A Magazine about the Hudson Valley’s local economy, published by Hudson Valley Current.

When the Workers Decide

What happens when the employees of a business concern are also the owners? That’s a question Shawn Berry of Lift Economy, a management consulting firm, is eager to start answering in the region.

Berry and his company are focused on promoting the concept of worker-owned cooperatives as a structure that could resolve some problems that dog small business owners, like succession and continuation of what’s often a lifetime of work. The reason that Berry is very gung-ho on this model—which Lift Economy itself adopted in 2015—is that he believes cooperation is built into our very genes.

“With the exception of the Industrial Revolution,” he says, “our success has come from the cooperation of small bands of humans.”

That’s also the premise for crowdsourcing, or drawing on the collective knowledge and experience of a great number of people to find a solution to a problem. Both concepts are based on the assumption that we’re smarter together than we are individually.

The United States has only a “shred of that legacy” remaining, Berry believes: the nuclear family, or at least the idea of the nuclear family, which is a family group consisting only of two adult parents and their children. Yet in other nations, it’s not uncommon for extended families to live in the same building or neighborhood, supporting one another in all things.

“Everybody gets to eat, have shelter, and resources are spread throughout the family,” he says.

A shred isn’t much, though, and our individualistic society has eroded what Berry sees as a unique competitive advantage of human beings.

“We are a quite individualistic people, and we aren’t taught to collaborate from a young age,” Berry says. “Instead, we compete for individual achievement. A lot of really well-intentioned young people try to collaborate, but they lack the skills.”

From a business perspective, Berry makes reference to a Gallup poll which shows that only 30 percent of employees feel engaged in their work.

“The best time to market to people online is when they should be working. It’s just terrible news for us, and we can see the results,” he says, in societal problems ranging from environmental degradation to the sheer number of people unable to meet their own basic needs. “It’s a missed opportunity of the mainstream economy, not having people really engaged.”

A worker-owned co-op has a pathway to ownership, which culminates with existing owners voting on whether to accept the new guy after a probationary period. Whether they get to keep the job if they lose that vote depends in part on the organization’s rules. At the end of a career, however, it’s typical for that ownership stake to be bought out, because the power of the model is in having people who are already doing the day-to-day work making the big decisions as well as the small ones. In all, stability is a hallmark of these co-ops.

“All of those minds that actually know about their jobs, they care as both owners and workers,” Berry says. The decisions made with that kind of collective experience tend to be rooted more solidly in understandings about the business, whether it’s conscious or not. Fully empowering workers as owners leads them to do a better job documenting their own work, because they know they have a say in strategic decisions, rather than simply reacting to what’s coming from the corner office.

These are also resilient companies. In a serious economic downturn, for example, the worker-owners of co-ops are less likely to lay off 20 percent of their own number. Instead, they might agree to furlough themselves or accept a wage reduction during the lean times. When business picks up, they aren’t scrambling to find skilled employees to fill increasing demand, because they never left.

It’s a model that has a succession plan built right in, which could be attractive to an entrepreneur more interested in lasting legacy than a fat payoff upon exiting the business.

“If the vision is to sell the company and retire,” Berry says, “we would say definitely don’t go co-op. Unless it really strikes it rich, you’re not going to get a huge payout.”

When there is a passion for the organizational mission and a desire to see it through outlives the founders, a co-op conversion could be in the cards.

One thing that a worker-owned cooperative isn’t is particularly capitalist. That’s because no one is profiting from the business who isn’t putting in sweat equity, as well. Having an investor class is a hallmark of capitalism; Berry unabashedly says, “It’s more like democratic socialism, not trying to capitalize on a resource, or a class.”

Despite his love of the idea, Berry says that he can’t recommend it to every client seeking his firm for a consultation. There’s a lot more work than in a hierarchical model, because most of us lack the necessary skills in interpersonal communication, as well as the emotional maturity to negotiate challenging conversations. In short, there’s a steep learning curve ahead if it’s going to work, and not everyone is up to it. “For a co-op to thrive, it either needs a staff that already has these capabilities, or they need to be cultivated on a parallel track,” he said.

It’s a movement that is growing, albeit slowly, but there are trade associations specifically for worker-owner co-ops. To the best of his understanding, Berry doesn’t believe any of those trade associations has members in the Hudson Valley, because there don’t appear to be any of these co-ops here yet. If he has anything to say about it, that’s just an oversight which is going to change.