What are worker cooperatives? (With values and benefits)

By Indeed Editorial Team

Published 15 June 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Worker cooperatives are a technique to organise company environments in a collaborative manner. Working for a cooperative can be a good complement to traditional employment since it allows members to share ownership of a company with other people while also motivating them to help each other with their own ideas. This structure allows members to benefit from the expertise of others while also potentially earning from the cooperative's success. In this article, we look at what a worker cooperative is, explore the difference between a cooperative and a corporation, discuss the benefits of joining one and highlight some common principles.

What are worker cooperatives?

Worker cooperatives are collaborative firms which are owned and run by the members. They have a wide range of purposes and governance procedures but unlike many traditional firms, all cooperatives allow members to express their opinions on issues affecting the firm's future operations. Members of a worker's cooperative frequently reinforce a collaborative culture. Members of such firms can work together to achieve common goals and increase overall productivity while also receiving financial compensation for their contributions to the cooperative's operation.

Cooperatives have a long history of helping working people develop excellent, dignified jobs that they control, especially for those who lack access to business ownership or even steady employment opportunities. Cooperatives are an effective instrument for tackling economic inequality by organisations working on economic development in poor and colonial regions. Cooperatives can improve working conditions and pay for generally low-wage jobs, raising low-income workers' household wealth. Cooperatives for workers can also help to establish movements for economic fairness and social change.

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Difference between a cooperative and a traditional corporation

The company's owners are what distinguish a cooperative from other forms of corporation. Traditional businesses concentrate ownership control on a single person or a small group of partners. The cooperative model, in which every consumer is a member and every member is a part-owner, is the opposite. In cooperatives, the members or individuals who use the cooperative's services are the owners of the cooperative. Co-ops exist to satisfy the individual requirements of their members, as their primary goal is to develop and preserve the community. The following are some of the most significant distinctions between these two types of entities:

  • Laws: In traditional businesses, owners or boards of directors make the major decisions. Cooperatives use established voting processes to make these decisions.

  • Ownership: In traditional businesses, one person or a small number of people own the company, whereas, in cooperatives, all the cooperative employees are owners. Due to the shared ownership, every member of a cooperative could have a significant impact on the company's future.

  • Salary: In traditional organisations, new and existing employees discuss their salaries with their managers, and profit-sharing is rarely offered as a form of remuneration. Members of cooperatives are frequently compensated through profit-sharing rather than defined pay.

Values of worker co-ops

Co-operatives all around the world share a set of values which give them their unique identity:

  • Self-help: People in co-operatives help each other while also benefiting themselves by collaborating for mutual benefit.

  • Self-responsibility: Individuals working in co-operatives are responsible and contribute fully to the organisation.

  • Democracy: A cooperative gets set up so that members have power over the organisation. Each member gets a vote.

  • Equality: Each member has the same rights and advantages as the others (according to their contribution).

  • Equity: Members and owners treat each other justly and honestly.

  • Solidarity: Members help each other and other cooperatives.

Benefits of worker co-ops

Many people join cooperatives because of the numerous benefits they provide, which include:

  • Increasing responsibilities: Members of cooperatives get significant expertise in a variety of areas as a result of greater responsibilities related to management and ownership of the firm. This experience can help them qualify for future employment, as many organisations look for candidates with management and leadership experience.

  • Increasing productivity: Members of cooperatives are more likely to be productive contributors to their teams because they're more invested in the firm's success. Cooperatives can create better long-term results and stay competitive in their sectors by effectively utilising members' skills.

  • Building local wealth: Because cooperatives entitle all members to a share of the firm's profits, members' ability to save money and build personal wealth may improve. They could then invest their newfound money in local enterprises, allowing money to stay in communities for longer periods of time, potentially enhancing the wealth of a larger number of people.

  • Makes ownership more accessible: If you want to start a business, cooperatives give you the opportunity to do so with fewer resources than traditional businesses. Cooperatives enable many more enterprises to function with less capital by allowing members to share many of the expenses associated with running a firm.

Related: A complete guide to profit-sharing advantages and strategies

Principles of worker co-ops

Although the ideals of cooperatives change from one company to another, there are certain common principles among them. These principles guide cooperative members to focus on the cooperative's full community of members while allowing multiple individual members to prosper. Here's a rundown of some of the most prevalent worker co-ops principles:

Collaboration

Members frequently help one another by sharing project completion responsibility. This collaboration allows individuals to distribute specific tasks and responsibilities based on their unique skills, helping the company finish projects more quickly and with higher quality results. As a result, many cooperatives recruit members from a wide range of sectors and professions. In a successful cooperative, a software engineer might help a sales manager build a website in exchange for assistance with the production of a sales deck.

Related: What does collaboration mean in the workplace?

Autonomy

Cooperatives are self-help organisations managed by their members. If they sign agreements with other organisations, such as governments, or raise funds from outside sources, they do so on terms that assure democratic control and cooperative autonomy for their members. Cooperatives work together through local, national, regional and worldwide organisations to best serve their members and strengthen the cooperative movement.

Democracy

Members of cooperatives vote on all topics or appoint members to vote on all issues influencing the future of the organisation based on set principles that govern the cooperative. Profit-sharing, management responsibility, budgeting, organisational structure and creating new governing principles are all common issues for these votes. Members of a cooperative, for example, may vote that each member receive a share of the profits as per their contribution.

Related: What is a collectivist work culture? Pros, cons and examples

Economic participation

Members contribute evenly to the cooperative's capital and have democratic control over it. The cooperative owns some of that capital. Members typically receive little, if any, compensation for capital contributed as a condition of membership. Members allocate surpluses for any or all of the specified objectives, developing their cooperative, possibly by establishing reserves, at least a portion of which would be indivisible, benefiting members in proportion to their cooperative transactions, and supporting other activities approved by the membership.

Education

Cooperatives offer education and training to their members, elected officials, managers and staff so that they can effectively contribute to the Co-op's development. They also educate the broader public about the nature and benefits of the cooperatives, particularly young people and opinion leaders. This in the end helps the cooperative to become popular and accepted by the public.

Open membership

Co-operatives are non-profit organisations that are open to anyone willing to join. They're available to anybody who can benefit from their services and who is ready to take on the obligations that come with membership, regardless of gender, socioeconomic, racial, political or religious affiliation. This principle encourages every member of the community to feel part of the cooperative.

Community participation

Cooperatives use policies adopted by their members to strive for the long-term development of their communities. The members are dependent upon the natural environment and the larger community. This is why they carry out all operations in a manner that strengthens their community.

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