My experience of talking to finance people in worker co-ops is that a fair bit of the orthodox methods of internal financial management and reporting are not right for worker co-ops where the priority is communicating with internal members, many of whom don’t understand these normal methods.
Much financial management is designed to report financial performance and results to financially able senior managers and external funders and investors who can also call on expertise (or at least have a vested personal interest in learning how to read a balance sheet and P&L).
There are accountants who say that normal financial management is actually a tool for control by higher management with vested interests in keeping control, rather than freeing up entrepreneurial behaviour; see http://www.slideshare.net/LESSConf/11-12-what-is-bb BB seems more suitable for collectives to me than the normal methods.
We may have to abide by certain conventions in our external reporting but internally we can do whatever we think is appropriate. Even externally, conventional reporting underplays the financial and non-financial output benefits of worker co-ops. (Return On Capital Employed (ROCE) does not take into account profits distributed in premium wages and therefore under reports the financial performance of our better managed worker co-ops. Some of which are outperforming Apple in terms of the total financial outputs they are achieving.)
The American employee ownership literature is full of articles about how to engender an ‘ownership culture’ and much of that is ‘How do you report financial results and forward plans in a way that ordinary employee owners can understand?’. So that is why this topic is of such interest to me. Money is the only undisputed common language inside our co-ops (much as I dislike that) but only some members can speak it with all the consequences that flow from that.
The worst of which is that the finance people do their jobs and aren’t understood and other members blunder around in their financial ignorance, not aligned behind one understanding, not able to intelligently argue a common case. Result – too many co-ops which are just surviving against the odds with inadequate business and financial performance.
So, if we had forward planning or coordination of finances which all member could understand (the reason for) and could commit to and reporting of financial performance ditto, then we can have more collective understanding of the business and what members have to do to make it a success ( or just to survive).
It would help enormously with collective performance management ( because members would have their fingers on the pulse) and emergent business development ( where groups of members identify and develop good new business development without a CEO master plan) and contingency planning ( members would spot risks and react quicker if they had easy to understand financial metrics).
There’s a project here for a radical accountant. Volunteers?
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