The Blog

Beyond Employee Ownership?

Imagine working somewhere where you not only had a say over your own work, but could direct the organisation as a whole? A business where you had not just employee ownership, but employee control, a real stake?

Imagine working somewhere where you not only had a say over your own work, but could direct the organisation as a whole? A business where you had not just employee ownership, but employee control, a real stake?

For the thousands of people with jobs in worker co-operatives, this is the case. Worker co-operatives are businesses that are owned and run by the staff. Rather than a model of employee ownership which is still common in which shares are owned philanthropically on behalf of the staff (or where staff have only a minority stake), in a worker co-operative, they have a say in its direction and decide how any profits are used.

Take Suma, a worker owned wholefood distributor in Halifax, West Yorkshire. It is owned by its 150 employees, has weathered difficult economic times through its 40-year history, operates a flat management structure and its warehouse workers and forklift drivers are paid nearly 50% more than the market average. Why? Because, as a worker owned business, the people who work there are invested in it, in a way that they wouldn't be in a conventional investor or privately owned firm.

But Suma isn't unusual. The idea that employees can run their own business together might sound unrealistic to some, but new data from the University of Leeds University Business School academic, Professor Virginie Pérotin, says otherwise.

Published in a new report by us here at Co-operatives UK, the network for Britain's thousands of co-operatives, she has looked at international data on worker owned and run businesses in Europe, the US and Latin America and compared them with conventional businesses.

Professor Pérotin identifies a whole series of benefits that worker co-operatives bring for the people who work in them, with four standing out in particular.

1. Worker co-operatives give staff control. Because worker co-operatives are owned and run by them, their employees have far more say in the business, from day-to-day concerns through to major strategic issues. "A job in a worker co-operative probably is particularly valuable, since it is a job in which the employee has a say in decisions that affect employment risks" says the report.

2. Worker co-operatives boost productivity. Because the employees are the owners with a stake in the future of the business, worker co-operatives are more productive than conventional businesses, with staff working harder and the organisation harnessing their skills more effectively. The largest study finds that "in several industries, conventional firms would produce more with their current levels of employment and capital if they adopted the employee-owned firms' way of organising production" the report highlights.

3. Worker co-operatives provide greater job security. Because the employees themselves are in control, when there is a downturn in the economy or the market, worker co-operatives have consistently taken the decision to drop wages rather than lose jobs. Worker co-operatives are no silver bullet, and they face similar problems to other business when there are difficult market conditions. But when business picks up, they are ready to respond and can make up for lost pay because the employees get a share of profit.

4. Worker co-operatives are successful businesses. Because worker ownership is a way of organising a business that creates involvement, relative job security and higher productivity, the approach works across industries, from traditional manufacturing to the creative and high-tech industries. "There are thousands of worker-run businesses in Europe, employing several hundred thousand people in a broad range of industries" says Professor Pérotin.

What this research confirms is that starting a worker co-operative offers an appealing option that gives the people working there ownership, involvement and a degree of job security in what are often high performing and productive businesses. Employee ownership and control, in a successful enterprise... who could ask for more than that?

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