Worker-owned cooperatives (WOCs) are businesses owned and democratically governed by their employees, who collectively share ownership, decision-making authority, and profits. WOCs operate based on principles of cooperation, solidarity, and mutual support, aiming to empower workers, promote economic democracy, and create sustainable livelihoods. In WOCs, workers are not only employees but also owners and managers, participating in key business decisions and sharing in the risks and rewards of entrepreneurship.
The purpose of worker-owned cooperatives is to provide workers with greater control over their workplaces, enhance job security and satisfaction, and promote equitable wealth distribution. The scope of worker-owned cooperatives varies across industries and sectors but typically includes a wide range of businesses, such as manufacturing, retail, agriculture, and services, where workers collaborate to produce goods or deliver services collectively.
Principal Concepts
Worker Ownership: Workers in cooperatives collectively own shares in the business and have a say in its governance, policies, and operations, typically through a one-member, one-vote system.
Democratic Governance: WOCs operate on principles of democratic decision-making, where workers participate in collective decision-making processes, such as electing leaders, setting policies, and approving major business decisions.
Profit Sharing: In WOCs, profits are distributed among worker-owners based on their contributions to the cooperative, fostering a sense of shared ownership and collective responsibility.
Theoretical Foundations of Worker-Owned Cooperatives
Worker-owned cooperatives draw on principles from various theoretical perspectives, including:
Cooperative Theory: WOCs are grounded in cooperative principles, such as voluntary membership, democratic governance, and member economic participation, as articulated by the International Cooperative Alliance (ICA) and other cooperative organizations.
Labor Theory of Value: WOCs align with the labor theory of value, which emphasizes the role of labor in creating economic value and asserts that workers should be entitled to a fair share of the wealth they help produce.
Methods and Techniques for Worker-Owned Cooperatives
Worker-owned cooperatives employ a variety of methods and techniques:
Worker Participation: Encouraging active participation and engagement among worker-owners in cooperative governance, decision-making processes, and day-to-day operations.
Training and Education: Providing training, education, and capacity-building programs to empower worker-owners with the knowledge, skills, and tools they need to effectively manage and govern their cooperatives.
Financial Management: Implementing sound financial management practices, such as budgeting, accounting, and financial reporting, to ensure the financial viability and sustainability of the cooperative.
Applications of Worker-Owned Cooperatives
Worker-owned cooperatives have diverse applications across industries and sectors:
Manufacturing: Manufacturing cooperatives produce a wide range of goods, from consumer products to industrial machinery, with workers owning and managing the production process collectively.
Retail: Retail cooperatives operate stores, supermarkets, and consumer cooperatives where workers serve as owners and employees, providing goods and services to customers in their communities.
Agriculture: Agricultural cooperatives, such as farmer cooperatives and food co-ops, enable farmers and agricultural workers to collectively market their products, purchase inputs, and access resources and services.
Industries Influenced by Worker-Owned Cooperatives
Worker-owned cooperatives have influenced a wide range of industries and sectors, including:
Technology: Worker-owned tech cooperatives develop and distribute software, provide IT services, and offer digital solutions, with workers collaborating to innovate and meet client needs.
Healthcare: Healthcare cooperatives, including worker-owned clinics, hospitals, and home care agencies, provide medical services and support to patients while empowering healthcare workers as owners and caregivers.
Advantages of Worker-Owned Cooperatives
Worker Empowerment: Worker-owned cooperatives empower employees by giving them a direct stake in the ownership, management, and governance of their workplaces, fostering a sense of pride, autonomy, and responsibility.
Job Security: In WOCs, workers have greater job security and stability, as they collectively control the business and are less vulnerable to layoffs, closures, or changes in ownership.
Equitable Distribution of Wealth: Worker-owned cooperatives promote equitable wealth distribution by sharing profits among worker-owners and reinvesting surpluses in the cooperative, benefiting both workers and their communities.
Challenges and Considerations in Worker-Owned Cooperatives
Despite its benefits, worker-owned cooperatives face challenges:
Capital Access: Accessing capital for startup costs, expansion, and investment in worker-owned cooperatives can be challenging, as traditional lenders and investors may be unfamiliar with the cooperative model or perceive it as risky.
Training and Education: Building the knowledge, skills, and capacities of worker-owners to effectively manage and govern their cooperatives requires ongoing training, education, and support, which may require resources and expertise.
Integration with Broader Economic Strategies
To maximize the benefits of worker-owned cooperatives, they should be integrated with broader economic strategies:
Policy Support: Enacting supportive policies, legislation, and incentives to promote the development and growth of worker-owned cooperatives, such as tax incentives, technical assistance, and access to financing.
Collaboration and Networking: Fostering collaboration, networking, and knowledge-sharing among worker-owned cooperatives, cooperatives, and supportive organizations to strengthen the cooperative movement and build solidarity among cooperators.
Future Directions in Worker-Owned Cooperatives
As worker-owned cooperatives continue to evolve, future trends may include:
Digital Innovation: Leveraging digital technologies, platforms, and networks to enhance the scalability, efficiency, and impact of worker-owned cooperatives, enabling them to compete and thrive in the digital economy.
Sectoral Growth: Expanding the presence and influence of worker-owned cooperatives in key sectors of the economy, such as healthcare, education, and renewable energy, where cooperative principles and values align with social and environmental objectives.
Conclusion
Worker-owned cooperatives are a democratic and inclusive business model that empowers workers, promotes economic democracy, and fosters community development. By enabling workers to collectively own, manage, and govern their workplaces, worker-owned cooperatives offer an alternative to traditional hierarchical business structures and contribute to building more equitable and inclusive economies. As worker-owned cooperatives continue to grow and evolve, they hold promise as a transformative force for social and economic change, empowering workers, strengthening communities, and advancing principles of cooperation, solidarity, and shared prosperity.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
