A conflict common to many co-operatives...

I've been asked to help resolve a familiar situation in a co-operative:

A founding group has put much time and effort into building a successful business, which now has the opportunity to expand rapidly - which will require admitting new members.

Some of the founders are happy to do this, but others do not want to dilute their own control and investment (mainly time - but obviously it does have a financial value).

Luckily it is a share structure and it is possible to reward the 'sweat equity' - but it is also a one-member-one-vote structure so although there will be a probationary period ultimately control will be shared.

Obviously I'm aware of both the technical mechanisms that can mitigate problems like this - that's why it's a share structure! - and also the arguments for bringing in others to allow and boost growth (it's better to have a smaller share of something really valuable than the lion's share of very little).

However, for those who are happy to share ownership and control, the disagreement has raised questions about the others' commitment to co-operative principles - perhaps they were never heart felt principles at all - just a convenience to cohere a good team?

Given that this is such a familiar difficulty - which I know has broken co-ops in the past - I wonder if anyone knows of case studies, or just has their own story, of how co-operators involved in such conflicts have dealt with them - more especially how they have dealt with the feelings involved?

Emotions

Geof,

This is a big issue because it centres on the issue of 'equity', not just in the legal sense of the term but also the socio-emotional sense. I've seen this both from a practitioner and research side. As a practitioner, we came up with a scheme through which we planned to issue Labour Shares (1 for each year of work) so that 'voice' grows with participation. We also thought that the shares should be capped at 5 on the basis that anyone who has worked for 5 or more years should have an equal voice. It stopped founders with 20-30 years of work from dominating new staff members forever and created a dynamic towards full equity in exchange for labour committed.

I never got to see how this worked out over the longer term. I suspect it would cause some resentment amongst groups of new staff, but it also calms the anxieties of experienced members who fear a takeover. For new start, any voice in management is often more than they've had in the past. My sense - after much research - is that feelings about this depend mostly on how much 'voice' the person has had in their previous job. Some research evidence from my PhD also suggested that people joining an organisation think it is unfair if new people have the same voice as those who have been in the organisation a long time so we need to see this from both sides.

The most common arrangement in IPSs is one-person, one-vote after the probationary period. That was great (for me) when I joined a cooperative. I could participate in discussions as an equal from day 1. Later, there were arguments against giving people votes straight away. At one point, there was a 2 year qualifying period which definitely caused an us/them until (after a while) all the voices equalised again as people acquired their voting rights.

I think, with hindsight, that voting rights and participation rights can be separated. When there was a 2-year qualification period for voting rights, people were also barred from participating in General Meetings. I suspect that this was the cause of most resentment (i.e. not being part of discussions that affect the person's working life). It was for this reason we switched (in a spin off company) for 1 vote granted at the start of each year. This way, people could participate in discussions straightaway and register their feelings. A lot of decisions in cooperatives are made by consensus anyway, so the disparity in voting power does not affect all decisions (only those where a poll is requested).

I still think that issuing voting shares on the basis of the number of years worked (subject to a cap) might be a creative solution to the issues you identify above. It would stagger the influence of new members in a growing cooperative (for example, a group of 5 founders could take on 10 new staff, involve them in discussion and debate without a fear of losing control of their cooperative until the new members have acquired experience of cooperative working. This allows for a period of adjustment.

Where new members have never previously had any voting rights, this is still more 'voice' than they have had in the past and my experience (from research interviews conducted with members of this cooperative some years later) is that this still creates a favourable environment for discussion.

For more on the whole issue of emotions in organisation, see my 2009 e-book:

http://www.scribd.com/doc/16393568/Emotion-Seduction-and-Intimacy-eBook

All the best
Rory