24 November 2009

Case Study: Zebra Collective

Last week I went to Exeter and Plymouth to visit Co-operativesSW and some other Co-operatives including Co-operative Enterprise Unit, Meta4Theatre and Zebra Collective. Below is a quick look at Zebra Collective a training and facilitation worker co-operative based in Plymouth.

Most of their income derives from delivering training - particularly in the areas of equality, participation and communication skills. Operating mainly with 3rd sector and public agencies in the community, health and social care sectors. Zebra is an organisation motivated by its strong commitment to its values of social justice and consistent in the quality of its work.

Zebra collective was founded in 2003 as a company limited by guarantee and run as a worker co-operative. Three founder members with experience in the health and social care sector wished to set up an independent business that offered good quality employment.

They received generous and excellent support from Co-active (formerly Plymouth Co-operative Development Agency) and chose the co-operative model as they agreed with the Values and Principles.

Coming from a public/grant-aided sector background some members found the culture change of working in a co-operative business difficult “if you don’t deliver work you can't get paid”. Some members did not make this transition and left, but others persevered. The co-operative survived and had steadily grown in strength.

Four phases of development:
  1. Started with 3 founders with 4 more joining quite rapidly after start, structure was informal collective with only a few earning sufficiently for full time employment.
  2. As a number of members were partly or fully employed elsewhere, the co-operative began to split and inadvertently the feel of a management committee merged. This was tackled as the co-operative created a definitive split between the core membership group and a wider group of associates to properly segment membership and improve Governance. Those members not doing paid work for Zebra gave up their membership and became Zebra Associates, an informal collective that exists to this day (see below)
  3. Zebra in the last 15 months has gone through a growth phase and is now up to 7 members (all but one part-time). This can be attributed to a positive cycle of gaining more work, including winning larger contracts, that has enabled them to recruit good people and therefore deliver more work.
Some recent successes
  1. 2008 & 2009: winning contracts with regional government to support local authorities in implementing the empowering agenda, including the "Duty to Involve" their citizens.
  2. Significant growth in demand for its equality and diversity training, including winning and keeping contracts to deliver equality and diversity training for Devon County Council and winning a new contract for such work with Westward Housing. In September 2009, Bernadette Chelvanaygam was recruited as Zebra's new Equality and Diversity Lead.
  3. After receiving some training in solutions focus communication in October 2009, in November Devon County Council began using solution focused techniques to review it strategic plan and asked Zebra for more training.
  4. Facilitated Co-operatives SW AGM, 2008 & 2009.
  5. Attained Social Enterprise Mark, July 2008.
Current Structure
Zebra has a flat management and pay structure. As members all get paid the same irrespective of role; they work pay out as a proportion of two main roles carried out: training/facilitation (4/5) and administration (1/5). At the outset in 2003, in their area the market rate for a facilitator was roughly £30,000 and £14,000 for an administrator, they therefore worked pay out to be £27,000 (it has since risen). Zebra also operate good flexible working conditions like 6 weeks annual leave.

Zebra operate on the more than profit principle and are looking to enshrine this in their governing documents. Any surplus earnt is used to offer free or subsidised work to good organisation with limited ability to pay and to pump-prime new initiatives.

Membership is split into core members (Employee/Directors) and associates. Some associates get the odd bit of work to fill in gaps in capacity, others act like a “friends of” and get involved in recruitment panels and in other more voluntary ways. Zebra organises events for Associates to keep them engaged in their work. The Zebra Associate group exists also for collective action beyond that of the Zebra worker co-operative, e.g. climate change action and other social justice campaigns. etc

The team at Zebra Collective believe in and employ their work, and frequently reflect on the benefits of worker ownership of their organisation. They have great hopes for the co-operative sector and are keen to contribute actively to its development. If you in the SW please get in touch with them.

23 November 2009

Why have the employees bought West Highland Free Press?

This blog was posted at www.businesszone.co.uk by Giles Simon and I have reposted here for members interested in employee ownership.

It’s well known that local newspapers are in crisis. Advertising revenue is down for many in the industry, we’re seeing big changes and vibrant discussions across the newspaper industry about alternative business models. Journalists and employees of a local paper in Scotland – the West Highland Free Press – think they’ve hit on to a viable option. Whether it will work across the industry is a different question, but this option looks set to work for them.

The paper was founded by five friends in 1972 as a weekly newspaper. But as they began to pursue new interests they felt the time had come to sell their shares in the newspaper. Rather than selling the business on the open market, they approached the employees of West Highland Free Press to see whether they would be interested in buying the shares.

Ten employees now own and run the business, and the creation of an employee benefits trust will hold the shares for the employees and ensure that the paper continues to run at the heart of the community.

One of the biggest challenges facing innovative business models like this is securing finance, so when the traditional bank route closed, the Baxi Partnership, which controls a £20 million fund specifically for facilitating employee buyouts, was able to bring together a funding package that allowed 10 employees to purchase the title from the paper’s five founders.

Baxi also worked with other specialists, including Co-operative Development Scotland, which works to increase the number of employee-owned and co-operative businesses in Scotland, and Co-operative and Community Finance, which has been providing loan finance to co-operative enterprises since the 1970s.

Employee ownership is no panacea for a failing business or industry – they have to compete and make a profit like all businesses. So why do the employees at West Highland think that employee ownership can work for them?

Paul Wood, Managing Director there, explains:

“Despite what is happening in the wider industry we are optimistic about the future. The Free Press has always been a breeding ground for talent and employee ownership will not only help us retain that talent but make even better use of it.

“Our readership is loyal and discerning and we think we can build on this base and further develop the business through the greater participation that employees will have in the way the business is run. Through our staff we are already identifying opportunities for developing content, utilising new-media and developing a news agency side to the business.”

This has always been one of the strengths of employee ownership – employees that are motivated, care about the business, put effort in and go the extra mile to ensure that the business continues to grow.

As Ian Taylor of Co-operative and Community Finance puts it, “West Highlands Free Press is a fine example to show how employee buyouts can increase the motivation and job satisfaction of staff. For this company, employee-ownership was the only business model which would enable the paper to continue running at the centre of its community and ensure all members of staff job security.”

Sarah Deas, Chief Executive of Co-operative Development Scotland (CDS), agrees: "Research shows that employee-owned businesses [like John Lewis Partnership, Eaga or Loch Fyne Oysters] are more productive and sustainable, so there is enormous potential for this type of ownership model to contribute to the development of Scotland's economy.”

Employee ownership might not be the answer for every local paper. But as West Highland Free Press have realised, if there’s a market then an employee buyout can create more motivated and committed employees who actively help grow and develop the business.


04 November 2009

Case Study: Whomadeyourpants?

I always enjoy supporting new co-operatives and hearing their story. Here is a case study of Whomadeyourpants? by Becky John one of the founder members.

I had the idea in May 2006 to start a co-operative underwear business and started making formal enquires to CAN (Co-operatives Assistance Network) in January 2008. I quit my job on June 30th 2008, and started full time work on this on July 1st 2008. We were incorporated and registered with the FSA on the 12th December 2008.

We are based in Fairways House, Mount Pleasant Industrial Estate, Southampton, SO14 0QB. Currently just three founder members, with40 volunteers around the country. We are training 25 women who will become members when they are employed by us and complete probationary periods.

Why did you choose to set-up as a co-operative?
I believe in the concepts of fairness, equality, democracy and also sharing responsibilities and rewards.

We set out to empower marginalised women. We basically mean women who have had little opportunity or who have had opportunity taken from them. We define this as women marginalised by their status as refuges or up to 20% may be marginalised by other factors such as being taken out of school as a child due to abuse (at the discretion of the committee).

This came from a number of things. I had become empowered through 2.5 years counselling at Rape Crisis and wanted to share that feeling. I knew there was a huge refugee population in Southampton. And I knew that women are, even within marginalised groups, some of the most marginalised.

Women who have had really hard times, and have very little opportunity offered to them in our society often become isolated and develop mental health issues. It can be hard for people to feel powerful and involved. We believe that supporting the women to feel strong and capable is critical to their real and full empowerment.

How did you start?
By talking to Nathan Brown of CAN, and then Chris Funnell of SACDA. We received support around everything from co-operative structures and how they work to bid writing and registration. We also use the SACDA office as our registered office which was handy as before we had premises I didn't want it to be my house!

What issues have you faced?
There has been constant headaches and waking up at 3 in the morning moments. In particular funding is a nightmare, so many people don't understand social enterprise or worker ownership and the effects of that, ie, that we can't take equity funding.

We never seemed to be at the right stage to get this or that fund and funders all want the same information in a different format. It takes AGES to get grants applied for and decisions made, which is understandable, but it would help to plan ahead a bit more than I did - I tended to be firefighting today's problems rather than planning ahead to prevent the ones coming in 6 months.

Grants being paid in arrears by some funders makes for a huge cash flow problem. As we are a start up, we deliver training up front before we are making pants to sell - so we are spending but not generating income. Cash flow has become a word I dread.

Negotiate with suppliers on utilities - ask to spread bills over a few months. If you don't ask you don't get and they can only say no.

Bureaucracy and paperwork - tedium that is vital

Being REALLY busy means mistakes and cock ups can happen - getting more people involved as volunteers if 1) they are good 2) they don't need micromanaging and 3) they know you can't pay them is brilliant.

Juggling all the balls in the air - project managing everything from finances to supplies to premises to which kettle to buy to which bows to designs to training to recruitment to the day to day stuff like answering emails- it takes huge amounts of time and mental energy. I'm almost constantly exhausted.

But the joy is, I love it. I know I'm doing this because I want to and so, yes, it's a headache and yes it's hard, and yes some days are truly awful - but I still know I want to come to work every day.

What do you do?
To the public - we make and sell gorgeous ethical pants.

To marginalised women -

We provide opportunities for work, learning at various levels, computers, social space, advice space - all in a safe women only environment.

We provide access to a range of advisers from partner agencies on languages, personal finance, safety, computer training, supporting family dynamics - whatever the women want.

Have you had any major achievements or recent successes?
Happily they seem to be coming every day:
  • Just been offered an interest free loan by a venture philanthropist
  • Got through to last stage of level 2 UnLtd award completion (interview 5/11/09)
  • Been approached by a shop locally to sell our products.
  • It's a massive success that we are here - we are supported by volunteers working on bookkeeping, web design and build, photography, professional PR, copy writing, marketing materials design, IT suite set up, PA.
  • Invited and gave a lecture to a local Univeristy MSc Entrepreneurship course and got 10 willing volunteers out of it - their voluntary work for me is coursework for them.
  • Received a bursay from NCVO to visit and learn from the lovely Infinity worker co-op.
I love that people just want to be involved.

What approach have you taken to starting up?
My approach tends to be 'I want to do that, what, who can tell me what I need to do' and then talk to them. Talking to people is vital - they know stuff you don't.

Find people involved in any areas you want to be involved in and talk to them, ask questions, make sure there is always someone you can call whatever you need to know about. DO NOT try to know everything yourself. We are linked with CLEAR, a local refugee organisation, Solent MIND, various community groups, various churches, local Universities, Southampton Women's Forum.

Don't presume anyone is 'not your type' - talk to ANYONE about what you're doing and see what they have to say. If you are passionate people WILL help.

Any pros and cons associated with choosing a co-operative model?
We probably could get more money if we were a charity, but I still think this is the only way we can achieve our social aim. Members controlling the direction of the business democratically is key and I think the women will benefit from seeing their work pay off rather than just getting stuff given to them.

What are your future plans? Loads! whomadeyourbra? in 5 years time. Potential for global expansion, in times of resource scarcity let's look at keeping skills in each country in case there's a day when we can't import everything from china.

29 October 2009

Case Study: Software.coop an LLP

We are seeing more new-start co-operatives set-up as LLP's and even some conversions of existing co-operatives. software.coop has written up their personal experience of setting up a Limited Liability Partnership and some of the practical things you should know. If you want to know more or interested in setting one up please contact Co-operativesUK. We can put you in touch with existing LLP's like software.coop or help regsiter your LLP, with the co-operative values and principles in mind.

Software.coop is a tech worker co-op centred on web and GNU/Linux development and maintenance, with particular interests in library management systems, email services and Django, Drupal and Wordpress web applications.

As well as being strongly in favour of Free and Open Source Software (FOSS) because of its importance for cooperative values, we're also fairly unusual in being a Limited Liability Partnership (LLP) instead of a Ltd company.

In 2002, we incorporated Turo Technology LLP (Turo means tower and we started in King's Lynn, which is famous for its towers, including the nationally-famous Greyfriars Tower), which may make us the oldest LLP cooperative. Our early days were assisted by a New Entrepreneur Scholarship, but we were also still heavily dependent on "sweat equity".

The co-op currently has four members and no employees. Our headquarters are now in Somerset, but no two members are currently in the same region, while we work for clients around the world. That wasn't intentional, but it seems to work.

Software.coop became a CooperativesUK member in 2007 and has recently applied to join Cooperatives-NW. Member MJ Ray currently represents tech/worker co-op views on the board of Cooperatives-SW and is struggling to get involved with the North Somerset Partnership and West of England Partnership.

Why We Chose the LLP Model
"The essential feature of an LLP is that it combines the organisational flexibility and tax status of a partnership with limited liability for its members." - Explanatory Notes to the Limited Liability Partnerships Act 2000

We chose LLP as the corporate form because it appeared to have low start-up costs and low administration costs. Also, we took the enthusiasm of professional services businesses like accountants for the LLP as a good sign. Finally, because we didn't have to file particular rules with the registrar of companies, we could improve them if we found any flaw or mistake in them, without much bureaucratic process. We actually used this feature when we replaced our original rules with a modified set that made it more obviously cooperative in 2005.

Pros and Cons
The main benefits:

  • Lower overheads, although I feel you need to be clear with all partners from the outset that the LLP will only address partnership tax affairs and not all members' personal tax returns;
  • it is an "inherently cooperative model"[1] and you can see this in the "Default provision" section of the Limited Liability Partnerships Regulations 2001. It implements several (but not all) of the key cooperative values: voluntary membership, economic participation, member control and autonomy;
  • there was no requirement to file our rules, so we could fix initial mistakes fairly cheaply.

But there were drawbacks:

  • LLPs had poor support from banks. Initially, we failed to open a bank account because banks did not recognise LLPs. This has improved since Community Interest Companies (CICs) were introduced (because they also have letters in their company numbers), but even in 2007, some banks would not accept company numbers that contained letters. I thank Norwich and Peterborough Building Society's Cambridge branch for living up to their mutual status and patiently learning about LLPs in 2002 while helping us to open an account with them.
  • LLPs get fewer services from Companies House than Limited companies. While there is a helpful specialist LLP Team there, LLPs are excluded from key online services, but you have to use those online services to get discounts on filing fees. In effect, this means LLPs now pay higher filing fees than Ltd companies, although I think we don't file as many forms.
  • LLPs get poor support from HMRC. Because LLPs are taxed as ordinary partnerships, we have the same limited range of software for filing tax returns as ordinary partnerships and I don't think any of them are Free and Open Source Software. So, we have completed paper tax returns for all but one year to date. In effect, this means LLPs must complete their tax returns months earlier than Ltd companies.
  • LLPs are not always understood or promoted as an option by some Co-op Development Advisers and many Social Enterprise Advisers. I have been surprised by how many will tell us we cannot be a cooperative or a social enterprise because we are an LLP. In our region, Social Enterprise materials include phrases like "most Limited Liability Partnerships (LLP) are not eligible" before it even considers any rules!
  • Co-operativesUK questioned our worker co-op status three times: before we joined, when we joined and once since we've joined. [edit JA: Co-operativesUK checks all members are bona-fide co-ops. As the LLP model is/was a new model, we took special interest in this case.]
  • LLP co-ops seem to be generally uncommunicative about their cooperative rules and most LLP co-ops that I know are not members of any larger body. I feel that this is a consequence of the initial hostility from advisers. An LLP could lose a lot by describing how it implements cooperative principles and gain little, particularly because most seem to trade more with non-cooperatives than with other cooperatives. This leaves LLP co-ops "semi-detached" from the wider movement and fails to demonstrate the cooperative difference to them.

2amase LLP are probably the best-documented example: a group of MA Social Enterprise students who are probably more sure about their ability to assert their co-op status against hostile experts. Yet the 2006 case study of 2amase LLP (available from [1]) also reports poor support from banks and advisers.

While being asked to explain LLP co-ops so many times means that cooperative status has probably been a slight net cost for TTLLP so far, we believe in the long-term benefits. The pros are very compelling and long-term, while the drawbacks seem to be mostly short-term: banks are becoming friendlier, Companies House and HMRC should catch up eventually, which just leaves raising awareness with advisers and the wider movement.

How can we persuade them to treat LLP co-ops fairly?

The Process for Setting One Up
In essence, you find at least two partners, complete form LLP2 and send it to the Registrar of Companies with the appropriate fee (£20 as of 14/10/2009). It's generally a good idea to write a partnership agreement at the same time, but it's not actually required. If you want to be really thorough, read the first LLP Act and Regulations (they're fairly short and clear as legislation goes). The Companies House guides about LLPs are also worth reading.

However, like any incorporation, it comes with responsibilities and risks of fines for maladministration, so I feel that this is not to be taken lightly.

Practical Things - Tax, NI and so on

  • Tax and NI behave as if the workers are self-employed, so each member needs to:
    1. register with their tax office as self-employed,
    2. pay self-employed National Insurance quarterly and
    3. complete a tax return each year that includes partnership pages.
  • In addition to the personal tax returns, a Partnership Tax Return will need to be completed. It is worth getting the LLP's tax reference number from HMRC as soon as you can because of the previously-mentioned poor support for LLPs by HMRC. In seven years, I haven't had a trouble-free partnership tax return yet.
  • Other than that, you'll need to send a membership return (on the anniversary of the incorporation date or previous membership return) and financial accounts to Companies House each year (within 9 months of the accounting reference date). These are usually at different times.
Further Resources

21 October 2009

Business Referral Network

I attended a Co-operativesNW event yesterday and had a revelation. 30 or so co-operatives in the room stood, and told me about their business. What they want, who they want to talk to, and that dream contract they would like to land.

Although we talk to each other about values, promoting the movement and improving society, how often as co-operatives do we actually talk about what our business needs are and what business opportunities we could help each other with?

Not as much as we should, and not as much as many other businesses. Whether through the local chamber of commerce, sharing a round of golf, or as a member of a select club or Network, businesses with less history of co-operation are co-operating with each other to increase their business opportunities.

One of the priorities of the worker co-operative council is to improve trading between worker co-operatives. So we asked Co-operativesNW if we could hold our meeting on the same day and run a session at their event. Sion Whellens from Calverts a long standing member of the BNI ran a session on this topic.

Sion started by talking about the BNI, the point of it and the amount of business referrals received from these weekly meetings. He then invited attendees to do a 60 second pitch about their business:
  • Name
  • Where they are based
  • What they provide
  • Why people should buy from them
  • Who you want to talk to:
Although we didn't have time it is also usual to reverse the process, with everyone returning to the stage to tell the room what business referrals they can make, based on what people have asked for. This really would get you paying attention to other peoples pitch!

The session went incredibly well and people hung about at the end far longer than usual, to catch each other and to share contacts. It somehow felt right, and as if we should be doing this more often.

As a way of enabling co-operatives to find each other work, of helping individual co-operative grow and building the co-operative commonwealth as a whole, business referral networking is part of the answer. It’s what Principle 6 – co-operative amongst co-operatives – is all about. So if you are and experianced at business networking get in touch with us or your local Regional Co-operative Council and get organising!

07 October 2009

Worker Co-operative Survey Results

This year we asked worker co-operatives to fill in a few more questions in their annual return, to help us better understand the sector. Below is a summary from the 99 who returned their survey, Thank you!

These results only cover co-operatives that are live and trading. Roughly 25% returned the survey and some only partially completed, please view the results in this context. I hope you find this information interesting and reflect on how you are similar (or different) from other co operatives.

This first chart looks at all live worker co-operative records, we have 3 live co operatives dating back before the 70’s but these have not been included in this chart. IPS’s were the traditional legal form for co operatives, and most early worker co operatives registered as IPS’s. However this model was seen as cumbersome (needed 7 members to start) and quite expensive.

During the 80’s, the number of worker co operatives rapidly increased. ICOM and Co operative Development Bodies developed Company models that were predominately limited by guarantee, to reflect the interest in common ownership and to be more flexible (only needed 3 members).

With the introduction of new legal forms worker co-operatives have taken advantage of these; with at least 4 Community Interest Companies and a number of Limited Liability Partnerships being registered in the last few years.

This second chart focuses on the survey results and the different ownership structures; older worker co operatives tended to prefer common ownership (where the assets are held in common and not withdrawable). During the 00’s there has been a growing trend of “jointly” owned co operatives where members have an individual stake in the co-operative.

Others refer to assets held in trusts commonly used by John Lewis Partnership and Scott Bader for example.

Looking at Governance structure; 25 of the 27 “Collectives” (all members are directors) had 20 or less members. For co-operatives with a “representational” structure (directors elected from membership) there was no clear pattern with co-operatives as low as 4 members choosing this option.

Looking at Management structure; co operatives with a flat structure all had 10 or fewer members (with one exception). As co-operatives grow they tend to develop a sector or team based structure with 9 of the 13 co operatives having more than 30 members with the remaining 4 between
6 -11 members. As might be expected conventional management structures could be found at all levels of membership.

This chart looks in more detail at employees within worker co-operatives. As might be expected there is a higher ratio of women than men being employed part-time compared to fulltime and with roughly 4% of the employees from a Black or Minority Ethnic background.

Pay Structure (more than one answer could be chosen) Out of 99 responses
Members start on the same hourly rate irrespective of their role = 48
Members with longer service are paid more = 12
Members with more responsibility paid more = 31
Members pay based in part on individual performance = 9
Members pay based on need (member withdraws what they need) =1
The majority of members on a higher than industry average = 17
Profits are distributed as a bonus or dividend to members = 35
Members have individual investments that can be withdrawn = 10
Maximum differential in pay (highest can’t be paid ?x the lowest paid) = 6

This final chart gives a break down of worker co operatives by sector (where known). Worker co operatives set up in the 70’s tended to be manufacturing or retail based businesses; this has broadened out over the years, with more worker co-operatives starting in the creative and professional services sectors.

Worker co-operatives vary from 2 to 120 members, with a variety of different governance, management and pay structures, operating throughout the economy. They all however share something in common; their values such as: self-help, democracy, equality, honesty, openness and social responsibility.

We will start sending out next year’s survey at the end of the year. If you were not one of the 99 who returned your survey; please remember to fill this in when you receive your audited accounts for 2009. This information particularly turnover, member/employee figures helps us shout about the size of the sector and campaign on issues affecting our co-operatives.

If you would like to see us include different questions in next year’s survey or are a research interested in more in-depth information, please get in touch.

21 September 2009

Principle 6: Trading together, do we?

When I first learnt about co-operatives, I thought Principle 6: Co-operating with other Co-operatives was the most powerful of all the principles and gave co-operatives a serious competitive advantage against other forms of business and other social enterprises for that matter.

I imagined this to be like being in the Freemasons, or going to the right University. The right handshake, name dropping Horace, George, or the Fenwick Weavers and you would be instantly given all the advice, business contacts and co-operation you required from fellow members of the movement.

Now that I have been "in the movement" for 18 months and talked to a lot of co-operatives, I find that this is not always the case, particularly the trading together aspect of Principle 6. There is interest though: for some a genuine commitment to a stronger movement and helping fellow co-ops, for others its just good business sense.

People do try and are successful, but this is mainly the larger co-operatives or in an informal way. There are some who try to inter-trade, market to fellow co-operatives and don't meet with much success. There has even been a proposal put forward to develop a business referral network called "principle six". So does it work? Can co-operatives trade together?

Some examples of success:
  • Fair trade & supporting producers in developing countries - A good example is Palestinian Olive Producers supported by Zaytoun & Olive Co-op are selling under the Equal Exchange label in Co-operative retailers like the Co-operative Group and the many smaller retailers. The wider fair trade work done by the co-operative movement has helped 1000s of farmer co-operatives round the world.
  • Initial growth in Co-operative Sector - Historically the consumer societies had a strong tradition of co-operating with each other, the formation of the Co-operative Wholesale Society and CRTG.
  • The Co-operative - The Renaissance in the Co-operative Brand and the sector as a whole is in part down to the continuing co-operation between the consumer societies.
  • The Phone Coop - has been particularly successful at using other co-operatives to promote its services, Co-operatives UK members for example get a 6% discount and we promote this as part of our membership offer.
Through formal co-operating (CRTG) , to the less formal (worker co-op wholesaler selling each other products), co-operatives can and do co-operate. What I am interested in, is why small and medium sized co-operatives and in particular worker co-operatives find it difficult to trade together. This is not just about inter-trading but doing joint projects, making business referrals to each other.

Here's one idea for doing using Principle 6 to trade together, (send me more):
Joint marketing is the process of promoting your co-op to the customers of other co-ops. For example, suppose you wholesale ethical products to small ethical retailers, your customers, probably have a website, bank account, phone line, and you would hope accounts.

You could ask co-op providers of these services to offer a benefit to your customers (of course with an extra discount if these customers are co-ops themselves). If your products are relevant to their customers you could mirror the deal and promote to their customers. This could result in a win-win situation for both of you.

Step 1 - Understand your numbers. You'll need these to demonstrate how much money your fellow co-op could make. For instance, work out what your response rate is for a typical direct-mail campaign and the value of each new customer.

Step 2 - List products and services that are complementary or related to your own, and that you would like to offer your customers. Don't leave out products or services that aren't necessarily related but in which your customers might still be interested.

Step 3 - Search for co-ops that sell those products and services. Then contact those people and propose a meeting to explain your strategy further or get in touch with me to make the link.

Step 4 - Get an agreement. When negotiating your deal, always try to get an agreement to extend your relationship and be clear what you both expect from each other.

Step 5 - Contact Co-operatives UK so we can promote what you have achieved, share the learning or even better get us involved in the idea from the start.

Before you go and start looking for opportunities:

How much trade do we already do with each other?
What stops us from doing more?
What things could we do to improve it?

If you are as interested in the answers to these questions as I am please fill in this quick survey and I will publish the results at the end of October. Together we can look at improving our Principle 6 behaviour. Please leave any comments on this blog or start a discussion here.

17 September 2009

Principle 5: Learning together to be a better co-op

A post from Adrian Ashton sharing his thoughts on training - Training...an idea that either fills you with enthusiasm, or fills you with dread (depending on your experience of previous trainers). Or, maybe something that your co-op regularly budgets for (in cash and time), or views as a luxury – to be undertaken only if someone else is paying and no-one's off sick or on holiday...

Whatever our feelings may be, training and learning are key aspects of any co-operative enterprise: remember, in the absence of a legal definition of what constitutes a co-operative business in the UK we rely on being identified by our values and principles which include:
  • Principle 5, A commitment to the education, training of members and workers.
So, we need to do be doing this, but what if we're facing some of the constraints listed above? It's not uncommon for co-ops to have had bad experiences with trainers who didn't 'get' what a co-op is, nor in this current training climate to be facing difficultly in justifying spend on training courses.

There is a solution which also neatly fits with another of our defining characteristics:
  • Principle 6 Co-operation between Co-operatives - We should work together at local, regional, national and international levels to achieve our aims.
As a movement, we've fundamentally changed the way business is done by showing that our alternative model can not only work, but also is also a very powerful tool to address all sorts of issues in our society and world. In doing so, we've created a lot of knowledge, expertise and skill.

So how do we look outside of ourselves to source training?
We've an internationally recognised College that specialises in co-operative learning, most relevant for small and medium co-operatives at the moment is a practical work-based learning scheme.

We have numerous networks (both local, regional and on-line). Many co-operatives informally support each other from phone calls, and visits to staff swaps. We now also have tools to allow us to measure our performance against our defining values and principles (CESPIs) so can even more easily identify who we might want to approach to ask for some ideas...

Above all – remember learning doesn't have to be a stuffy formal classroom affair: it can be done as a shared activity with other co-ops, be as simple as reading and article or listening to a podcast, or even spending time down the pub with other co-op members.

What's stopping you?
What is stopping us from learning together, post your challenges here, or on our facebook group and lets see what we can all do to suggest 'work-arounds' to them.

Comments from John Atherton
From talking with members I hear of lots ways members are or have learned together.

Daily Bread and Unicorn used to do staff exchanges, as did Brixton Cycles and Bicycle Doctor does anyone still do these, or would they like me to facilitate exchanges?

Becky of Who Made Your Pants recently visited Infinity to learn about engaging members in the Co-operative Culture. Both parties even got paid for this through a NCVO fund called Only Connect.

Members are always asking for example policies and procedures, and I share what I have on a resources page for worker co-operatives (I am always looking for new resources and links to add).

We are developing an online resources repository, wiki and the ability to discuss issues with other members on a new Business Networking Website (more information on this in November).

I agree with Adrian, there are lots of opportunties for co-operatives to learn from each other. What are your barriers to doing more?

26 August 2009

Case Study: Calverts

Calverts, one of our long standing worker co-operative members and has kindly updated their case study. If your interested in what makes a successful worker co-op, continue reading. If you want to help us promote the co-operative model, I am always looking for more case studies.

Founded in 1977, and based in central London, Calverts North Star Press Ltd (now trading simply as Calverts) is a successful graphic design and print co-operative employing 16 worker members, with a turnover of £1.4m. The co-op specialises in communications design, branding, graphics and print. Clients range from investment banks and marketing agencies to government organisations, arts groups, charities and campaigns. Services include branding, corporate identity, design, copywriting and photography; website design and development, and print media of all kinds.

Calverts is a market leader in environmentally positive design and print. It holds Forest Stewardship Council (FSC), Greenmark and ISO14001 accreditations. In 2001 it was given the Inner City 100 award, in recognition of its achievements as one of the UK’s fastest growing inner city social enterprises.

Calverts was named in honour of Giles and Elizabeth Calvert, who published and printed many of the millenarian texts of the 17th century English revolution (and were frequently imprisoned for their efforts). Their workshop was in Clerkenwell, where the co operative had its first premises.

Calverts was set up after an industrial dispute at IRAT services, the design and publishing wing of the Arts Lab. The workers had understood that they were working for a ‘co-operative’, which turned out not to be the case when they found themselves in receipt of redundancy notices. Believing that there was a market for their work, wanting to preserve jobs, having no investment capital and wanting to work in a radically egalitarian way, seven of the employees decided to set up a common ownership, ICOM (Industrial and Common Ownership Movement) collective type worker co-operative. They incorporated as an Industrial and Provident Society in November 1977, and the first formal meeting was held at the North Star pub in Finchley Road (hence the other part of the co-op’s name).

Early barriers to success were many. The co-op had no capital other than a £500 loan from ICOF to buy equipment; initially, there was no money to pay wages. Calverts’ landlord required personal guarantees on the lease (two people volunteered, and the other members signed a legal deed in case things went wrong, to indemnify the two); suppliers had to be persuaded to continue delivering raw materials such as paper, ink and typesetting consumables on credit; membership of the NGA trade union had to be negotiated.

The biggest single weakness of the co-op was lack of capital. Calverts was a classic ‘sweat equity’ operation. It was decided to cease trading if all the members could not be on the trade union minimum within six months (they succeeded); apart from some small members’ loans at low interest rates, major equipment purchases were financed through debt (asset finance loans from Close Brothers merchant bank, United French Banks, and further ICOF loans.)

This has continued to the present day; Calverts last major investment was in a £750,000 Heidelberg printing press, financed by a loan from Close Asset Finance over 7 years. The view has always been that relatively expensive capital has been a price worth paying for autonomy and equality.

Essentially, all the early problems were overcome through a combination of militancy, hard work, solidarity and persuasion.

For the worker members, the main benefits of working at Calverts are good wages and conditions (slightly higher than average pay, and much better conditions than the industry standard), respect and equality in the workplace, education and skills development, and the opportunity to exercise democratic self-management. Average staff retention is more than twice the industry average, which means that as a business Calverts has built a body of considerable creative and technical expertise. This is reflected in high levels of quality, service and client care.

Trading through three recessions, no employee has ever lost their job by reason of forced redundancy, and continual improvements in productivity and service delivery meant that real wages have increased almost without interruption for 30 years. Apart from these obvious social dividends, Calverts has also developed an unusually strong management culture based on mutual respect, trust and consensus building. This is the true strength of the business, and it is maintained by paying close attention to good governance, which the members have interpreted as operating according to both the letter and the spirit of the co-operative principles.

Successful and innovative business initiatives in Calverts have come from all areas of the co-op, which has always invested for the long term, and attributes the success of its investment strategy to rigorous discussion and testing of its plans. As a result, the co-op has weathered the storm of the current recession, in a business market was already hugely competitive, much better than its competitors.

In Calverts early days, skills development was almost entirely ‘on the job’, and members rotated job functions. As the business grew, technical and creative skills became more specialised. All members have a personal training budget which allows them to develop knowledge relevant to their job role, but also to their personal aims. In recent years, the co-op has invested more in the area of new member induction and education in co-operative values, principles and the movement’s history, believing this to be an important aspect of skills development for any worker in a co-operative business.

Interestingly, Calverts is still a true equal pay co-op; the hourly rates of pay are the same for a founder member with 31 years’ service, who is now a trained financial accountant, as for a newly-qualified design or printing apprentice. The co-op has had to meet the needs of all its members by driving up productivity, and thereby improving pay and conditions across the board. As a result, it has no problem recruiting experienced and highly-skilled new employees.

Calverts demonstrates that radical ideas around worker co-operation can lead to innovative and successful businesses, bringing member benefits which other business models cannot equal. It believes the project to build co-operation as 'social brand' is now an urgent challenge for the wider movement. To demonstrate the kind of work it thinks is needed to raise public awareness and approval of co operative values and principles, Calverts developed the 'Co op Hands' stamp for worker co operative produced goods and services, and is working on ideas for a new ‘co-operative mark’.

The co-op champions socially and environmentally conscious design and print - but, like many other co-operatives, it didn't jump on the last green bus. It pioneered high quality printing using recycled papers and vegetable oil based inks before such things were popular or profitable. As one member explains: "our clients want the assurance and credibility which comes from eco-positive design and print - but in Calverts early days, it was as much about clean and safe working methods for our members."

Jess Baines, a former member now teaching at the London College of Communication, has set up a wiki about radical printshops, design studios and poster collectives of the 70’s and 80’s, and there are a couple of interesting reminiscences about Calverts here.

Sion Whellens one of Calverts members is a member of the Worker Co-operative Council and at present represents the WCC on the main board of Co-operativesUK

Other links:
Calverts Facebook group

20 August 2009

Mediation: does it work?

Article by Dr Rory Ridley-Duff in response to Bob Cannell's article on mediation. Does it really work?

This short article examines research findings from the US Postal Service where there is widespread use of mediation. Given the process of mediation is suited to the authority structures of co-operatives, these findings are of particular interest to co-operative and employee-owned enterprises.

In attempting to define mediation, it is useful to define what it is not. Importantly, mediation is not arbitration, which Liebmann (2000:11) defines as, ‘a process in which an impartial third party (after hearing from both sides) makes a final, usually binding, agreement.

In contrast, mediation is defined as:

‘A process by which an impartial third party helps two (or more) disputants work out how to resolve a conflict. The disputants, not the mediators, decide the terms of any agreement reached. Mediation focuses on future rather than past behaviour.’

In mediation theory, there is a focus on developing the conflict resolution skills of the parties involved, not simply solving the immediate dispute (Bush and Folger, 2004). The USPS REDRESS programme is the only large scale opportunity that has afforded researchers a chance to review thousands of cases and outcomes (Bingham and Pitts, 2002).

This programme has several features that may, or may not, be adopted in any UK programme. Firstly, disputants on either side can bring any representative they wish to mediation meetings (including no representation at all). Secondly, mediation is compulsory for the employer, but optional for the employee: if an employee raises a grievance, the employer must mediate; the reverse is not the case.

Outcomes and satisfaction levels were studied. In nearly all cases, the best outcomes and highest satisfaction levels were achieved when trade unions represented the complainant (the person expressing a grievance) and lawyers represented the respondent (the person defending themselves against an accusation). This is in stark contrast to the UK model where third party representation is seen as inappropriate towards reaching a successful outcome (ACAS: 2007).

Interestingly, parties representing themselves also expressed high levels of satisfaction. Bingham and Pitt (2002:142) concluded on the basis of studying 7,989 complainant surveys and 6,794 respondent surveys that “allowing participants to bring whatever representative they prefer will have no adverse impact on an employment dispute resolution programme”.

After a pilot programme using ‘in-house neutrals’ an external mediator programme was implemented. Satisfaction levels on procedure were high in both cases (91% with internal mediator, 96% with external mediator), while satisfaction with outcomes was achieved in most cases (74% with internal mediators, 80% with external mediators). These high satisfaction levels indicate that internal mediation can still be effective in many cases and may be particularly cost effective.

One weakness of the REDRESS studies is that satisfaction with court proceedings are not compared to those undergoing mediation. One area where this question has been considered is mediation in a family context (see Kelly, 2004). In this case, outcome and satisfaction levels of those who chose mediation and court routes were compared. Moreover, follow-up studies (after 18 months and 24 months) were undertaken to compare satisfaction levels later on.

Similarly high levels of satisfaction were reported (86% said they would recommend mediation to others). These satisfaction levels, however, dropped substantially in follow up studies (between 20 to 30 percentage points, depending on the question). Nevertheless, satisfaction levels remained substantially higher than those who went through court proceedings. For example, 55% managed to maintain workable relationships two years after mediation, compared with on 34% who used legal processes.

If mediation does produce more desirable, if not uniform, outcomes, how is this achieved? An argument made in traditional disciplinary and grievance proceedings is that if a person is disciplined immediately and consistently when they transgress codes of conduct, they would not have engaged in the 'inappropriate' behaviour of which they later stand accused (Gennard and Judge, 2002). This assumption is only valid within a framework that uncritically accepts the moral and legal right of social elites to decide which behaviour is 'appropriate'. Mediation, on the other hand, does not accept this in an uncritical way.

Viewed from a Chinese perspective, Huang (2006: 307) comments:

With [Western] insistence on beginning with abstract premises about rights, and of subsuming all legal decisions by deductive logic under such principles, formalist legal system can drive almost all disputes into an adversarial framework of rights violations and of fault, even when neither party is at fault or when both parties would prefer a compromise resolution.

Huang outlines how justice in cultures based on Confucian and Maoist philosophy is based on an investigation of social "facts" before any decision is taken about how to resolve a dispute. Where an investigation determines there is no blame, joint blame, or joint rights and obligations in law, Chinese courts opt for mediation as the dispute resolution process.

Where there are clear cases of legal right and wrong, an adjudicative (evaluative) approach is adopted to determine punishment. Chinese law permits legal practitioners to switch between adjudicative and mediatory justice in light of findings that emerge during investigation. As a result, many cases are resolved without attempts to determine right and wrong, or apportion blame, by focussing on rebuilding relationships rather than determining punishment.

The argument for mediation, therefore, can be made on either financial or moral grounds. Firstly, there is a reasonable expectation that fewer disputes will be escalate to court proceedings. Secondly, there is a compelling ethical argument: mediation, to date, has produced outcomes with higher levels of satisfaction for both disputing parties with a higher percentage of working relationships remaining intact in the aftermath of conflict.

ACAS (2007) Mediation Explained (London: ACAS Publications).
Bingham, L. and Pitts, D. (2002) "Highlight of Mediation at Work: Studies of the National REDRESS Evaluation Project", Negotiation Journal, April 2002, pp. 135-146.
Bush. R and Folger, J. (1994) The Promise of Mediation: Responding to Conflict through Empowerment and Recognition (San Francisco: Jossey-Bass).
Gennard J. and Judge, J. (2002) Employee Relations (London: CIPD).
Huang, P. C. (2006) "Court Mediation in China, Past and Present", Modern China, 32, 3, 275 314.
Kelly, J. (2004), "Family Mediation Research: Is There Empirical Support for the Field?", Conflict Resolution Quarterly, 22, 1-2, 3-35.
Liebmann, L. (2000) “History and Overview of Mediation in the UK”, in Mediation in Context, (London: Jessica Kingsley Publishers).
Ridley-Duff, R. J. (2007) Emotion, Seduction and Intimacy: Alternative Perspectives on Organisation Behaviour (Bracknell, Men's Hour Books), downloaded from http://www.scribd.com/doc/4912718

17 August 2009

Worker Co-operative European Conference

On 28th September, CECOP (European wide body for worker co-operatives) will be holding their annual conference in Brussels. The theme for this years conference is "Managing Change with sessions on: Corporate Governance, Restructuring, Clusters & Innovoation.

They will also launch a book "Cooperatives and Social Enterprises - governance and normative framework". Which is the result of analysis work spanning three years, intiatied in Manchester (Nov 2006). Looking at the common denominators among peices of legislation across 11 EU member states, relating to Co-operatives and Social Enterprises.

If any members are interested in attending and representing UK worker co-operatives please get in touch.

22 July 2009

Part 2: The Surge of the 70's and its Aftermath

In the 1970’s ICOM, young and full of evangelising zeal, soon identified two key problems which were hindering the expansion of the employee-ownership sector; first, the need for an easily understood model legal framework, and second, the need for start-up capital. Several of the entrepreneurs behind these ten founder businesses of ICOM had spent huge amounts of time and expense on constitutions embodying their personal and varied convictions.

Scott Bader called itself a Commonwealth, Trylon was a Christian working community, Fakenham Enterprises Ltd. was an all-female business which scorned any male interference. Outwith ICOM, the John Lewis Partnership was growing into a large retail business with its own complex constitution for employee ownership.

The only model available was the CPF Rules, originated in 1882 and augmented on numerous occasions in the 90 years since. By 1970 these Rules had become a turgid 100 pages, incomprehensible to nearly all who persevered to read them. It was a time of considerable idealism but would-be co-operative entrepreneurs had no alternative but to go to solicitors who merely pulled a standard Companies Act Memorandum & Articles from the bottom drawer because they had no knowledge of IPS's. They would then modify the Memorandum a bit to accommodate the views of the founder, and take their fees.

Roger Sawtell, as chairman and dogsbody of ICOM, was given the task of formulating a simplified set of Model Rules for employee-ownership, ‘on one sheet of paper’. As the main principle, worker members should take decisions themselves, the Model Rules were to be minimal but had to comply with IPSA for registration. The first ICOM Model Rules were eventually adopted in 1976 and the first co-operative to register with them was Daily Bread Co-operative in Northampton. ICOM grew steadily in the 1970’s and by the end of the decade there were over three hundred employee-owned businesses, most of them registered with the ICOM Rules and covering a wide variety of industries. A door had been opened.

The second requirement to enable the sector to grow was to make loan capital available to emerging worker co-operatives. Working capital is just as necessary for a co-operative as for any other business but equity voting shares are not appropriate because the enshrined co-operative principle is that control rests with the working members on a one-person-one-vote basis, similar to parliamentary democracy, and not with ‘outside’ investors on a one-share-one-vote basis, looking for dividends and capital appreciation.

Banks were cautious and even suspicious of co-operatives so ICOM decided to initiate a revolving loan fund, taking in loans from well-established employee-owned businesses such as Scott Bader and lending to newly emerging worker co-operatives. At a meeting in the kitchen of the ICOM chairman’s home in October 1973, Industrial Common Ownership Finance (ICOF) was founded (later to operate as Co-operative and Community Finance). Several well-wishers pledged incoming loans to get the fund off the ground and ICOF grew slowly and with occasional setbacks. (By 2008 the fund was well-established and had £17 million out on loan, with few failures.)

The Triumph Co-operatives. Following the miner’s strike in 1974, a Labour government (Harold Wilson) was elected and determined to do something about industrial democracy. Tony Benn was briefly Secretary of State for Industry. ICOM recommended grassroots help for emerging co-operatives but civil servants argued that a more dramatic gesture would be to make substantial grants to three troubled businesses in danger of going bankrupt, Kirby Manufacturing, Scottish Daily News, and Triumph Meriden, to transform them into worker co-operatives.

Their shareholders must have rejoiced all the way to the bank for this rescue but there was no experience of democratic management among the workforce and failure was inevitable. The first two soon succumbed but Triumph motorbikes struggled on until 1983 before collapsing.

For the ensuing thirty years Conservatives used this debacle as ‘proof’ that worker co-operatives do not work. It became a millstone round the neck of advocates of all kinds of co-operative ventures. The bitter lesson was learned that money will not turn a failing capital-owned business into a successful co-operative. Very slowly, the positive lesson was also learned that sustainable development can be achieved by co-operative entrepreneurs from the grassroots or by the transformation of successful businesses, like Scott Bader.

The Industrial Common Ownership Act (1976)
In 1975, while the Triumph co-operatives were in the news, David Watkins, MP for Consett, which had suffered from the closure of its substantial steelworks, drew a favourable place in the annual ballot for private member’s bills and invited ICOM to draft a Bill.

The parliamentary lawyers changed every clause of the draft and the resulting Act, expertly steered through parliament by Watkins, and brilliantly supported by Peter Melchett at the Department of Industry, was disappointingly weakened. It provided a legal definition of a common ownership enterprise but few co-operatives perceived this to have much merit.

However, the Act gave a publicity boost to the co-operative concept and underpinned the surge in worker co-operative registrations in the 1970’s and 1980’s, despite the impending failure of Triumph. The Act also provided a very helpful grant of £250,000 to ICOF to lend to emerging worker co-operatives.

Co-operative Development Agency (CDA) 1978 – 1990.
After much political lobbying, a national development agency was initiated in 1978, chaired by Bert Oram (Lord Oram), a seasoned co-operative campaigner. This augmented the work of about 30 local co-operative development agencies which had sprung up all over the country. The CDA legislation was one of the last Acts before Labour succumbed to 17 years of Conservative government. It acted as publicist, advocate and adviser, and decided to concentrate its efforts on worker co-operatives to provide good quality jobs. The first Directory published by the CDA in 1980 listed 330 worker co-operatives and the third Directory in 1984 showed 911.

Although accepting the CDA as a means of generating jobs in a time of recession, the Thatcher government was lukewarm towards co-operatives and happier to encourage private ownership and equity share companies. So the CDA was deflected away from co-operative ownership towards employee shareholding schemes and the playing field was tilted towards minimally-regulated capital ownership. The CDA was gradually strangled by diminished government funding.

Despite the debacle of the Triumph co-operatives and the lack of real support from the Conservative government, the surge of the seventies had generated a momentum and many more small worker co-operatives were initiated in the 1980’s. Larger employee-owned businesses like John Lewis Partnership and Scott Bader continued to do well and worker co-operatives of all sizes showed that this structure could survive recession because there were no outside shareholders expecting dividends and because the working members were committed to survival in a way that conventional wage earners never could be.

A directory published by the Co-operative Research Unit (CRU. Open University) in 1989, listed 1400 worker co-operatives, probably the highest figure recorded. The foreword to this directory reflected an optimism which was soon dispelled by those who claimed that private enterprise would bring everlasting increases in material prosperity. Greed was not to be discouraged and the doldrums for worker co-operatives set in.

The government finally killed-off the CDA in 1990, local authorities were closing down some of the local co-operative development agencies to save money, the CPF continued to be moribund and the Co-operative Union(CU) the representative body of the co-operative movement, dominated by the consumer co-operatives, showed scant interest in worker co-operatives. ICOM and ICOF passed through various crises but struggled on. The number of worker co-operatives began to diminish.

Hope re-emerged around the turn of the century when Co-operativesUK, led by Pauline Green, replaced the CU and was determined to represent all manner of co-operatives and mutual enterprises and become truly representative of the whole co-operative movement. ICOM responded by merging with Co-operativesUK in 2001 and other co-operative bodies joined until there were 560 members by 2009. Co-operativesUK have brought together several different model rules for co-operatives and offer a straightforward registration service and advisory support for worker co-operatives.

The recorded number of worker co-operatives at March 2009 is 403 and, if those with other legal forms are added, the total number of employee-owned businesses is about 500. This is significantly less than twenty years earlier but, and it is an important but, plenty of these 500 are well-established and experienced in effective management under the seven Co-operative Principles established by the International Co-operative Alliance(ICA). Thus the worker co-operative sector has never been stronger and is ready to meet the challenge to make this the century of co-operation.

20 July 2009

A short history of worker co-ops part 1

For those new to worker co-operatives interested in history, Roger Sawtell has kindly written a brief article. This first part looking at pre-1970's worker co-operatives. The second part will look at the rise in the 1970's of worker co-operatives.

Roger Sawtell is a co-operative entrepreneur, co-founded two ongoing worker co-operatives, Trylon Ltd.,Wollaston, in 1968, and Daily Bread Co-operative, Northampton, in 1980.

This potted history is deliberately peppered with the names of organisations and individuals so that those who want further information can access it on websites. [JA - added links, if you have interesting links please post as comments]

The Early Years, Rise and Decline 1850 -1970

The modern co-operative movement in UK dates from 1844 when the Rochdale Pioneers opened their co-operative store. In 1852 the first Industrial & Provident Societies Act (IPSA), under which co-operative societies were registered to distinguish them from conventional companies, was guided through parliament by the Christian Socialists, an influential group of academics and lawyers, including Charles Kingsley, author of The Water Babies, F.D.Maurice who became professor of theology at King’s College, London, and J.M.Ludlow. They put their energy and their money into the formation of worker co-operatives of tailors, shoemakers and even ‘piano manufacturers’.

These dedicated reformers, determined to provide a ‘better way’ than rapacious Victorian capital ownership, were the founding fathers of the subsequent development of worker co-operatives, In 1882, E.V. Neale and Edward Greening initiated the Co-operative Productive Federation (CPF) to be the representative body for worker co-operatives but the number grew slowly and was overshadowed by the dominance of the consumer co-operatives. Beatrice Webb, a powerful voice in the co-operative movement, wrote against producer co-operatives and the trade unions showed little interest. In 1923 there were 44 societies in membership of the CPF but thereafter it gradually diminished in size and influence and by 1970 only a rump remained.

However, in the 1960’s, independent of the co-operative movement, there was a scattering of employee-owned businesses, mostly transferred to the workforce by reforming entrepreneur owners wanting to create a more democratic business structure. Prominent among these was Ernest Bader, a turbulent Quaker and gifted entrepreneur, who had founded and developed Scott Bader Ltd. into a substantial chemical manufacturing business. Bader had strong and unusual convictions which included not only employee ownership but also pacifism and vegetarianism – a heady mixture. By 1963 he had completed the transfer of the business to the 260 employees and formed The Society for the Democratic Integration of Industry (Demintry) with five employee-owned businesses as members. Scott Bader continued to grow and there was increasing interest in industrial democracy.

At a historic meeting in 1971 Demintry was transformed into Industrial Common Ownership Movement (ICOM) with ten founder members, five of which were located in the Northampton area. The ICOM businesses were in fact worker co-operatives but an early resolution to join up with the CPF was soundly defeated because these energetic businesses did not want to be dragged down by the seemingly moribund CPF.

The secong part will look at ICOM and the rise of the worker co-operatives in the 70's

For wider reading on co-operative history:

Co-operative College Archive
Society of Co-operative Studies
History of worker co-ops in the US

13 July 2009

Mediation in worker co-operatives

Bob Cannell has kindly provided a summary of the 37 page ACAS guide to mediation. A topic of interest to worker co-operative and other equal status organisations where management authority is is not available to "sort out" arguments between peers.

Mediation is increasingly recommended (ACAS, CIPD) as a method to resolve conflicts and disagreements between people at work. Unresolved disagreements and blocked communication can cause serious long term damage to cooperative team working and business performance.

Mediation is a method by which people can take responsibility for resolving their own disagreements with the help of a facilitator, the mediator. There is little paperwork because the process relies mostly on verbal communication.

What is Mediation?
Mediation is where a mediator helps two or more people to reach an agreement to change behaviour. Any agreement comes from those in dispute, not from the mediator. The mediator does not judge or tell them what to do (beyond making suggestions). The mediator is in charge of the process of seeking to resolve the problem but is not responsible for the outcome.

The stages of mediation

  1. A complaint is received by Personnel
  2. Personnel ask the parties to accept mediation to resolve the issue. (if they refuse, it might become a formal grievance or disciplinary)
  3. Personnel agree a mediator (themselves, other member(s) or an external mediator.)
The process

First contact with the parties
The mediator meets the parties separately. To set the guidelines for the mediation process. To allow them to tell their story and find out what they want out of the process.

Joint meeting
Hearing the issues
  • The mediator brings the participants together and invites them each to put their side of the story during a period of uninterrupted time.
  • The mediator begins to summarise areas of agreement and disagreement and draw up an agenda with the parties for the rest of the mediation.
Exploring the issues
The mediation is now about encouraging communication between the parties, promoting understanding and empathy and changing perceptions. To begin to shift the focus from the past to the future and begin to look for constructive solutions.

Building and writing an agreement
The mediator encourages and supports joint problem-solving by the parties, ensures any solution and agreements are workable, and records agreements and respectful ‘agreements to disagree’.

Closing the mediation
  • Once agreement has been reached, the mediator will bring the meeting(s) to a close, provide a copy of the agreed statement to those involved and explain their responsibilities for its implementation.
  • If agreement cannot be reached, other formal procedures may later have to be used to resolve the conflict.
  • Nothing that has been said during the mediation can be used in any future proceedings.

Conditions for Successful Mediation

Not a First Resort
People should first try to resolve disagreements by themselves and managers/co-ordinators should not use mediation to avoid their responsibilities for people and team leadership.

Trained Mediator
  • If possible, Mediation training ACAS or CEDR should be done in advance of it being needed.
  • With goodwill from the parties in dispute, lack of training need not be a reason to delay.
  • Starting meaningful communication between the people is more important.
Time and Place
  • Mediation works best if started promptly.
  • The first stages must not be rushed by time pressures.
  • Length of meetings depends on the people involved.
  • Many mediation processes take one day or less to complete
  • The place must be private with a private room to break out into if a calming down period is needed.
Voluntary and Co-operative
Both (all) parties must agree
  • to use mediation.
  • to want to achieve a cooperative resolution.
  • to be prepared to ‘give and take’.
Mediation does not work if one ‘side’ is seeking revenge or is determined to win at the cost of the other or does not intend to be open and honest.

Informal and Flexible
Both parties must be prepared to be flexible and allow the mediator to facilitate the process.

Personal and Unrepresented
People only use representatives or ‘go betweens’ in mediation where they cannot be in the same room together. email, video links, telephone can be used if necessary.

Non-speaking work friend companions are sometimes useful. NB some people need interpreters or care assistants.

Anything said during mediation is confidential to the parties. They may choose to reveal some or all of what has occurred during the mediation to colleagues but only if all parties agree. The only exceptions are where, for example, a potentially unlawful act has been committed or there is a serious risk to health and safety.

When Should Mediation not be Used or be Stopped?
Where clear evidence exists (including detailed written accusations) of serious Bullying, Harassment, Intimidation or Discrimination, the employer has a legal duty to protect employees by intervening, investigating and stopping any such behaviour. Mediation then can be used to repair relationships.

Reasons to Stop Mediation
  • One party wants to withdraw from the process
  • The behaviour of one or both parties becomes unacceptable
  • Emotions and /or distress make progress unreasonable.
  • The mediator realises that the issue is too serious for mediation and should be a formal Grievance.
Morally binding but not legally enforceable
Both parties should realise that mediation agreements are morally binding, you have given your word, but that subsequent ‘backing out’ of mediation agreements cannot be prevented.

Agreements and Failure to Reach Agreement
Mediation is not a mechanical process. People may agree but not change behaviour. People may not reach agreement but then change behaviour. Mediation should be easy, cheap and convenient enough to be repeatable whenever required, even with the same people with the same problem.

Feedback and Debriefing
It is useful for the mediator if the participants briefly give feedback about the process and the mediator’s role.

Mediators need space and time to recover from what can be an exhausting and emotionally demanding experience.

Further information on Mediation can be found on here.

10 July 2009

Map of worker co-operatives

Ed Russell (Co-operative web), one of our new worker co-operative council reps, has kindly given up a bit of his time to map worker co-op members.

This is purely a test and is not 100% accurate, as only the postcode and town of a co-op has been entered, but I thought it might be interesting to share. If people think this is a good idea, or have other ways of mapping the same information using open source solutions, please send me a comment.

01 July 2009

Worker Co-operative Forum

The Worker Co-operative Forum took place last Friday as part of Co-operatives 2009 Conference and was attended by 33 delegates. This is the first time I have organised a worker co-operative specific strand and I hope to build on this and our presence at Co-operatives 2010 next year.

We had workshops on: Marketing co-operatives, running effective meetings, HR issues, and implementing The Code of Governance. For the presentations and other materials, please visit our events page.

We also had 3 opens sessions on: Perceptions of Co-operatives UK , Business networking using the web, and social auditing and performance measuring.

If you attended and their is an online form to feedback on the day.

Other interesting bits at Co-operatives 2009.
We had worker co-operative representation throughout the weekend, of particular interest I attended workshops on: Employee participation, Where future co-operatives will come from, How much is your manage worth?

I should also not forget that The employee co-operative council has had its name change approved and will now be known as the worker co-operative council.

We will be uploading videos of some of the workshops when there ready in the next week or so. Please check here for articles already online.

Do you want worker co-operatives to be more visible at Co-operatives 2010, please post your comments or email me your thoughts about what we can do next year.

09 June 2009

ECC Election Results

Who cares about the Council and European Elections. The Employee Co-operative Council results are in. Britta Wermer (Unicorn) & Babs McGregor (Green City) have been re-elected. There are also two new faces, Ed Russell of Co-operative Web and Dan Harris from Oxford Cycle Workshop. The new members will join at the first meeting after Congress and will stand for two years as your represenatives at Co-operativesUK.

GORECKI, Nik 136
SCHWARZ, Paul 52

No we haven't had a massive jump in membership. Co-operativesUK represents 170 Worker and Employeee Owned Co-operatives. As a secondary co-operative votes are weighted by the economic participation of a member.

Thanks to all members that took part in the elections half of whom voted using our new online system.

If you have any priorities or issues you would like to pass onto the ECC for their consideration, please contact me.

05 June 2009

Member Visit: Infinity Foods

Founded in 1971, Infinity has grown from a student run Cafe to a £14m turnover business owned and controlled by its worker members. Infinity Food is spread over 3 business locations in Brighton. A shop & bakery selling wholefoods and ethical lifestyle products, a cafe and a large wholesale and distribution operation.

The 3 parts of the business are relatively autonomous with their own member meetings to decide on operational issues. Representatives from each part of the business are elected by members to sit on a co-operative wide management committee to look at legal and strategic issues. Infinity has 70+ members and operates a broadly equal pay, and profits distribution model within each business, similar to a lot of worker co-operatives. Infinity used to be a member of ICOM and has a strong common ownership and co-operative ethos.

Steven Kay and I visited to find out how they measure commercial, co-operative, environmental and social performance. We are looking to improve and standardise measures across worker co-operatives to facilitate benchmarking and sharing of good practice.

As an example Infinity source all their electricity from good energy and disperse some of their profits to member chosen good causes.

26 May 2009

Member Visit: Suma

Last week I visited Suma Wholefoods, to talk about measuring and reporting business performance within worker co-operatives. Suma is largest worker co-operatives in the UK. wholesale and distribution business with 120 employees and turnover of £24.7 million. They have grown year on year and operate a successful business in a very competitive industry.

How do they do it?
Suma has grown and therefore needed to evolve over they years but some of the core features setting it apart seem to be: democratic management structure, flexible multi-skilled workforce, equal pay and profit distribution, common ownership and a clear set of principles guiding their business.

Democratic Management Structure
Major strategy and policy decision are decided at general meetings of the full membership, roughly 6 a year. Members once a year elect representatives to sit on a management committee (MC), which is given authority to implement the plans and make recommendations to the general membership. Suma is organised into functional areas (Drivers, Warehouse, Buyers etc) and representatives from the these areas meet weekly to manage operational issues and work in partnership with the MC to organise Suma business operations .

Multi-skilled workforce
Suma members are actively encouraged to rotate jobs and skill up in different areas of the business. This helps to smooth over personnel demands in peak periods and also means decision making can be more informed with members knowing the impact of decision in different areas of the business. It does however have issues, with the need for more complicated staff scheduling systems and individual performance measuring.

Equal pay and profit distribution
All Suma members are paid the same net daily rate irrespective of role, full time member this amounts to £18,500 a year in hand plus bonuses. As a member owned business Suma does not have outside shareholders to satisfy and therefore distributes any surplus between members on an equal basis pro rate for the days they work for the co-op (in line with co-operative principles).

Commonly Owned Co-operative
Suma is common ownership business which means the business is safe from hostile take over or members selling the business for individual gain. Current members can use the assets built up by past members and hold them in trust for future members. This has secured Suma's independence and frees them to invest in the business for the long term.

Actively Managed business
25 years ago Suma members decided to run the business to deliver the wages they wanted. Suma's annual business planning is aggressively managed to ensure this and to deliver a Christmas bonus each year. Bob says " It took us a while to work out how to actively manage the business but our performance is pretty consistent these days and we can adapt to changing market conditions pretty well."