Think Outside the Boss: The Benefits of Worker-Owned Cooperatives

For decades, Mexico’s Cruz Azul cement company operated as a traditional capitalist organization—and suffered from constant strife as dissatisfied workers battled its owners. In 1929, with the global economy tanking, Cruz Azul laid off most of its employees and sold the shell of the business to another company. Eventually, the state took over the failing business and reorganized it, giving workers the chance to purchase it and form a worker-owned cooperative. Today, the company is still owned by its employees—and it is thriving as a result. 

Cruz Azul it is just one example in a growing global cooperative movement. Worker-owned cooperatives are so successful in some places that they compete directly with large multinational corporations. Spain’s Mondragon corporation has roughly 80,000 worker-members and does about $19 billion a year in business. Included in the Mondragon cooperative complex are factories, superstores, a university, and one of Spain’s largest banks.

What sets cooperatives apart, even at this large scale, is that their democratic design allows them to readily prioritize goals like worker satisfaction, community, and sustainability rather than just focusing on profits. At a cooperative, the workers are the owners. Thus, when business is slow, instead of laying off workers or cutting corners on quality, the workers can vote to take a pay cut or scale back profit expectations. The result is a model that leaves room for—and nourishes—values like inclusivity and environmental stewardship.

Last week, Green For All hosted a webinar featuring three co-op experts who shared information with entrepreneurs interested in forming worker-owned businesses. Sushil Jacob and Daniel Mandel of the Green-Collar Communities Clinic at the East Bay Community Law Center discussed the advantages of co-ops and shared guidance on how to create and run them, while David Smathers Moore, founder of TeamWorks Cooperatives, offered his insights from years of running a worker-owned landscaping and house cleaning operation.

Jacob pointed out that in the face of increasing national and global economic troubles, cooperatives offer a solution and a new way of doing business.

“We’re at a moment right now where we’re faced with deepening environmental crisis, poverty, and economic inequality,” he said. “There’s no magic bullet to get our economy out of recession or stop climate change. We need to think about new operating systems that honor the planet and lift up people as well.”

A 2011 UN study showed that worker-owned enterprises fared better during the economic downturn than their traditional counterparts. They were more resilient, in part, because they didn’t immediately lay off workers. That’s because co-ops are designed to allow workers to make decisions about running the business, instead of letting capital make the decisions. Finance is viewed as a tool for creating a successful business, rather than the sole driver.

During the presentation, Mandel discussed some of the challenges and advantages of creating a worker-owned business.  He emphasized the importance of choosing members wisely, noting that those who are entrepreneurial, comfortable with risk, and personable tend to thrive.

Smathers Moore shared his own experience in forming the worker-owned cooperative TeamWorks, which he started in 2004. He emphasized that in running a successful worker-owned enterprise, you need to do everything a traditional business does—plus manage the added challenges of a cooperative structure. But the outcome can be worth the extra work.

One of the things TeamWorks does, he explained, is invest heavily in education and training for its workers. And it has paid off. One worker, Bianca, was a member of the housecleaning team, and an immigrant from Mexico. Though she only had a 6th grade education when she joined the company in 2006, it soon became apparent that she was incredibly bright and resourceful. She’d solve difficult scheduling problems in her head, and showed an interest in learning how to work with computers. Eventually, she moved into the role of assistant manager. Now others in the company are following in her footsteps—working in housecleaning for much of the week, but spending one or two days performing duties like accounting. The result is that TeamWorks has created a continuum that allows its workers to move from manual labor into management—opening doors and economic opportunity they wouldn’t otherwise have.

That’s something that cooperatives can nurture. In contrast, traditional capitalist organizations tend to form rifts between labor and management that can be difficult to cross. But for worker-owned enterprises like TeamWorks, the central value is investment in each other—and that creates a space that allows people like Bianca to thrive.

If you’re interested in learning more about worker-owned cooperatives—or if you’d like to start your own—you can find more information at: http://usworker.coop/education

You can also join the Green Collar Communities Clinic for its workshop, “Think Outside the Boss,” on November 17 in Oakland, California.  Register here: http://thinkoutsidetheboss11-17.eventbrite.com/# 

To download the slides from the presentation or to listen to the audio file, click here.

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