F5.008 (EMPLOYEE CAPITALISM) WORKERS COOPERATIVES - WILLIAM EASTMAN

Well, we are getting to the end of the Season and the series - we have one more show to go: Employee Stock Ownership Plan or ESOP. Today I will do my best to present Worker Cooperatives as neutrally as I can because I just see it as a viable option; option yes, viable no. But that decision is up to you.

INTRODUCTION
In the series we have discussed a number of options on a continuum from Variable Compensation as the starting all the way to the extreme employee ownership - a cooperative.

OBJECTIVE

1. Understand the advantages and disadvantages of a Worker Cooperative as your exit strategy.

WHAT DO YOU NEED TO KNOW

• F5.002 (EMPLOYEE CAPITALISM) RANGE OF EMPLOYEE STAKEHOLDER OPTIONS - WILLIAM EASTMAN
• F5.006 (EMPLOYEE CAPITALISM) BUILDING A VARIABLE COMPENSATION SYSTEM - WILLIAM EASTMAN​
• F5.007 EMPLOYEE OWNERSHIP TRUSTS - WILLIAM EASTMAN

What it Isn't
It is not a Trust or a Stock Plan. In a Trust the shares are pooled and the employee receives a portion of the upside based on a pre-agreed formula; the employee does not own stock per se.

A Stock Plan is where the employee owns shares in the company for the duration of their tenure and will receive a payout for the total owned upon separation from the firm.

What It Is
One Employee, One Share or everyone has equal shares. It is the ultimate egalitarian approach. The operation and management structure can take any form but most have individuals hired by the workforce and subject to dismissal. If there is a Board of Directors it too is under the management control of the cooperative.

The cooperative sets the pay bands and most have a pay ratio limit between front line and executive.  Rewards for performance / contribution are usually provided through a special dividend - 'patronage' dividend.

WHAT DO YOU NEED TO DO
Core Principles of Worker Cooperatives

1. Voluntary & Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy & Independence
5. Education, Training, Information
6. Community is a Stakeholder

What do you think?

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