ENLISTING WORKERS TO RESTRUCTURE BUSINESS

Preserving Jobs and Businesses in Challenging Times

Workers jobs are threatened as never before due to the worldwide economic downturn brought on by the COVAD 19 pandemic. Over the last sixty years, the booms and busts of capitalism have driven workers to demonstrate solidarity and stage initiatives to acquire the threatened company they work in to keep it operating. These have been termed worker buyouts or employee buyouts depending on the culture. From a Christian viewpoint, this has its roots in the encyclical Rerum Novarum, and its emphasis on justice, workers rights, the dignity of work and the principle of subsidiarity – decisions are to be made by those who have to carry them out. The famous worker cooperative Mondragon Co-operative Corporation in Catholic Spain was initiated by the Catholic priest Father Arizmendiarreta and has become a pilgrimage thousands take to understand the Christian business model of sharing in ownership, decision making and profits.

This phenomenon of the EBO – … Read more

Robert-McMaster

REPORT ON THE PERFORMANCE CULTURE – C-MAC INDUSTRIES COOPERATIVE

Cultural & Performance Change

To identify training and the support required for staff to move into employee ownership through the introduction of the “Employee Share Ownership Plan” (ESOP), C-Mac needed to understand the current situation. Consultants were engaged to undertake a survey and make recommendations. The report was titled:

Employee Ownership, Performance Management and High Performance: A Report on the Performance Culture at C-Mac Industries and the firms’ readiness for Transition to Employee Ownership.

Undertaken by Dr Anthony Jensen (Founding member of the Cooperative Development Network)

Below is the Introduction from the report:

Introduction

The purpose of this report is to support the vision of the owners of C-Mac to transition ownership of the firm to its employees over four years. With its move to make shares in the business available to its employees, C-Mac’s owners and its leadership team have shown that they are forward-thinking and prepared to embrace change.

Importantly, whilst C-Mac has received national recognition for its … Read more

COMMUNITY WEALTH BUILDING

What is Community Wealth Building?

My interpretation of the big picture:

• Re-making our local economy, creating a strong, resilient community with trust-based relationships, local connections, individual community champions, reserves of human capital and volunteer effort.

• Working with “anchor institutions” with the aim of maximising local economic, environmental and social benefits from their spending on goods, works and services.

• “Clawing back” wealth with local import replacement and recycling of local income thereby stemming the leakage of revenue from the Hawkesbury.

Why care about Building Community Wealth?

• This is about the dignity and sense of worth of our local community; of their relevance; of their well-being and their productive and useful place in the economy.

• Creating a fairer and more sustainable economy that retains and builds wealth that adds social value from within.

• This is a practical agenda to address real, local economic stresses.

• This is a “bottom-up” approach

Why now?

• Our regions have Read more

Robert-McMaster

CO-OPERATIVE ACQUISITION STRATEGY

Co-operative Acquisition Strategy

The number of “baby boomer” business owners wanting to retire and realise their assets by disposing of their businesses and selling properties is increasing. This could potentially put large numbers of people out of work.

Advice on how to transfer ownership to staff in the way of a workers co-operative through experience is not readily available or easily found in Australia.  Also, existing employee cooperatives can become successful through mergers and acquisitions 

Having recently transferred our 50-year-old family manufacturing business www.cmac.com.au to a workers’ co-operative so I could exit the business and retire, I discovered that co-operatives can potentially be the most socially responsible solution.

This was after a journey of nine (9) years exploring and trying different succession options.

All the below succession options were implemented and tried at C-Mac and the co-operative solution was the only one that got over the line in this economic environment where manufacturing has been struggling and re-inventing itself in

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IMPACT OF EMPLOYEE OWNERSHIP

Below is my summary from the “The Ownership Enquiry – Final Evidence Report” June 2018, which I thought a great introduction for anyone wanting to understand why I introduced employee ownership into our family business. Educating yourself before jumping into launching EO is critical to the success of your succession.

The evidence of the impact of employee ownership on performance is overwhelmingly positive. The most apparent evidence is for smaller firms, firms with larger employee ownership stakes, and in studies over longer time horizons.

Employee-owned firms tend to be more productive, have higher employee engagement, along with factors like rewards sharing, job satisfaction, organisational commitment, and motivation – which is reflected in higher retention and lower absenteeism.

Employee-owned business is more resilient in crises and appear to have a positive impact on the broader community. This evidence has salience in the current economic climate. The economy is increasingly shifting from manufacturing to services. The increasing shift involves the development of … Read more

FAMILY BUSINESS SUCCESSION

What do you do if you cannot find a successor or a buyer for your family business? Sell to your skilled and experienced workforce! “It’s an answer you may have been looking for.”

57% of family businesses have acknowledged that they would have no choice but to cease trading within one year of a severe illness or death of a current owner.

Only 42% have planned for the family business succession.

Family Business Succession Options

Model 1. “Recycling dad” but what if no one is willing or able to step into dad’s shoes?

Model 2. Next Generation ownership and management

Model 3. Have active next-generation owners with a non-family management team

Model 4. Trade Sale or find a private equity investor

Model 5. Management Buyout – Then the question arises; Can the business then sustain another MBO when the managers/owners are ready to retire?

Model 6. Employee Ownership

                6a. Create some liquidy with a minority employee ownership stake. This unlocks … Read more

INTERVIEW WITH DR. ANTHONY JENSEN, CO-AUTHOR OF “WAKING THE ASIAN PACIFIC COOPERATIVE POTENTIAL”

This interview was released by The International Cooperative Alliance Asia Pacific and has C-Mac Industries (an Australian workers Cooperative) as a case study.

Dr. Jensen is the lead editor and key author of the book “Waking the Asian Pacific Cooperative Potential”. He is also the Founder of the Asia Pacific Cooperative Research Partnership, with Prof. Kurimoto.

Q 1. What was the genesis of the book?

This project had its genesis in collaborative thinking around the idea of comparative research. An idea whose time had come. It started with discussions I had held with Mr Bien Nito at the University of Asia Pacific on a comparative study of cooperatives I had conducted in Italy and Australia, and how this could be applied to Asia-Pacific. Ms Melina Morrison of the Business Council of Cooperatives and Mutuals (BCCM) in Australia suggested that I put this to the ICA-AP Research Committee in Bali in 2015, where it struck a deep chord with Professor Akira … Read more

HOW IS YOUR EMPLOYEE-OWNED COOPERATIVE PERFORMING?

Mutual Value Measurement or Cooperative Value measurement is a recently developed method funded by BCCM and Monash Business School

As values-based businesses, the greatest challenge for co-operatives and mutuals is to let our values shine. This is a new way of measuring our positive impact on our members, our customers, the community and the economy.

There is a toolkit for measuring the value we create. A framework that helps the CME sector measure their total value creation (mutual value) through a set of common dimensions. Creating a commonly shared language about measuring and reporting mutual value.

The MVM Framework can be used by CMEs across different industries, of different sizes, and with different capabilities.

The Framework uses six dimensions to cover the unique areas of value that CMEs generate.

  1. Commerciality

Generation of sustainable economic value for current and future members through business cooperation

  1. Shaping Markets

Creating, maintaining and/or shaping sustainability and competitive markets for goods and services

  1. Member relationships

Building … Read more

WHY ARE THERE NOT MORE EMPLOYEE-OWNED BUSINESSES IN AUSTRALIA

After attending many business functions, seminars and conferences, I have found that business owners in Australia are unfamiliar with employee ownership. Even my accountant initially advised not to proceed with an employee-owned cooperative, due perhaps to a combination of inexperience and a warped perception that cooperatives were too tricky and complicated. He later told me “cooperatives were in his toolbox under dairy farmers”.
Our C-Mac experience has shown that:

  • The owner rarely thinks of selling to all the employees
  • Owners don’t consider that employee ownership represents another succession option
  • The owner does not consider that management and employees possess the requisite skills to run the business
  • Owners are concerned about losing control of their company
  • Accountants do not understand employee-owned companies
  • Most economists and professionals have limited knowledge or understanding of the benefits of employee ownership and don’t consider them as serious alternatives to conventional corporate structures
  • Management Buy-outs often receive priority consideration
    • Management is in the driver’s seat with
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SEVEN PRINCIPLES OF COOPERATIVES AT C-MAC

The seven cooperative principles are a vital part of any cooperative.  In an employee-owned cooperative, these principles have to be understood and accepted.  This is a big difference between employee-owned cooperatives and other employee ownership models.

C-Mac’s Board, management team and Staff Committee’s response to the Seven Principles of Cooperatives and values has been slow.  Although they did not have prior understanding of these Principles, it was essential that when exposed to them, they would accept them as a reflection of their own personal values.  Most of the members, after two years still need to sense merit in the Principles.  Over time as members become more exposed to the cooperative principles and values, I am hoping they will come to view them as an operational foundation in all areas of the business.

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity.  In the tradition of their founders, cooperative members believe in the ethical values of … Read more