We’re all in this together: a new future for co-operatives?

In less than 24 hours, we may be getting an interesting lesson in leadership and the forging of working relationships. Alternatively, we might get a lesson in leading while visibly having only a minority of potential available support, or a masterful (well, it will be a man) display of tantrum throwing at the electorate’s lack of gratitude for their potential services. (Today’s Times has published a recipe for a coalition cocktail for those of you for whom this is all too much to contemplate: you may wish to stock up on Galliano on your way home.) Whatever the result, the electoral ground has shifted in this campaign as rarely before: the level of public discussion about electoral reform may have interesting implications for the governing style of any ‘winner’. But I also noticed another very interesting aspect of the campaign that may see interesting developments in organisational development and leadership almost regardless of the outcome.

All three parties are – and this may be counter-intuitive for some readers – in favour of increasing the number of workers’ co-operatives. Chances are that we will, once we’ve recovered from tonight’s events, find ourselves facing hitherto unprecedented opportunities to be empowered and engaged. That potential rather flippant sentence goes rather further than the potential idea of ‘The Big Society’ that has been raised during the election campaign, although that certainly raises very interesting questions around engagement, empowerment, responsibility and accountability. Earlier today, we responded to a comment received on a posting that we had made at HRZone on empowerment:

On one hand, there is an intention to urge people to become engaged in aspects of life that directly affect them and to have a greater say in it. On the other, there is concern about the practicalities of implementation and about how the self-emprising may – through their stronger volition – disenfranchise others.”

Turning a public sector service department into a co-operative, as David Cameron would hope to encourage many of those working in them to do, is similarly more than just a philosophically-motivated concept. Whether we agree with the philosophical underpinning (big society vs small state) or not, the small matter of implementation doesn’t go away. A co-operative, based on membership, is a very different animal to a public sector organisation (based on employment) – or a private sector one. Having worked in all three in my time, it’s also a very different working culture and environment.

Ed Mayo, secretary general of the representative body, Co-operatives UK, was interviewed recently for a Guardian article, Why coops are cool again:

[Mayo] recognises that change is needed in the [public] sector because, he says, successive governments have failed to “take people with them” when implementing changes.

He says: “If they can now find ways to combine a sense of service but also to create space for staff to own their own solutions then that has to be a good thing. If it’s done as an excuse for cost cutting, however, it won’t work.”

There is, obviously, quite a big ‘rub’ in that final sentence, and one that shouldn’t be ignored, but former employees who opt to establish a co-operative will have other significant challenges to face. (Incidentally, we hope fervently that no future government will seek to impose co-operative status on groups or functions: whatever the debatable financial merits, imposed empowerment is a non-sequitor – and a euphemism for abnegation.) As membership organisations, the staff of co-operatives jointly own and run their organisation – more like directors or partners in a ‘traditional’ business. Those who work for co-operatives are more than just employees, they are – both literally and legally – part of the organisation. As Mayo points out in the Guardian article:

If there is one thing that co-operatives learn, it is that people’s behaviour matters,” he says. “When staff relations are a matter of contract, then you can resort to employment law when things go wrong. When staff relations are about membership, then you have to ensure that the spirit and not just the letter of co-operative behaviour is affirmed.”

While co-operatives are businesses – as the Co-operatives Fortnight website (19 June – 3 July 2010) points out – you might wish to compare the following opening sentences from the International Co-operative Alliance’s Statement on The Co-operative Identity with the vision or mission statement of your current organisation to see how differently co-operatives are organised and operate:

Definition
A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Values
Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Turning your local Social Services Department into a co-operative is more than a matter of a change of legal control or re-issuing employment contracts: it’s a wholesale (no pun intended) cultural and organisational change. As Kellie Bubble of the Unicorn Grocery in Manchester pointed out in the Guardian article:

You get to influence all the decision making from the products we sell to how people are treated. […] But choosing to be part of a co-operative is not choosing an easy life. A co-operative doesn’t want passengers; it needs committed, enthusiastic, hard-working members willing to contribute to the many aspects of running a business.”

Co-operatives need managers with not just technical skills in their operational area, but also entrepreneurial skills (to raise capital – hard for co-operatives to do traditionally, manage budgets, make investment decisions) and a strong ethical value base to maintain their enterprise as a viable concern within the co-operative model.

For a co-operative to function effectively, engagement and buy in to values from all staff is critically important. Everyone will, by definition, be involved in decision-making, which makes communication critically important. It also places a great dividend on working relationships: command and control models are not just inappropriate in this context – they run contrary to the entire organisational model. And if everyone has a say in the running of the business, it’s obviously vitally important that the business makes sure everyone has a clear understanding of the issues where decisions will need to be made.

Consider also the International Co-operative Alliance’s 5^th Principle:

5th Principle: Education, Training and Information
Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.

In transforming an existing organisation into a co-operative there are two large learning and development tasks to face: firstly, to ensure that its members will have the understanding of co-operatives and the skills required to ensure the co-operative can not just function, but endure and thrive, and secondly, to live up to that fifth principle and thereby serve the co-operatives ongoing development. And this will, of course, be done, without automatic recourse to the L&D and HR functions of any previous parent organisation. Even where this recourse is available, the newly born co-operative will need to buy in this expertise (in line with its new principles), which may not – as it operates within the mainstream private or public sector – be fully understanding of its clients’ real requirements.

Co-operatives are neither easy to establish nor necessarily smooth to run, despite their undoubted strengths, as highlighted by an article – Support for Co-operation is vital for next Government – Ed Mayo published at the Co-operatives UK website at the start of the election campaign:

The financial and ensuing economic crisis has had negative impacts on many enterprises. However, co-operatives across the globe are showing resilience to the crisis. Financial co-operatives, in particular, remain financially sound and consumer co-operatives are reporting increased turnover. Current debate in the UK about employee owned co-operatives is welcome and there is growth in such co-operatives as people choose the co-operative form in response to new economic realities.’

We’ve recently debated the role of ethics and sustainability in business education here on the blog – their influence on the success of existing co-operatives, and public trust in them, is a valid and interesting point. (Perhaps Business Schools should add ‘the co-operative model’ to the MBA curriculum as well?) Consider the following extract in an interview with the Manchester Evening News by Co-operative Group chief executive Peter Marks:

The Co-operative Bank won 150,000 new current account customers in the 51 weeks to January 2, boosting its market share to four per cent during what Mr Marks described as a ‘flight to trust’ with consumers shunning listed banks in the wake of the crisis which gripped world financial markets.

He added that there had been strong growth in customer deposits as consumers continued to be attracted to the Co-op’s mutual and ethical position, while its green credentials and commitment to tackling climate change and global poverty had also won admiration.

“It is no coincidence that our business model is in vogue with the mainstream political parties who see consumer and employee-owned co-operatives as a potential solution to some of the issues faced by the public sector,” added Mr Marks.

“The Co-operative business model is increasingly being seen by consumers, commentators and politicans alike as a long-term and sustainable solution to the challenges facing the UK financial services industry.”

Let us hope that our future political leaders are not simply flirting with an idea that may restore lost trust or – viewed superficially – cut costs, important as both challenges are. If our public services are increasingly to be delivered through mutual organisations, we also need to hope that this significant change is thought through so that fledgling co-operative enterprises have the support, staff development and training that they will need.