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

HOW DO OWNERS UNLOCK VALUE IN THEIR COMPANIES?

One year after establishing our employee owned cooperative, the economy started to improve.  Before this, a significant rationalisation had occurred throughout Australian manufacturing.  Companies either re-invented themselves or closed their doors, but even as economic conditions looked brighter, profit margins were still very tight. 

Trying to value a business that had taken the better part of two generations to create and build was a challenge.  As business owners, we were overly influenced by our personal histories, our sacrifices and the memories that had taken over half a century to accumulate.  We had initially hoped that placing the business for sale on the open market would automatically produce a fair and equitable result for both buyer and seller.  Unfortunately, this was not the case; we found to our horror that no one wanted to buy!

In the absence of a sale, our protracted and tortuous succession process had finally come to a conclusion.  We had transferred full ownership to our employees … Read more