How to Turn Your Business into a Worker Cooperative: 7 Expert Tips

When an individual wants to include social cohesiveness and sustainability in business in the long run, then he or she can incorporate worker cooperative approach. Now a question can arise, “exactly what is it?”.We can refer to worker cooperative as a value-driven business concept, wherein the benefit of the worker along with the community is perceived as the prime purpose of corporate operations. For instance, here we can share the story of Linda and Gregory Coles’ A Child’s Place (daycare business) in Queens. After running the business successfully for 34 years, they were going to retire and sell their business. However, they changed their planning to sell the business as per their broker’s idea and offer the entire company to the employees. In this context, the employees of the daycare business of Linda and Gregory Coles bought it from them and developed a successful worker cooperative. They both agreed that it was the most appropriate thing they can do for their business. Precisely, it highlights a community development purview by adopting a business retention tool through which it can generate a better sustainable business model in terms of effectiveness and efficiency towards the community.

The development of worker cooperative can be considered to be a significant economic model, which is capable of keeping a hold on the economic equity by developing employee embedded business control in the communities. It is a successful model for new business ventures, as the leaders of such business cooperatives know the ways to enhance both employee retention and their wages. The business opportunities for better augmentation and virtual development are a necessity as well for developing a perfect venture or transforming the existing process into the worker cooperative format. Thus, we still witness that worker cooperative business model is yet not gaining any popularity and is identified as an underrepresented business model in the corporations. For developing awareness, here we focus on the worker cooperative as a comprehensive idea for those business people, who are willing to turn their businesses into a worker cooperative.

Motivation towards Worker Cooperatives

Contextually, the report presented by the Democracy at Work Institute (DAWI), non-profit organizations supported the worker cooperatives, as it can increase the productivity by 4 to 5 times than others. Additionally, this also helps in maintaining stability and growth potential. In comparison with the traditional business format, worker cooperatives have a lower level of employee turnover and create an effective organizational environment. This ultimately improves the business profitability as well as the wage structure of the employees. This scenario is better as compared to the other formats of business cooperatives, as people, who worked for the company once are now owners. Furthermore, companies can use data management platforms to provide a better customer experience. If we consider Maslow’s hierarchy of needs, we found that both self-esteem and recognition are the key requirements for an individual’s survival. This is due to the fact that the feeling of achievement can be considered to be sufficient for an individual. It can make an individual have a greater sense of responsibility. For willing business people, it can be perceived as good news, as the present legislative format and policies are supportive towards the worker cooperatives. At present, the policymakers understand the effectiveness of the worker cooperatives along with its needs with respect to recent economic conditions to make it stable and capable to sustain in the long run. The small business initiatives have a potential anchor in their communities, while worker cooperatives can develop a stronger base for enhancing business growth. The operational processes of worker cooperatives allow the community to enjoy the benefits in terms of being more transparent along with depicting a mutual approach.

How to Turn Your Business into a Worker Cooperative?

According to Michelle Camou, who is a former professor of labor history and movements at the College of Wooster in Ohio, worker cooperation is an emerging topic. This concept has evolved after the financial crisis of 2008-09, whose importance grew in later years. Based on her research, we have found three distinctive models that supported worker cooperatives. These are considered to be the three tips through which one can turn his or her business into a worker cooperative format.

1. The Anchor Approach – This approach is effective, especially for those cities, wherein the rate of poverty is relatively high. In such areas, it is better to implement worker cooperative in different institutions including universities along with hospitals. The funding of such operations is generally obtained through grants and external loans. Additionally, the partnership with the city government can also help in securing the funding process. A successful instance of such model is the Evergreen Cooperatives in Cleveland. The enterprise comprises an eco-friendly laundry, a community garden, and a solar power company as well as other business corporations. The local residents are the employees of the company and the services are provided to the nearby institutions such as the Cleveland Clinic and Case Western Reserve University. Undoubtedly, it is a holistic approach towards the society and the community. For initiating such specific approach of business, all individuals need to have a creative and unique idea to achieve organizational success.
2. The Preference Approach –Through this worker cooperative priority approach, an individual can become a vendor as well as a city contractor. Additionally, readers can obtain empirical evidence of the successful initiation of this approach from the San Francisco Bay area. This specific area has a significant portrayal of implementing cooperative models in the economic domain from a long period of time. Oakland and Berkeley have already introduced the law through which the local worker cooperatives can get feasible discounts for continuing direct working in the city and offering clear preference to the other cooperative models.
3. The Ecosystem Approach – This approach is better to use in wealthy cities such as Austin and New York. According to this model, the city government can develop a funnel shape approach for collecting and distributing capital through the vast network of lenders, developers, and incubators. It is effective for starting or converting the business into worker cooperatives.

According to Mark Stewart, who is an Ohio Cooperative attorney, there are four changes that are to be followed for facilitating the transition towards worker cooperatives. These are as follows:

1. For conducting such kind of business transition, an individual must focus on the narrow concept of the marketing as well as supply chain rather than concentrating on the business application of wider arrays.
2. The incorporation of additional language can further allow getting associated with the contributed resources and helping worker cooperatives or employee leasing companies.
3. To offer and set better provisions for incorporation along with the transition of the existing business balance of interest in different levels of operations. For instance, cooperation between workers and customer class is also necessary for enhancing growth.
4. In the period of transition from existing business to worker cooperatives, “sweat equity” is considered to be an important provision, which helps in generating capital for the company without incurring any debts. This significant development is effective for the company and outside groups including lenders, who believe that the lack of equity development in the existing business can be the possible reason for breaking the potential opportunity of growth.

Summative Understanding

The worker cooperatives’ results are attractive, however, it needs concentration, tenacity, and willpower. In relation to the transition of worker cooperatives, Melissa Hoover, the founding executive director of DAWI affirms that “they’re bread and butter types–necessary and profitable, but not sexy.” Considering this statement and the present requirement of development of the worker cooperatives, we understand that it is a need of the global corporate world to sustain the prevailing possibilities in the long run. Additionally, the communities and policymakers also have the potential power in their hands. Thus, they can lead the corporate competitiveness and sustainability towards a higher degree of opportunity. However, they need to utilize their potential comprehensively to ensure that the actual motto remains viable.

neOadviser