher class of employees who receive different benefits and have more say in running the business.

In worker-owned cooperatives, all of the workers, once they've passed their apprenticeship period and purchased a share of business, have an equal vote in running the business.

The author goes on to make a point about the temptation in both types of businesses to cash out: "A one-time conversion from a partnership to a corporation or from a worker-owned business to an investor-owned business offers a cash windfall that is big enough to be life-changing – but it destroys the dream of employee ownership to all those who follow later on. The temptation to cash out can prove irresistible to senior management unless a cash-out is prohibited by statute, contract or charter."

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A harrowing and recent example of just such a situation is the U.K.'s Cooperative Bank, which is being threatened by U.S. hedge fund investors because the bank was trying to deal with a huge shortfall in cash reserves.

As the U.S. News writer states, "Good partnerships and employee-owned businesses are hard to create, but they are all too easy to destroy by a single generation of senior management that lacks a sense of stewardship."

At TESA, we know how hard it is to create and run a democratic workplace, which is why we strongly believe that democratic education is vital in teaching people cooperatives.

Discover how to use democratic and popular education in your workplace with our free activity.

Topics: democratic workplaces, co-ops, new economy

    

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