LESSONS IN ESTABLISHING AND
MAINTAINING A STRONG OWNERSHIP
CULTURE IN COOPERATIVES AND ESOPS
George Cheney
Adjunct Professor, University of Utah, University of Texas at Austin, and
University of Waikato
Associate Investigator, Ohio Employee Ownership Center and
the Rocky Mountain Employee Ownership Center
With Ashley Hernandez, independent consultant, OEOC, and
the Lanki Institute, Mondragon University, the Basque Country, Spain
Acknowledgements: A Kelso Fellowship from Rutgers University and the Foundation for Enterprise Development, for
2012-13 supported parts of this research. Thanks also to Norma Jones, Kent State University, for her assistance with
collecting images for this presentation.
November 2014
BACKGROUND ON THIS PRESENTATION:
WHAT HAVE WE LEARNED
 Studies of leadership: from mid-19th century onward
 Studies of motivation: since about 1890
 Studies of communication in organizations: for over 80 years
 Studies of participation: with a history of 70 years
 The bottom line: For the most part, we do know what works best
and enables people to be happy at work. This is not to downplay
opportunities for innovations in the social side of enterprise but to
help make common sense, well, more common.
OBJECTIVES OF THIS PRESENTATION:
CONSIDERING LARGER DISCUSSIONS
 Focusing on culture: “The social side of enterprise”
 Pulling together some ideas and lessons from a variety of experiences
and types of research
 Highlighting some examples
 Posing further questions and looking towards development of an
employee ownership manual
 Moving towards more comprehensive and dynamic knowledge
sharing: For employee ownership, for cooperatives, for economic
alternatives, and for communities
Here are a few terms and definitions . . .
 Cooperatives: including Consumer, Producer, Marketing, Financial,
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Housing, Worker, Second-Tier, Solidarity, and Multi-stakeholder
Employee Stock Ownership Plans (ESOPs): per legislation and tax law
and displaying a range of practices as well as levels of employee involvement
Worker Cooperatives: involving shared equity and governance
Social Economy: with an emphasis on social roles and functions of the
market
Solidarity Economy: with a emphasis on transformative societal change
Globalization from Below: with an emphasis on responses to the
dominant model of globalization
Alternative Organizations: with reference to positioning at least
somewhat outside the mainstream
And, here are a few notes and statistics . . .
 First the United Nations and then many other organizations declared 2012 the
International Year of Co-operatives.
 In 2012, there were 1.4 million cooperatives of various types worldwide and
more than 70,000 in the U.S. When we add related organizations, often with
similar structures and practices although under other rubrics, the numbers
becomes much larger.
 Modern co-ops trace their structures and processes to the Rochdale Principles
of 1844 in England; however, the first co-ops appeared in the U.S. in 1750.
 Co-ops have proven more resilient in both financial and organizational terms
during the Great Recession that mainstream capitalist firms, according to Tom
Webb, a Canadian management scholar and as supported by economic data.
 Towns, cities and regions with a high concentration of co-ops have been
demonstrated to have longer life expectancy and to perform better on
indicators of well-being than areas without great concentrations of cooperative
businesses, according to David Erdal.
Let’s review key developments in the social side of
enterprise since the beginning of
the Great Recession in 2007-08
 Conferences: especially in 2012, for example, in Quebec
 Cooperative start-ups: e.g., by Ohio Employee Ownership Center
 Cooperative conversions: for example, empresas recuperadas in
Argentina (see esp. Atzeni & Vieta)
 Union-worker cooperative ventures: for example, in Pittsburgh
and Cincinnati (see Witherell, Cooper & Peck, 2012)
 The incorporation of principles and practices of environmental
sustainability (see Azkarraga & colleagues; Imagine 2012)
 The rise of regional and sustainable strategies in many parts of
the world (examples from North America, Europe, and Latin America)
RESOURCES FOR THE REMAINDER OF THIS
PRESENTATION
 Collections of insights in academic and professional resources: Looking
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towards developing manual for employee ownership (as a major collaborative
effort)
Best Practices Study: 2012-2015 (Cheney and Hernandez)
The Mondragon Experience: 1992-present (Cheney and collaborators at
Mondragon University and the University of the Basque Country)
Two-year study of the cooperative economy in Austin, Texas, co-sponsored
by Cooperation Texas
Recent U.S. conferences and discussions: Emphasizing the need to pool our
questions, experiences and recommendations
1. VALUES/PRINCIPLES:
GUIDES AND TOUCHSTONES
 Meaningful and practical: Beyond slogans
 Collectively endorsed: Including for subsequent generations of
employees
 Adapted for the times and a changing workforce
 Lived and practiced from top to bottom and bottom to top
 Example: Union Cab, Madison,Wisconsin
2. STRUCTURE AND GOVERNANCE:
EFFECTIVE AND DYNAMIC
 Determining number of necessary organizational levels
 Identifying and constructing essential organs/councils/committees
 Clarifying decision-making structure: “Locating” decisions in the best
spots in the organization
 Pursuing inspiring and realistic meanings and practices of democracy
and consensus
 Making needed adaptations over time
 Examples: New Belgium Brewing, Fort Collins, Colorado;
Rainbow Grocery, San Francisco, California
3. INSPIRED AND SHARED LEADERSHIP
 Entrepreneurial: Fostering a culture of initiative
 Facilitative/Enabling: Beginning with the assumption that something
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can be tried
Shared/Collective: Looking for opportunities to empower groups
Transformational/Encouraging: Modeling as well as inviting others to
lead with their best selves
Overcoming the charisma problem?
Example: DPR Construction, San Diego
4. TRANSPARENCY TO THE EXTENT POSSIBLE,
DESIRABLE AND PRACTICAL
 Demonstrated as well as asserted
 Honest and sensible rather than total
 With mechanisms for feedback
 With emphasis on literacy
 Example: Namaste Solar, Boulder, Colorado
5. PARTICIPATION AT ALL LEVELS
 Both direct and representative (according to size)
 Formal and informal
 Horizontal and diagonal as well as vertical (for example, with a
“matrix”-style organization)
 An integrated team approach
 Example: Isthmus Engineering, Madison,Wisconsin
6. COMMUNICATION PATTERNS AND
STRATEGIES
 Linking internal to external communications
 Encouraging upward flow of information and opinion, including bad
news
 Making effective uses of multiple media/channels
 Fostering trust in all dealings and relationships
 Example: Cooperative Home Care Associates, Bronx, NewYork
7. CONFLICT RESOLUTION/MANAGEMENT
AS INTERWOVEN IN THE CULTURE
 Multiple avenues
 InformalFormal
 Mediation as an essential part of the leadership skill set
 Peer involvement
 Clarity on escalation: Why, when and with whom?
 Example: Arizmendi Bakeries, Bay Area, California
8. TRAINING, TRAINING,TRAINING
 Multi-dimensional (technical, financial, participatory, leadership)
 Roles for shared and targeted forms
 Ongoing but adaptable
 With avenues of input for goals, techniques, content, and “ownership”
of training itself
 Example: Mondragon Cooperative Corporation, Basque Country, Spain
Opportunities for Practice . . .
Education and Training:
Best Practices Study (Cheney & Hernandez, in progress)
The most common types of training mentioned are:
 Financial literacy
 Democratic decision making
 Industry and job-specific (technical) training
 Communication, facilitation and conflict resolution
 What it means to be a worker owner
 Effective conduct of meetings
 Cooperative history and principles
Recommendations for training include:
 It is important to design training processes upon the cooperative’s values and
governance structure.
 Training content should be as accessible and relevant as possible for the membership.
 Training should be ongoing and include active feedback loops.
9. STAKEHOLDER AWARENESS AND
ENGAGEMENT
 Cultivating key relationships with suppliers and clients
 Embedding the firm in the community
 Setting up short- and long-term partnerships
 Making decisions with levels/spheres of effects in mind
 Looking towards constant improvement in the execution of the social
mission
 Example: Equal Exchange,West Bridgewater, Massachusetts
Employee Ownership for All (or Most) Political
Sensibilities: Some themes for building support
 Entrepreneurial spirit
 Small-medium business focus (in most instances)
 Opportunities for family-owned businesses to continue in a form that honors
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the owners’ desires.
Stable employment for households
Strong links to neighborhoods
Individual pension approximation through patronage accounts in worker co-ops
Creative, cross-sector collaboration that is neither corporate-centralized nor
government-managed
It’s important to note that a number of these points apply also to other
types of cooperative ventures and enterprises.
--George Cheney and Jay Simecek, for the Ohio Employee Ownership Center, December 2013
10. NETWORKING:
MULTIPLE CIRCLES
 With similarly structured firms
 Within industry
 With community
 In the wider context of economic solidarity: Including across sectors
 Across region
 Example: Austin Cooperative Business Association
11. DISTINCTIVE HR POLICIES FOR
EMPLOYEE OWNERSHIP:
NEED CONCERTED ATTENTION,
TESTING AND DEVELOPMENT
 Selection of employees with core values and practices in mind
 Flextime and flexible benefits
 Bringing in necessary outside expertise (sometimes with
representation on boards)
 Stitching things together, especially given different spheres of work
and in coping with growth
 Examples: Everyone is calling for the sharing of model HR and employee-owner
manuals and associated best practices.
12. REFLECTION, SELF-CORRECTION AND
RESILIENCE
 Multiple measures of success
 Periodic surveys and discussions, with visible follow up
 Early analyses of and responses to problems
 Proactivity as a general approach
 Example: South Mountain Company,West Tisbury, Massachusetts
The Case of Mondragón, briefly
The case of Mondragon: The public
Rorschach test of the cooperative
movement
 Origins, phases and expansion
 90s’ encounters with globalization
 Recent return to emphasis on core values
 Strategic crisis prompted by historic “bankruptcy” in 2013
 New structural and practical steps
 Implications for the wider cooperative movement
The Mondragon Cooperative Principles
 Open Admission
 Democratic Organization
 Sovereignty of Labor
 The Instrumental and Subordinate Nature of Capital
 Participatory Management
 Payment Solidarity
 Inter-cooperation
 Social Transformation
 Universality
 Education
 Let’s now add environmental sustainability!
General
Assembly
of Members
Executive
Board
Elects
Elects
Elects
Elects
Appoints
General
Manager
Dept.
Manager A
Dept.
Manager B
Dept.
Manager C
Audit
Committee
Social
Committee
Governing
Council
Appoints Management
Committee
Dept.
Manager D
Dept.
Manager E
Broadening our Conception of Community and
Connections: The multiple meanings of solidarity,
based on George’s fieldwork at Mondragon from 1992-today
 Workplace Camaraderie
 Team Performance and Problem Solving
 Wage Solidarity
 Inter-Cooperation (within the system of cooperatives)
 Community Solidarity
 Cultural Identity
 The Wider Cooperative Movement
 Identification with Less Advantaged Peoples
Opportunities for Research
 Multi-Level Democratic Governance (see, e.g., Ortega, In progress)
 Advancement of Cooperative Education (see, e.g., Udaondo, In Progress)
 Shared but not Necessarily Charismatic Leadership (see, e.g., Grant, 2004)
 Community Building in and around Cooperative Firms (see Alperowitz &
Dubb, 2012)
 Discourses of the Solidarity Economy and Environmental Sustainability
(see, e.g., Azkarraga et al., 2012, 2013)
 Multi-Dimensional Networking in Response to Crisis (e.g., with regional
emphasis)
 Cross-Generational Transmission of and Reinterpretation of Core Values
(Cheney and colleagues in the Basque Country, in progress)
 Elaboration and Reinvigoration of Applied Business Ethics
 Messaging for Wider Social and Economic Change
Thank you!
Questions, Comments and Discussion