8/13/2019 Factors for Success of a Worker Cooperative

1/2

Factors for Success of a Worker Cooperative

Here are some things to consider when planning a worker cooperative or trying toimprove an existing worker cooperative. These success factors have been identified byworker cooperative development practitioners.

1. Clearly Defined Purpose and Focus

When a co-ops purpose is clear and understood by everyone involved, it is much easierto plan and achieve stated goals. Worker members must also believe in the clearlydefined purpose and focus.

2. A Commitment to Worker-Ownership

Right from the start, an understanding and acceptance of the principles of worker-ownership is key. These principles include a) worker must be involved in decision-

making; b) workers should be treated like owners and not worker; c) repeated andcareful efforts must be made to make sure workers know what their ownership means.

3. Viable Business Idea and Thorough Business Plan

Business idea should be carefully considered, researched and analyzed. The businessplan is the road map for co-op. It provides details of where co-op is going and how it !sgoing to get there. It should be accurate and comprehensive.

4. Suitable Ownership and Equity Structures

This means two things: systems that allow for workers to actively participate in decisionmaking and receive a meaningful share of the profits. These two things could providepowerful incentives to succeed.

5. Access to adequate financing

Co-op members will be an important source of initial financing in the form ofmembership equity. Rarely is membership equity enough to finance the start andcontinued operations of the co-op. Other forms of financing such as loans or possiblypreferred equity may be needed. The structure and amounts of financing should bedetermined during the business planning process.

6. Clearly Defined Roles and Procedures for Decision Making

This means different things if a co-op operates as a collective and doesn !t havemanagers versus a co-op that uses a management structure. In a collective settingclear procedures for decision making are extremely important. Clearly defining whatdecisions can be made by individual worker, which can be made by specified work

8/13/2019 Factors for Success of a Worker Cooperative

2/2

groups, and what kind of decisions should be addressed at meetings that include allworker-members.

7. Sound Business Practices

Use proven methods. Sound business practices include attention to finances, productquality, recognition of the importance of customers and responsive to their concerns.Develop quality-control standards to maintain consistency for products and services.Use established systems of record keeping, accounting procedures, and financialcontrols to prevent financial problems down the road.

8. Ongoing Education and Training for worker-members, Directors, andManagement

Education and training are critical to the long-term stability and strength of a worker co-op and to its success as a business. Having an education/training plan as part of

business plan could be helpful. Education/training can cover issues related toleadership development, cooperative decision-making, interpretation of financialstatements and even second languages.

9. Entrepreneurial Skills and Knowledge

Worker cooperatives are an example of labor entrepreneurship. A group of workersstarting a business and willing to assume responsibilities and accountability - together.Many entrepreneurial skills/knowledge can be acquired whether through workexperience or education. Besides being willing to assume responsibilities andaccountability, entrepreneurship includes the ability to sell product/service, ability to

analyze potential success of new ideas, ability to adjust to challenges and opportunities,and courage to take a chance.

10. Business Advisors and Consultants Knowledgeable about WorkerCooperatives

Advisors and consultants can save a co-op time and money by avoiding potentialpitfalls. Worker co-ops often avoid advisors/consultants out of fear that such serviceswould cost too much. Ask up front - is initial consultation free and ask for an estimate ofcosts? Check references and get referrals from other worker cooperatives andbusinesses.

Sources: Steps to Starting A Worker Co-op, Gary Hansen, E Kim Coontz, AudreyMalan (1997)

Putting Democracy to Work, Frank T. Adams and Gary Hansen (1987)