08 December 2010

Will public sector workers fit in the co-operative movement?

Another Guest blog, this time by ChangeAGEnts which exists to create a space for active citizenship and to be a platform for older people.  Cheryl of ChangeAGEnts responded to a Linkedin discussion which got me thinking about the different cultures within worker co-operatives and public services, as ex-public sector workers, here are their views.

A worker co-operative is owned and democratically controlled by the people who work in it: Public Services are owned by The People.

If the Coalition Government is successful in ʻnudgingʻ public sector workers into the co-operative movement, how will they relate to, and with, existing worker co-ops?

Our guess is that the ex-public sector co-operators will create a space within the co-operative movement to deliberate: citizenship, democratic accountability, coproduction, available resources, commissioning and ownership. They will take some time to understand and re frame the co-operative business model, including and expanding upon current government thinking on 'wellbeing'.

They will invite existing co-operators to facilitate their understanding of the values and principles of co-operation and to help them to form multi-stakeholder, partnership based, co-operatives, building on the established core values, policy, practice and legislation relevant to their service area.

A defining principle for worker co-ops is ownership, the public sector ethos is one of service but are we really so different? The co-operative movement and the welfare state share radical roots, shouldn’t we also have a shared future, blending the best of ethical business with the best of citizen empowerment? Might we, redefine ʻownershipʼ together with the public and establish a new paradigm for Public Services

A note of caution, we in Change AGEnts chose to become a co-operative, even so it was for us a challenging, though exhilarating journey, for others, who in reality will have very little choice or control as to if and how their service is transferred, there will be pain, loss, anger and disorientation.

We’ve seen a lot written recently about the ʻspinning outʼ of Public Services, most of it focusing on reducing costs (terms and conditions of workers) or increasing profit. We have not yet heard the ʻvoiceʼ of the public or public sector workers, nor has it included the current discourse on public sector reform beyond the political ideology of the coalition government.

If essential public services are mutualised but not made sustainable and they collapse, who will the public hold to account?

A recent survey by Ipsos MORI (2010) indicates that the public want public services to be distributed fairly. Fairness in this instance being about equity and uniformity of access, the notion of a variation in quality of service’s across different localities was unpopular and considered unacceptable. 82% of respondents supported greater public involvement in public policy and service design, 53% supported individual budgets only 41% supported free schools. The Coalition Government’s agenda of shrinking the state seems at odds with the majority of the citizens of the UK, who define their ʻBritishnessʼ not by colour, class or ethnicity but by fairness, as exemplified by the welfare state.

In relation to Public Services, people do not define themselves as service users, nor do they see themselves as retail customers. (Clarke et al 2007) ʻItʼs not like "shopping” was the response from focus groups, when asked for their views on health care, it is the quality of the relationships with health care workers that is valued, along with trusting workers to reach decisions based on need not profit.

The Co-operative movement is similarly trusted and valued by the public, for example Older People that we work with, frequently recite their national insurance number, along with their co-operative membership number as proof of active citizenship. We are often given life course narratives, where good neighbours and the Co-op were essential to the survival of a family or a community. The notion that a barely elected government can transfer that sense of ʻownershipʼ or re-negotiate a cherished relationship without permission or participation, we believe is risible.

So what might happen when worker co-ops and the public sector newbie’s get together?

A radical and powerful paradigm shift that moves us out of our current silos, bringing us to a new and shared understanding of ownership, taking us beyond
Thatcher and Blair’s consumer model for Public Services, applying instead the legacy of the Rochdale Pioneers, reflecting ʻbottom upʼ the aspirations and expectations of the wider public.

Climate change, obesity, chronic disease management, inequality, the financial crisis, the ageing of society and social justice across and between generations are challenges which demand co-operative principles and shared ownership, not to come together now, may be considered by future generations as not just a missed opportunity but as a betrayal.

Co-operative Public Services that re-create the Beveredge dream for and with the 21st Century Citizen, that’s the enterprise that we would want to own in common.

Cheryl Barrott
Mervyn Eastman

04 December 2010

From conflict to co-operation

Worker co-operative people are very aware that conflict can be an issue and over time can cause real problems. Conflict shouldn't be avoided, but equally you shouldn't revert to "because I told you to" (even if you can).

I always like posting guest blogs; and here is one from Kate Whittle a co-operative developer of more than 20 years, who has recently written a series of publications for Co-operatives UK called From conflict to co-operation.

I was on my way to a meeting I expected to be very challenging a few days ago, and as I got off the train and started walking I noticed my knees were feeling wobbly - and I understood - it was adrenaline - my body was getting ready for fight or flight ... (not really sure if wobbly knees are any use at all for either fighting or fleeing, but you get the picture ..)

So I started thinking what can we do when our physical body is reacting to a real or perceived threat - by flooding our system with adrenaline? How can we find a way to acknowledge the signal that the body is sending us, but at the same time adopt a stance in the confrontation that is going to give us the strength to insist on a negotiated settlement, rather than run away or engage in physical or verbal fighting?

I believe that having a recipe - such as the one that the book Getting to Yes gives us - can help us find that strength, and help us behave in a way that is most likely to produce a satisfactory outcome.

The recipe has 4 ingredients:

  1. separate the people from the problem - i.e. build trust, try to help them to see that you are not their enemy, but that you want to find a solution that will satisfy both of you
  2. focus on interests, not positions - try to find out why they feel like they do, or want what they say they want. A great but simplistic example shows us what this can mean. A mother separates two little girls who are fighting over an orange. She cuts it in half and gives them half each. However one eats the fruit and throws away the peel, whilst the other throws away the fruit and makes marmalade with the peel. If the mother had asked them what they wanted to do with the orange, she could have given the peel to one child and the fruit to the other, a much more satisfactory outcome!
  3. invent options for mutual gain - once you are working together on a solution, and you each understand where the other is coming from, it's much easier to brainstorm potential solutions that will satisfy both parties
  4. insist on using objective criteria - it's important to use criteria that are independent of the will of either side, and find a solution based on principle, not pressure or power.
That's why the approach is called Techniques of Principled Negotiation - and this handy little book should be on the shelf of every co-operative or community enterprise. The first third of the book explains these four steps in more detail, with examples. However the rest of the book concentrates on what happens when people won't play - when they are more powerful, or if they use dirty tricks, the techniques are still useful, and will help you get as much as you can out of a difficult situation. 

From Conflict to Co-operation is a series of five cartoon booklets from Co-operatives UK, the first book focuses on dealing with conflict and books 2-5 on preventing conflict. 

Wider Reading
From conflict to co-operation, Co-operatives UK (free to download)

Getting to Yes Roger Fisher and William Ury Arrow Business Books (buy from Amazon)

03 December 2010

Lesson's from the dark side

Last weekend I was asked to facilitate the Southern Consumer Co-operative Council Meeting and thought I'd do a post on my experience with the other side of the co-op movement (they'requite nice really).

So what is this meeting and why should you care? Basically it's the equivalent to our own Worker Co-operative Council (but they have 3, Northern, Midlands Southern).  It is a forum for Co-operatives UK's consumer co-operative members to share knowledge and feed in to our activities.

The people who attend are Board Members of consumer co-ops in that region (elected from customer members).  For the southern meeting I attended these included: Chelmsford Star Co-operative Southern Co-operative East of England Co-operative Midcounties Co-operative and the Southern Regions of Co-operative Group.

So first thing that might surprise some people is there are actually more than one Co-op! A lot of people see the co-op shops and assume their all the same business, this is not the case.  Yes there has been a lot of consolidation of the years (used to be 1000's) but there are still around 20 of the traditional retail societies left.

The Co-operative Group is the largest with a turnover of: £13.6bn, but Midcoutnies is around £0.8bn, East of England £0.4bn and Southern £0.2bn etc.

So why should you care? Well these co-operatives operate in a incredibly competitive market. What has helped them survive (and now prosper again) is the way they co-operative with each other, what can we learn from co-operatives that have been around for 150 years?

Firstly; quite a lot share the same branding "the Co-operative" which comes with quality standards and shared membership card and divi systems. This helps with public awareness, improves expectations and levels of service as co-operative has to reach certain standards to be innvolved.  A shared membership card means customers can more easily move between co-operatives and helps all particpants increase trade.

Virtually all of them are members of the same retail trading group (they bulk buy and package stuff together).  This means that the smaller co-operatives can retain their local focus and independence, but they are better able to compete in the market against Tesco etc.

Also by regularly meeting (and i assume this happens with officers and operationally) co-operatives can share best practice, what works and what doesn't.

On the train home I was musing what worker co-operatives could do.

Probably most importantly is find better ways to share knowledge with each other, and regularly meeting up. Like coming to the Future Co-operatives (and our worker co-op open forum), attending Congress, and getting involved in Regional Co-operative Councils.

More wistfully I was thinking:

Could we create a shared services co-operative to jointly purchase our stationary,  IT support, do our payroll and make our co-ops tax efficiently (do you have a specialist accountant who knows how to make your co-op tax efficient?).

Could we build a secondary co-op to bulk import and package wholefood products for distribution via the independent wholesalers, to the independent retailers.

Could creative co-ops, agree to share a brand, quality standards, bidding for larger contracts and jointly marketing their specialist services?

Could we create a cross movement membership divi card, where member producers and customers 'trading' with co-operatives can all benefit, an keep the money circulating within the movement?

Ooh that's enough Friday lunchtime thoughts for one week, what do you think we could practically do or learn from other co-operatives?

25 November 2010

Can we really create a co-operative economy?

All the talk at the moment is about public service co-ops and mutuals. How the co-operative model would be great for driving up performance, lowering costs, but at the same time keeping these new businesses accountable and lets be honest ethical.

I agree with this generally and particularly if the employees get a real sense of ownership and control of their work life. But the question I'd like to ask Dave and George is: If its so great for the public services (especially in this time of budgetary constraint) why is it not a great idea for the rest of the economy and particularly those areas of high capitalism that got us into this mess in the first place?

I know a number of you must be thinking the same, in a recent SEC survey showed 2/3rds of people want more employee owned business in the private sector.

We are not the only ones who want to create a more co-operative economy either.  Fidel Castro at the other end of the spectrum admits Cuba's centrally planned economy is not working and worker co-operatives should be promoted.(I find it slightly bizarre that a communist and a Conservative could agree on a economic model.)

Some people like the Basques in Mondragon and Emilia Romagna in Italy have been creating a worker co-operative economy on a regional level for years. Hugo Chavez in Venezuela is also a convert:

"When he took office, there were 762 co-ops in Venezuela with 20,000 members. Many of these were more credit unions than worker-owned cooperative work places. By mid-2006 there were 108,000 co-ops with 1.5 million members with half in the service sector and a third in production.
More information on his Bolivian Revolution here and here.

So creating a worker co-operative economy is doable, but is it doable in the England or the US?
Well some in the US are giving it a try; the steel worker union of America is looking to partner with Mondragon.  There is also an experiment going on in Cleveland to create a Mondragon like network of co-operatives, the first group of co-operatives are focused around The Evergreen Co-operative.

So is it achievable in the UK and what could it look like?  
Co-operatives UK is releasing a paper (more of a tomb) written by Robin Murray who was heavily involved in the formation of the fair trade movement: Twin Trading, Cafe Direct, Divine Chocolate etc. Its called Co-operation in the Age of Google,

Co-operation in the age of Google shows that we are living at a time of profound transformation. The information and communication revolution, widespread concerns about private sector greed, public sector finances and impending climate chaos present a wide range of possibilities for co-operative expansion.

Robin argues the UK Co-operative movement is not yet in a position to make the most of these opportunities. It needs to be more innovative, more integrated, more internationalist, to get better infrastructure and to find ‘the idea’ that can mobilise support for co-operation. The review proposes a series of practical initiatives for 2011 and 2012 to strengthen the co-operative sector.

Have a read and in true co-operative style add your own comments, thoughts and ideas.

Another report released by MIT in October looks at Mondragon and the Evergreen Co-operative Model case study them and then create a theoretical framework for what creating a worker co-operative economy.

"The most important lesson from Legacoop and the Mondragon is the importance of developing an economically integrated network of cooperatives rather than a single cooperative."

I've added a diagram from this report as it sums up their framework.But do have a read of that too.

We live and vote in a country run democratically and we may well soon have a public sector run in a more democratic and mutual way.  Why should we not work in a business that is run in a democratic and co-operative way?

Wider Reading
Co-operation in the Age of Google (Co-operatives UK) 
Sustainable Economic Democracy: Worker Cooperatives for the 21st Century (MIT Co-lab)

11 November 2010

What is an employee owned co-operative?

If you work in a public service, you're probably asking the question: What is an employee owned co-operative? If you're an owner/member in a worker co-operative you might well be asking the same thing, but for a different reason; I'll get on to that later.

But first the answer:


Unsurprisingly its kinda in the title: An employee owned co-operative is an organisation owned & controlled by the people who work in it, that either consciously or unconsciously follows co-operative principles .

Ok what does that mean?

The first bit means: for it to be genuinely employee owned the employees should at a minimum control 51% of the voting shares or indirectly own the business via an employee owned trust (like John Lewis).  This ownership also has to be spread throughout the workforce, not just by the managers and come with a real sense of control over the business. Giving 10% of shares to employees is not an employee owned business.

You could just stop there and be an employee owned business, which is fine (damn site better than being investor owned), but I believe the bit that adds the real value (and makes it more palatable for me regarding public service delivery) is the co-operative bit.

You can read the internationally agreed Co-operative Principles here. But essentially they say that a co-operative is a business where:
  1. You can't be forced to be a member, and if you fit the criteria (length of service, commitment, etc) you can't be turned down.
  2. If your a member, you get a say in the running of the business and that say is equal to others not based on how much money they have invested.  (This doesn't preclude managers by any means, but does change the dynamic).
  3. You control the capital; you should also benefit from the performance of the business.
  4. Significant when it come to public services, as a business you should be independent, from the state or anyone else's influence.
  5. Members should be fully trained and supported so they can play a full role in running the business.
  6. Where possible you should co-operate with other co-operatives, to develop the whole co-operative economy.
  7. You should also have a wider concern for the community around you.
So if you're a public sector worker whose stumbled here I hope that helps. If you want to make an enquiry about setting up public services  mutual or employee owned co-operative click here. If you are interested in my own views on what model could help us create a big society click here.

My more regular readers might be asking, why I've essentially restated what a worker co-operative is. Why? because when you go on wikipedia, co-operative websites, or talk to people in the co-operative movement no-one really uses the term "employee owned co-operative".

In the US, Canada and UK we use the term worker co-operative, or if were really old-school "producer co-operative". As with most things in the English language the why has been lost in history.
The more pedantic people like me might argue that "worker" is technically a broader legal term than employee. But for most people the two phrases are interchangeable. (or are they? If you disagree please leave a comment)

I've heard grumbles that the use of this new term by Government and others is to distance these new entities from co-operatives of the past; or because "worker" sounds a bit too socialist for people's liking.

There are good examples of public service co-operatives out there.  But I do understand the need to look if exhisting models will fit and what these public service mutuals are going to really look like. Co-operatives UK provides a point for accessing information and signposting for people interested in starting a co-operative delivering public services. At the moment we are working with the Government particularly in relation to the Post Office.

And that's the real point of all this, what is being proposed by the coalition Government is going to break new ground, if public sector workers really are going to opt for some sort of mutual / employee owned co-operative model then they probably will be different from the worker co-operatives we have at the moment.

But if they share enough of the same characteristics, they are going to be dealing with the same issues worker co-operatives face.  How can we pass on our learning, and what can we learn? What are the opportunities (or threats) from some potentially massive new worker co-operatives that could easily dwarf the existing worker co-operative economy in the UK.

I'll end by saying; you can’t bluff it; if you say something is a co-operative it has live up to it. If its called employee owned, it has to be genuinely owned and controlled by those employees.

This is something I'd really like your comments on both from worker co-operatives and those in the public sector trying to understand how this might work for them.

Wider Reading:
Demos - John Lewis vs easyCouncil
Respublica - Turning public servants into service partners

05 October 2010

Event Report: Society for co-operative studies

Last weekend we had our quarterly worker co-operative council meeting which took place at the Society for Co-operatives Study Conference. This blog is a brief summary and my thoughts on the conference aswell.

Apart from welcoming our newest member to the council Alison Banton of Dulas (full list of members here) The main items on the agenda were:

Our involvement in a European wide campaign to promote worker co-operatives as a sustainable form of employment www.sustainableemployment.eu. On an EU level with the size and strength of the Spanish, French and Italian movements we actually have quite a strong voice to influence policy (which of course filters back down to the UK). We've sent some case studies, pictures and other media.  If you want to add your worker co-operative, do a testimonial or get involved please get in touch with me.

Nominations for the President of CECOP, we have not put forward a UK candidate (our multi-lingual skills frankly aren't good enough) and have therefore nominated/seconded a Swedish representative.

The two representatives to the main Board of Co-operatives UK; Bob Cannell and Sion Whellen's gave feedback on previous meetings.  Members of the Council discussed a variety of membership and strategic issues to help inform future decisions of the Board including: Co-operatives Fortnight, Congress, membership recruitment, member services and risks affecting the movement. For members interested in goings on at the main Board you can read their Board Updates here.

Our meeting lasted about 2 hours after which we took part in the Society for Co-operatives Studies conference.

Highlights from Society for Co-operatives Studies Conference
The event started with a 2 speakers discussing "Lessons from Mondragon" (will try and get a links to presentation). The main thought I took from this session was the sense of community/solidarity within Mondragon which keeps this network of worker co-operatives together and supporting each other. This is very geographical and culturally based.

For the UK worker co-operative sector to succeed I think we need to work on this sense of solidarity and mutual self-help, which is more difficult due to the diversity and geographical spread worker co-operatives in the UK. We too often re-invent the wheel, or don't think about working together to satisfy our shared needs (something we do with-in our co-operatives). Any ideas on a postcard (or leave a comment below).

Bob Cannell of Suma ran a session looking at different approaches to strategic management within worker co-operatives and how mainstream managements systems thinking just isn't appropriate. Read his blog for notes on the presentation.

Britta Werner of Unicorn and Tony Gudgeon of Chelmsford Start, spoke at a session about the relationship within co-operatives between consumers and workers, from the perspective of a worker co-operatives and a consumer co-operative.  From a worker co-operatives  point of view it was interesting that our approach to customers was very similar from a service point of view, but our approach to workers very different.

The conference finished with a session facilitated by Alan Wilkins of CLADA looking at the opportunities and threats from the big society. I'm sure we've all discussed these countless times now so won't bore you with the details.  The one thing I will say however is; everyone talks about how to get involved and take advantage of the big society (and any funding), but what it should do is remind us of what we stand for and should be doing anyway, irrespective of who's in Government and what their plugging.

The co-operative movement already funds capacity building to help people help themselves; both through being members of Co-operatives UK and individual co-operatives initiatives like the Enterprise Hub.  What we need to do as a movement is co-ordinate and rally members to put less money into charities and more into developing the co-operative sector, so we are in position to deal with the big society (or the aftermath if it goes badly wrong).

To end on a less serious note, I unfortunately forgot to take any photos of the weekend so here is a picture of George our Rabbit who when i got home, in the spirit of self-help was munching on our flowers.

29 September 2010

Building a creative economy

The talk at the moment is all about jobs: creating them, sustaining them and they must be good ones.  Not unskilled ones created by multi-nationals that would be whisked off to India given half a chance, not unethical or polluting industries and certainly not public sector ones.

So where will they come from and who will develop them?

The much publicised big society and outsourcing of public services (already done a blog on that) wont be a source, as that is straight displacement or likely reduction. They will have to come from the private sector and probably the "creative" or knowledge based sector in particular.
Businesses that are agile, innovative, where staff have high levels of motivation and productivity (which can be more critical than capital investment in this sector).

So how do you set-up this type of business and what model is appropriate?

From the 160 creative and knowledge based businesses we know about in our directory mostly: design, print and communications, business consultants, architects, IT services. The worker co-operative, and consortia model is good one. (Consortia are made up of, self-employed people and small business who come together for mutual support/shared services)

To help promote our model to the creative sector and potential entrant. Co-operatives UK with help from our members has developed a website and resource to help people create the perfect business for this sector.

To get the message out we are launching this resource around the country and last week I attended the launch event in Manchester, at Openspace a co-working environment which is itself a consortia co-operative of mainly self-employed freelancers and the worker co-operative web designers Ecobee.

Want to know more about Openspace? then have a look at this video.

If you know of people in the creative industries or looking to enter this sector please tell them about our resources and help us promote the co-operative model. www.creatives.uk.coop

20 September 2010

Implementing the formula for co-operation

I'm always like posting guest blogs, here is a short article from Britta Werner, member of Unicorn Grocery and representative on the worker co-operative council.

In June 2010, I went to Plymouth to the Co-operative Congress. This was in the middle of the first Co-operative Fortnight. Prior to that, I have already heard something about the 'formula of cooperation'. I was a bit suspicious initially, a formula? For co-operation? It sounded a bit like an oxymoron to me. Co-operation should be a spontaneous thing, a bit of give an take but not like for like.

I kept walking past the big formula in the main hall at congress

After Congress, I looked up what the abbreviations stood for:

Sc * (Ci + Mt) = Co

Sc was shared commitment, yes, I can understand that. If at the time of the event, one of the parties is busy doing other things, then that would not really be co-operation. Ci stands for common interest, of course you would need that, if you are interested in different things, you would probably not get together in the first place.  Mt is mutual trust, I definitely have a lot of examples where co-operation doesn't work because there is no trust.  

So, I started to understand why those three elements had to be part of a successful co-operation (Co).

The paper is only 16 pages long, including appendices, notes and bibliography. It is written by Ian McDermott, with Jason Miller and Ed Mayo. It is a nice easy read and very accessible. Read it here.

Around the same time, the training team at Unicorn have asked me if I could do a training session on co-operatives. I agreed but was not sure what I was going to say. I really didn't feel like talking about the Rochdale Pioneers or just randomly explain what we talk about when I attend the the worker co-operative council meetings. So I decided to tell my colleagues about the formula of co-operation. 

I started of with quickly telling them about Ed Mayo's paper Dog Helps Dog World which shows how important in all aspects of live it is to act co-operatively. Ed Mayo tells in that paper that we could reduce inequality if businesses were more co-operative and that climate change can be dealt with if we did not only care about ourselves.After giving my colleagues some food for thought, I then started to talk about the formula.

I reminded my colleagues about our principles and values and why we are all working in a workers co-operative. But how is this possible and how can we get better at what we are doing?

Sc * (Ci + Mt) = Co

You and the other party/parties involved need to know that you want to help each other but you need to trust each other initially to establish that, but to make anything happen you need commitment and it needs to be mutual. All three elements create a multiplier effect, each multiplies the effect of the other two. Co-operation will be the result. However only if all three elements are present. The result will be rewarding and satisfying.
If any of these are zero, you will get a different result but not the satisfying achievement of co-operation.

The example of tennis players are given at some point in the paper but I preferred to be a bit mean to my colleagues and torture them with a recap of the recent world cup.

The German team, most players playing in co-operatively owned clubs, were at their best. All elements were present. The way they passed the ball, the way they showed trust to their fellow players. They were a team and they co-operated; they had the same interest: they wanted to win.

The England team on the other hand, were a group of individuals, worried about their careers in their clubs, they might have wanted to win it, but there was no real trust between them. Each player played for themselves. So, no co-operation and no success in the world cup.

I used the England v Germany match to wind my colleagues up but the more I looked for examples, the more I could see it. Spain won, again, most players are playing for cooperatively owned clubs, they were not only playing for themselves, not even only playing for their team but for their whole club, which is owned by the fans.

Every good training session should have a little test to apply your just learned knowledge. I didn't have to work hard for one because the 'co-operation health check' is already included in the paper. For all three elements are two statements each which describe what co-operation means. Each statement should then be marked on a scale of 1-5 of how true they are for the business. 

Shared Commitment
  • What gets agreed gets done.
  • Result are frequently tested against the original intent.
Common Interest
  • New possibilities emerge frequently because innovation is naturally fostered.
  • New parties want to join because they are attracted by what we do and how we do it.
Mutual Trust
  • Working relationship are emerging both for those involved and those around them.
  • People readily express themselves even if it goes against the grain becuase they are empowered and able to challenge.
Our staff are split into two groups for our training, one is attending training the other one is on the shop floor and vice versa. So I had to do the training session twice. When I did the health check, the first group, quickly marked all statements and discussed the points afterwards in a large group. The other group, however, immediately split into smaller groups to discuss it. This showed that co-operation can look very differently. Both groups had very similar answers and views about our business.

The paper also includes an 'acid test'
  1. Do you care enough about this to take action with others?
  2. Are you willing to trust the people you will collaborate with?
  3. Are you prepared to do what it takes?   
Good questions people in all kind of businesses should ask each other and their teams.
I concluded with pointing out how this formula can be used to help us making our business an even better place to work in. Most businesses will have some faults and once identified, the faults could be split into the elements of the formula and see what is lacking most. It might not work for every single aspect but at least it is a start.

When I came to the staff room in the evening, one of my colleagues has made this:
I can highly recommend this paper and if you have read it, then share it with your colleagues.

Formula for co-operation

10 September 2010

What's a social co-operative, can it help create a Big Society?

Back in May 2010 Bob Cannell and I were attending a European Conference for worker co-operatives, when we heard the news that David Cameron had not just be talking about the Big Society and worker co-operatives as vacuous election rhetoric, but he actually meant it.... (well as much as a politician can)

My tweet:
"Reading a cabinet office paper on how the new government in going to build a #bigsociety, with worker #coops http://s.coop/ix amazed..


This law recognised social co-operatives as organisations that primarily benefit the community, or groups of disadvantaged people. There are two types identified in the law:
Type A - Deliver health, social or educational services.
(Closest UK example is Greenwich Leisure)
Type B - Integrate disadvantaged people into the labour market. (30% of employees much be disadvantaged.)
(Closest UK examples is social firms like Daily Bread)

The interesting bit for co-op people is the primary purpose. In the UK (and before this change in 1991, in Italy) the primary purpose of a co-operative is to benefit a co-operatives members, not the general public. That concept is similar to the purpose in Societies for the benefit of the community (Bencom) or Community Interest Company (CIC).

Members may be:
  • People who work or manage in the co-operative
  • People who directly benefit from its services, such as a disadvantaged or marginalized community
  • People who are unpaid volunteers in the co-operative - (must be less than 50% of total workforce)
  • Funders of the co-operative - in practice mostly local government/ public agencies.
The majority of members tend to be the  workers and volunteers, with beneficiary's, investors and public agencies in the minority.

Social co-operatives are permitted to distribute profits, subject to the following conditions:
  • Distributed profits are restricted to 80% of total profits
  • Profit per share - no higher than 2% of the rate on bonds issued by the Italian Post Office
  • No profits - or other assets - can be distributed if the co-operative is dissolved. (like common ownership co-ops, or the stricter asset locks in Becoms & CIC's
Other usual company/co-operatives things apply: separate legal personality, limited liability and as usual for a co-operative voting is one member one vote.

  • Predominately contracts with public authorities
  • Contracts with 3rd parties
  • Trading direct with the public 
Social co-operatives tend to be small (20-50 employees) and locally based (this was a product of legislation not allowing co-operatives to operate in different areas and thereby remain locally focused)

Co-operative history in Italy
In Italy there has been a long tradition of co-operatives both consumer co-operatives and worker co-operatives. Emilia Romagna in particular is held up as one of the most successful regions in the world for worker co-operatives (Did a blog on them here with further reading).
The social co-operative movement started in the 70's and was born out issues like: the tradition of the family's role delivering health and local care diminishing, lack of state provision to meet this widening gap and the inefficientcy of that provision. They are also less open to corruption and the involvement of organised crime, particularly prevalent in southern Italy.

As mentioned above in 1991 legislation was introduced that recognised the reality of what had been happening since the late 1970s; that a movement of ‘social co-operatives’ became established to provide services to the public, rather than for their own members.  Legislation in Italy also favours co-operatives and social co-operatives specifically as they are seen as inherently in the public good.

For more info on legal/history read this 2002 paper from Social Enterprise London, which is a great read, especially the insight into social enterprise hopes/dreams for the UK 8 years ago.  Shame the main characteristic of  social co-operatives has been forgotten, just imagine what we could have created 10 years ago if we had kept with the concept of democratic member control and not the cult of the "Social Entrepreneur"... but i digress.

Growth of social co-operatives
Italy leads the world with over 800,000 people working in the co-operative sector, about half of which are in worker or social co-ops. At the end of 2005 there were 7,363 social co-operatives in Italy employing over 244,000 people.  They are divided into 4,345 social co-operatives of type A, 2419 of type B and 284 consortium mixed co-operatives (Type A and Type B). These social enterprises engage 244, 223 members. Their entire turnover is estimated at € 6.4 billion. More info here.
(will add more recent figures if I can).

Success factors

From reading the different sources mentioned in the wider reading section, most interestingly an excellent report by the Canadian Worker Cooperative Federation.  There are a number of factors that hve affected the  success of social co-operatives in Italy (and successful worker co-operative economies more generally)

A key element of the strength of Italian co-operatives is their mix of members. It is not compulsory to have members who represent the interests of service users, workers and volunteers, but it is common. And where it happens there is evidence that it contributes to the success of the co-operative.

Government Support
It is recognised in Italy that their social objectives make them very different from profit - orientated, dividend-distributing companies and they should therefore be treated differently both legally and fiscally.

Preferred supplier status
Although there have been issues with "state aid" and private sector lobbying to reduce perceived breeches in EU competition law. Social co-operatives have very often retained preferential treatment when it comes to tendering for public service contracts over traditional private sector businesses. In 1996 the law was changed so that any organisation could tender for contracts, but there were minimum requirements which only social co-operatives would normally meet.

Specific tax breaks and benefits include: reserves are not taxed, lower corporation tax, lower NI on disadvantaged employees, tax exemptions for private donations to organisations, including social co-operatives. There are further tax benefits available to people buying ‘solidarity bonds’ issued to finance not-for profit activities.

To receive tax benefits, businesses have to (obviously) be legally defined as social co-operatives and meet certain standards (% or profits re-invested/passed to central funds etc).

Social co-operatives are typically highly dependent on public contracts - and public bodies pay 60 to 90 days in arrears (sounds familiar). In general co-operatives find it difficult to raise funds from the market/capitalist investors (due to ownership structure, not focused on shareholder return).

There are a number of grants schemes, ethical and patient loan funds, that support the growth in social co-operatives particularly interesting is:

The ‘Marconi Fund’. In return for helpful tax exemptions. Co-operatives in Italy must invest 3% of their annual income in the Marconi Fund to finance new co-operatives.

Co-operatives of all types must put a proportion of there annual net profits (30%) into their indivisible reserves, which over time can become a considerable source of liquidity and soure for future investment.

Since 1992, 3% of a co-operatives profits have to be placed into co-operative development fund. The three largest co-operative federations in Italy each have their own fund. The largest of these is Legacoop’s Coopfond which has a capitalization of $340 million (US$). From 1994 to 2001 alone, Coopfond invested $101 million to help create 7,300 jobs. (original figures here)

Co-operative federations can arrange special loan facilities at low rates of interest, through regional agreements with banks. Every member co-operative has a privileged relationship with that bank through its membership of the federation.  (This would do wonders for our membership recruitment drives)

Co-operative Federations
The Basevi Law mandated that co-operatives had to join a federation. These federations are now well endowed (membership fees are 0.4% of a co-operative’s annual sales) and have members throughout all of Italy. The result is undeniable political influence, and a strong sense of solidarity with the wider co-operative movement.
There are regional and national co-operative federations, that play a pivotal role supporting new, developing and established co-operatives. There main roles are:

To offer a range of common services to members including: payroll, accountancy, training, management consultancy, marketing, preparing joint tenders and fundraising for bigger projects.

Act as strategic advisors and agents in supporting social co-operatives taking on contracts from municipalities. Some actually act as the primary contractor and sub-contract operations to their members.

They act a lobbying/campaigning organisation to ensure co-operatives have voice in Italian and EU discussion on legislation.

They also fulfil a useful role in enabling the sector to grow, without individual co-operatives expanding beyond their capabilities. Rather than co-operatives constantly taking on new contracts, broadening their services having to deal with the inevtaible issues of growth.

They assist co-operatives with the creation of spin-off co-operatives (similar to how mondragon works). In this way, co-operatives remain small and local enough for members identify and a be properly involved in management of the business.

Legal framework
And finally as mentioned throughout, there is a long standing statutory legal and regulatory framework for co-operatives, they are defined and can therefore receive specific support and benefits and responsibilities.

I hope this gives you an insight and do read the sources i have pulled from. I'll end with a question:  

Would your Co-operative?:
  • Put 3% of your income and profit into a fund to support the wider co-operative economy.
  • Be restricted on how much profit you can distribute to yourself and put 30% into reserves.
  • Have a common ownership clause so you cannot sell the business and the assets must be passed to Co-operatives UK if you did wind up?
  • Give Co-operatives UK 0.4% of your annual sales as a membership fee.
But you would:

  • Be legally defined by law and therefore more sure of our status as a co-operatives (and those you might trade with and people who might trade with you)?
  • Receive preferential tax breaks and treatment when tendering for public contracts?
  • Have a fully resourced federal body that can offer business services, advice, support and capital/loans when you need it?
  • Have a size and strength with fellow co-operatives that you can fight your corner and play a significant role in improving society.
Wider reading
The Rise of Social Cooperatives in Italy, Antonio Thomas, 2004 (have a pdf copy but can’t find a free one online)
Italian Social Cooperatives, Wilda M. Vanek

02 September 2010

How do UK worker co-operatives compare to the rest of the world

I seem to be doing a lot of internationally focused blogs at the moment, if anyone wants me to cover a domestic worker co-operative issue, or write one themselves, get in touch.

Ever year Co-operatives UK sends data on worker co-operatives to CECOP (our European Federation). This helps CECOP lobby the EU on behalf of the movement and collectively show our strength. For those interested, here's a summary the information. 

Something to reflect on (if your that way inclined) are the terms social co-operative and artisan co-operative, which are terms we don't use in the UK.  I have loosely defined them below and keep meaning to write a blog on them both. 

None of the figures include social co-operatives as we just don't classify co-operatives in that way. For artisan co-operatives, I've looked for co-operatives of self-employed people that come together in a co-operative to produce stuff/deliver a service. These are usually referred to as consortia co-operatives in the UK but that term also includes consortia of very large buying groups like www.bako.co.uk , agricultural machinery rings etc, so its really isn't comparable.

The 90 collected below are an attempt to record these types of co-operatives and are predominantly: taxi firms like www.dialacab.co.uk (sadly not a member, if anyone can make an introduction...), arts and crafts consortia like: www.woolclip.com and professionals like: www.theverypeople.co.uk, www.uhc.org.uk.

Numbers of organisations

As we do not have data on every co-operative in the UK, this will be an underestimate and should only be used as a general guide to the sector (these figures are always changing as we get new data).

 social 1
Artisans coops2
Number of enterprises39290482
Number of enterprises being SME’s339289481
Number of workers (members and non members)214040026142
Total number of members of all types e.g. volunteers, investors63446577291

1 Social co-operatives are multi-stakeholder (predominantly worker/volunteers) that delivers public services (mainly in Italy).
2 Artisan Co-operatives are consortia’s of self employed people who come together predominantly Arts, Crafts, like pottery etc.
3 Define SME as greater than 250 workers or turnover greater than 50 millions €

Size of Co-operative Economy
Worker co-ops in membership of Co-operatives UK = £129m
Worker co-ops in economy = £146m
Artisan/professional co-operatives in membership = £900,000
Artisan/professional co-operatives in economy = £40.9m 
(predominately down to a few very large taxi firms)
Whole co-operative economy = £33.5bn

Lives and Deaths
185 have been creating since 2005, 101 of them members or affiliated to Co-operatives UK. 
33 have closed down over this period (that we know of).

Gender balance of Directors
Male Directors =565
Female Directors = 429 

Industry Sectors 
CECOP uses an International Industrial Classification Systems, so the figures may not be the same as others  figures I might have published in previous posts. I've attached the Spreadsheet, in Google Doc form here. for the juicy details and sub categories.  Again there is a health warning with this data, as it is our interpretation of information we have available.
ISIC & NACE CodesNACE Description Total

If you have not yet lost he will to live with too many figures, here some tid-bits from the last report from CECOP of how we compare with the rest of Europe:

Number of worker co-operatives in membership of a CECOP member

CountryN° of Co-operatives
Czech Republic252

Industry Sectors (where they have data)

NACEN° of Co-ops

I hope you enjoy, if you have any questions, comments please get in touch