What is an employee owned co-operative?

If you work in a public service, you're probably asking the question: What is an employee owned co-operative? If you're an owner/member in a worker co-operative you might...

If you work in a public service, you’re probably asking the question: What is an employee owned co-operative? If you’re an owner/member in a worker co-operative you might well be asking the same thing, but for a different reason; I’ll get on to that later.

But first the answer:


Unsurprisingly its kinda in the title: An employee owned co-operative is an organisation owned & controlled by the people who work in it, that either consciously or unconsciously follows co-operative principles .

Ok what does that mean?

The first bit means: for it to be genuinely employee owned the employees should at a minimum control 51% of the voting shares or indirectly own the business via an employee owned trust (like John Lewis).  This ownership also has to be spread throughout the workforce, not just by the managers and come with a real sense of control over the business. Giving 10% of shares to employees is not an employee owned business.

You could just stop there and be an employee owned business, which is fine (damn site better than being investor owned), but I believe the bit that adds the real value (and makes it more palatable for me regarding public service delivery) is the co-operative bit.

You can read the internationally agreed Co-operative Principles here. But essentially they say that a co-operative is a business where:

  1. You can’t be forced to be a member, and if you fit the criteria (length of service, commitment, etc) you can’t be turned down.
  2. If your a member, you get a say in the running of the business and that say is equal to others not based on how much money they have invested.  (This doesn’t preclude managers by any means, but does change the dynamic).
  3. You control the capital; you should also benefit from the performance of the business.
  4. Significant when it come to public services, as a business you should be independent, from the state or anyone else’s influence.
  5. Members should be fully trained and supported so they can play a full role in running the business.
  6. Where possible you should co-operate with other co-operatives, to develop the whole co-operative economy.
  7. You should also have a wider concern for the community around you.

So if you’re a public sector worker whose stumbled here I hope that helps. If you want to make an enquiry about setting up public services  mutual or employee owned co-operative click here. If you are interested in my own views on what model could help us create a big society click here.

My more regular readers might be asking, why I’ve essentially restated what a worker co-operative is. Why? because when you go on wikipedia, co-operative websites, or talk to people in the co-operative movement no-one really uses the term “employee owned co-operative”.

In the US, Canada and UK we use the term worker co-operative, or if were really old-school “producer co-operative”. As with most things in the English language the why has been lost in history.
The more pedantic people like me might argue that “worker” is technically a broader legal term than employee. But for most people the two phrases are interchangeable. (or are they? If you disagree please leave a comment)

I’ve heard grumbles that the use of this new term by Government and others is to distance these new entities from co-operatives of the past; or because “worker” sounds a bit too socialist for people’s liking.

There are good examples of public service co-operatives out there.  But I do understand the need to look if exhisting models will fit and what these public service mutuals are going to really look like. Co-operatives UK provides a point for accessing information and signposting for people interested in starting a co-operative delivering public services. At the moment we are working with the Government particularly in relation to the Post Office.

And that’s the real point of all this, what is being proposed by the coalition Government is going to break new ground, if public sector workers really are going to opt for some sort of mutual / employee owned co-operative model then they probably will be different from the worker co-operatives we have at the moment.

But if they share enough of the same characteristics, they are going to be dealing with the same issues worker co-operatives face.  How can we pass on our learning, and what can we learn? What are the opportunities (or threats) from some potentially massive new worker co-operatives that could easily dwarf the existing worker co-operative economy in the UK.

I’ll end by saying; you can’t bluff it; if you say something is a co-operative it has live up to it. If its called employee owned, it has to be genuinely owned and controlled by those employees.

This is something I’d really like your comments on both from worker co-operatives and those in the public sector trying to understand how this might work for them.

Wider Reading:
Demos – John Lewis vs easyCouncil
Respublica – Turning public servants into service partners

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