I’ve got my Coop card, purchased for a pound. It entices me away from Aldi and into the local Coop; 5% rewards for me and 1% for my local community. But having the card, and being a ‘Member’ doesn’t mean I actually understand what’s going on. Sadly I haven’t developed a deeper insight into the operation of cooperatives by just having the card.
This is unfortunate. I’m about to embark on the first leg of my Churchill Travelling Fellowship (details here) to look at large-scale cooperatives, so a good knowledge of how cooperatives work is quite important.
To be honest, I have actually been learning about cooperatives for a while. This post is a summary of some key questions I’m thinking about and also a bit of, ‘I wish I’d known that when I started’. Hopefully its of some use for anyone else who’s interested in what happens ‘behind the Coop card’.
“Cooperative” covers a multitude of activities. Nobody will be surprised by this, but cooperatives are as diverse as anything that exists in the private sector. This diversity inevitably creates the desire to categorise things to understand whats happening. One of the categorisations I’ve seen is around the purpose the cooperative. Why does it exist? There seem to be four broad groupings:
- Consumer Cooperatives– groups that combine to collectively consume a product or service, which gives them a better deal than doing it alone. This would include my Coop Membership (purchasing cheaper groceries) or even things like Barcelona Football Club being owned by the fans (consuming football).
- Producers Cooperatives – groups that produce goods and services that get a better deal when they sell their products collectively, or collectively obtain services to support their business. For example, small agricultural producers who cooperate to strike a better deal with a big supermarket, or they might collectively ‘buy’ specialist marketing services to sell to other territories.
- Community Cooperatives – the boundary between consumer and producer blurs a bit here. A community might be motivated by things other than the ‘best deal’. For example community housing or a villagers owning the Post Office and shop will probably have more of a focus on the social (community) benefit than the economics of the best deal.
- Worker Cooperatives – Basically this is about control. The workers own the business, do the work, make the decisions and receive the rewards for their labour. In practice it is often more complicated with a focus on society, community, and ethical behaviour featuring in how many worker cooperatives operate. Worker cooperatives are the main focus of my trip to the Basque Country in NE Spain.
- Multi-Stakeholder Coops – these bring together community, consumers (service users) and producers (including workers). Thanks to Adrian Roper of Cartrefi Cymru for sharing this, which you can read about in the comments below.
The Seven Principles of Cooperatives. The are some specific ideas on what the purpose of cooperatives should be. The International Co-operative Alliance (www.ica.coop) promotes these seven principles which are aimed at helping cooperatives operate (see website for a full explanation):
- Voluntary and open membership
- Democratic member control
- Member economic participation
- Autonomy and independence
- Education, training and information
- Cooperation amongst cooperatives
- Concern for the community
This video from the National Rural Electric Cooperative Association (representing the interests of 900 electrical cooperatives in the United States) gives a good explanation of the Seven Cooperative Principles.
Education, Training and Information. Coming back to my Churchill Fellowship, I’m particularly interested in Principle 5: Education, Training and Information.
The detail of the Principle is: Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.
I am trying to find out is there is any link between the resources and effort put into achieving this Principle and the success of the cooperative? If there is a link, what does successful delivery of Principle 5 look like?
Worker cooperatives have to deal with tensions. This is a complicated one to explain and I’m probably going to have to come back to it in another post.
Briefly the issue is around the tension the exits in a number of areas which include:
- Making a profit and Principle 7, (concern for the community) are they compatible?
- Speeding up decision-making (through centralisation) and maintaining Principle 2, democratic member control,
- Involving literally anyone, and Principle 1: Voluntary and open membership (do you ‘select’ only ‘suitable’ candidates for membership?)
Just to get a sense of the tensions I recommend looking at this video from one of the workers at SUMA Wholefoods (link here). It’s a very frank explanation of the challenges and benefits of being part of a worker cooperative.
There are some interesting comments like; “management is a function, not a status”, and “we try continuously to dis-empower executive managers”. I think this is linked to the idea that too much power resting in the hands of a few ‘elites’ works against Principle 2: Democratic member control. The video is well worth watching.
What about the Benefits of Cooperatives? I could go on about this a length. There are very many benefits that come from worker cooperatives, examples include;
- They are more productive than traditionally structured businesses (9%-19%);
- They’ve consistently outperformed FTSE companies;
- 69% of Employee Owned Businesses have zero debt;
- They created more jobs during the last recession than conventional companies;
- They preserve more sustainable jobs in deteriorating market conditions; and
- I could go on… but you may prefer this short video from Co-operatives UK, which neatly sums up the benefits of cooperatives.
Finally, I would like to thank Dr Sarah Jenkins at Cardiff University Business School for sharing knowledge, and generously spending time talking with me about her research into cooperatives, thank you Sarah. Here’s a link to some of Sarah’s publications.
So, What’s the PONT?
- ‘Cooperative’ is a word that is used commonly to describe a diverse range of activities. Having a Coop Card didn’t mean I understood this.
- The Seven Principles of Cooperatives are a useful reference point and a reminder of why cooperatives exist and their purpose.
- The benefits of cooperatives are extensive. I’m just left wondering why they aren’t more widespread…