A co-op is a co-op by any other name .. or is it?

Yesterday’s excellent article by Peter Couchman, CEO of the Plunkett Foundation, got me thinking again about what it means to be a co-operative.

People sometimes say they want to set up a co-operative because they like the sound of it – sharing and caring and all that – however there’s a bit more to it than that, and it helps if they can get a clear idea at the outset of what a co-operative – and what it isn’t.

The International Co-operative Alliance – the world wide umbrella body for co-operatives – defines a co-operative as:

‘.. an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.’

Where the key words are: autonomous, voluntarily, economic, social, cultural, democratic control and enterprise.

Nevertheless there are a lot of myths about co-operatives, and perhaps because there is no legal definition of a co-operative (at least in the UK) that’s only to be expected. The most frequent myths I come across are:

Myth 1 – Everyone gets equal pay in co-operatives.

Not true. While most co-operatives would subscribe to equal pay for equal work, and while some co-operatives do have an “equal pay for all” policy (Suma Wholefoods is the most famous example. All Suma workers are paid the same daily net wage plus allowances and overtime or time in lieu to reduce hours imbalances). However many co-operatives have pay scales and pay differentials. Some cooperatives follow the example of the Mondragon co-operative in the Basque country, and limit the differentials between managerial staff and shop floor workers pay.

Myth 2 – All co-operatives rotate jobs

Not true. Some co-operatives encourage some job rotation – again, Suma is a good example. They call it multi-skilling and say “It allows us to use labour and skills more efficiently to cope with the troughs and peaks of business. It enables Suma members to cope with high work loads. It keeps people fresher and enthusiastic for longer and it allows recuperation from stress”. However job rotation needs to be well-managed and co-operatives should be aware of the costs of job rotation. If you are learning a new job, you will not be up to speed for some time, and nor will the person teaching you. This is a cost which needs to be built into budgets and projections.

Myth 3 – In a co-operative, everyone is involved in all decision-making.

Not true. If they were they would not survive. Co-operative members have to learn to trust one another and delegate power to take decisions to sub-groups or individuals. Of course those individuals are answerable to the whole co-operative for the quality of their decisions.

Myth 4 – You can set up a co-operative for other people.

Not true. However well-intentioned, people who seek to set up worker co-operatives for others eventually recognise that it is simply not sustainable. The concept of “self help” is a central one for co-operatives, and if the members do not genuinely take ownership of the co-operative, eventually it will fail, or degenerate into a private enterprise. It may take a few years, but it will fail. Co-operatives are owned and controlled by their members. Control is the key word here. How can the members control it if someone else (even a well-intentioned person) is pulling the strings?

Myth 5 – A co-operative is a sort of voluntary organisation, or charity

Well, perhaps just ignorance, rather than a myth, but it is still not true. A cooperative is a business. Trading in a commercial market place. It may need grant funding to get going, but it must eventually be commercially viable. If it depends on grant funding it is a voluntary organisation or a charity, not a co-operative.

Since there is no legal definition of a co-operative in the UK, the only way we can assess whether or not an organisation is a co-operative is by comparing it to the ICA definition of a co-operative and Co-operative Principles.

As we can see above, the definition agreed by the ICA in 1995 emphasises the entrepreneurial and autonomous nature of a co-operative – so Lambeth Council could never be a Co-operative Council, no matter how well intentioned, not to mention that the aim seems to be the Council setting up worker co-operatives for the workforce. As anyone in co-operative development circles could tell them, it won’t work. A key co-operative value is self-help – co-operators do it for themselves!

Co-operativesUK is doing excellent work promoting the concept of co-operative behaviour as a way of opening the door to increased understanding of the nature of the co-operative business model. However I think one of the most effective ways  of getting more clarity is to have the co-operative business model defined in UK law, based on the ICA definition and Co-operative Principles.