A worker cooperative is a business that is owned and controlled by the people who work in the company, rather than just a handful of founders or outside shareholders. This means:
+ Workers build assets through business ownership on top of wages
+ The profits of the company are locally owned, creating a stable local economy for the community
+ The company is more likely to be resilient and continue to serve its community through leadership transitions
The ownership structure of a worker cooperative has five defining characteristics:
1. Voting shares in the corporation are limited to workers
2. All workers meeting certain minimum criteria are eligible to become worker-owners
3. Each worker-owner can only have one voting share
4. Dividends are issued to worker-owners on the basis of hours of work performed (as opposed to capital contribution)
5. The financial value of the membership share is based on a system of internal capital accounts, not a market valuation of the company
Within these characteristics, there is a lot of room to design governance, ownership, and profit sharing within the company.
The Worker Cooperative Field
Worker cooperatives are found throughout the world, in almost every industry, and serve as leaders in the field. Today, more than 18 million workers in the US have some ownership stake in the place they work. Time and again, studies have found that when ownership is paired with a meaningful degree of employee participation, that performance, productivity and firm longevity is enhanced. A democratic workplace is more than just a way to make jobs better, it’s a way to make companies better.
This guide provides an introduction to worker cooperatives. It explains how worker cooperatives are different from conventional businesses, offers examples of successful worker cooperatives across the country, and highlights the importance of business strategy in worker cooperatives.
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Mētis Construction creates jobs and opportunities for craftspeople
Jobs in the construction industry aren’t always long-term options for craftspeople: workers are often hired as contractors, requiring them to move from project to project and individuals have few options to save and plan for retirement. Mētis Construction of Seattle identified worker ownership as an ideal solution to recruit and retain skilled carpenters while providing dignified jobs in their community. The ICA Group supported Mētis through the assessment and valuation of the business, and later guided Mētis through the conversion process, helping them to form a worker owned and controlled company committed to the practice and teaching of skilled craft. Worker ownership not only supports a local small business like Mētis for the long term, it helps employees build assets over time, promoting the financial viability of the trades as a career choice.
Mētis is now held by a worker ownership trust that provides a path to ownership for every employee. The trust is based on the company’s values and was designed to support worker ownership of the company for generations. Since transitioning to worker ownership, the business has seen a positive shift in the company’s culture. James Jennings, a new employee who was interested in working for a worker owned company shared,
“Everybody takes responsibility, everybody shares the stresses, the enjoyment, and the work, and this creates a much more appreciative, challenging, and enjoyable work environment.”
The company continues to support excellence in project management and craft, and has develop efficiencies in pricing and cost controls, project scheduling, and budget management. Mētis also developed a statement on equity and social justice, and worker owners are committed to upholding the company’s values throughout every project. Matthias Scheiblehner, founder and worker owner of Mētis, believes that worker ownership does more than provide a business solution:
“It’s a pretty amazing experience to walk into work every day and feel like you’re doing some small thing towards making the world a more just and equitable place.”
To learn more about Mētis Construction and the Mētis Trust Agreement, visit: https://metisconstructioninc.com
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Learn more about worker ownership
While some businesses are founded as cooperatives, a business can also convert to a cooperative. In a conversion to worker ownership, the shares of the business are transferred from the existing owner(s) to the workers.
A business conversion may be the right solution for you if:
+ You want the jobs you’ve created to exist after you leave
+ You want your business to survive for the next generation
+ You want to reward employees for their commitment and dedication to the business
+ You want to convert some of the equity you’ve built up into cash – but don’t necessarily want to leave the company
+ You no longer want to be the only owner
The most successful transactions are ones where the company is something worth owning and both the owner and the workers want to complete the transaction.
When thinking about selling your business to your employees consider the following factors:
+ Relationships with employees – are the people who helped build your company ready to take it to the next level?
+ Management team – do your existing staff have the skills, technical expertise, and relationships to help the business succeed?
+ Time – are you able to spend the time necessary to support the transaction?
+ Profitability – do you have consistent profits to support an employee owned company?
If you’re interested in learning more about how ICA can help you strengthen your business through employee ownership, contact us at (617) 232-8765 or firstname.lastname@example.org. The initial consultation can take as little as 30 minutes and there is no cost or obligation.
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Consulting and Technical Assistance
The ICA Group offers consulting and technical assistance to businesses converting to worker ownership, as well as new and established cooperatives.
Consulting to Conversions:
The ICA Group is one of the foremost firms designing employee ownership for small businesses. We have been instrumental in transactions with companies ranging in value from less than $1 million to more than $20 million in value.
The ICA Group works with business owners of all types to convert their firm to a worker cooperative, a social enterprise cooperative, or a democratic ESOP. We provide simple, straightforward tools designed to minimize costs and ensure that the interests of all parties are addressed. Every business is unique, and so are the objectives of the owners who wish to sell their business. We’ll walk you through the five basic steps to transferring your business to your employees:
+ Outline objectives
+ Test the feasibility
+ Structure the transaction
+ Complete the transfer
+ Operate as a democratic firm
Consulting to New Cooperatives:
The ICA Group offers in-depth technical assistance for new cooperative, including:
+ Market research to assess demand for services and develop sales estimates
+ Feasibility analysis using the business’s operational needs and cost structure to develop detailed financial projections
+ Business plan development to guide implementation, attract financing, and cultivate partners
Consulting to Established Cooperatives
The ICA Group believes that training and education can make a significant difference to worker owned companies & social enterprises. Effective and meaningful programs can profoundly improve productivity, corporate performance, and employee satisfaction. Our staff of trained consultants design programs to meet your firm’s specific needs and to make the benefits of ownership & mission focus both tangible and enduring. Trainings include:
+ Fundamentals for democratic firms
+ Basic and advanced accounting
+ The internal capital account system
+ Business tools for democratic firms
Explore our resources for Cooperatives and Conversions
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