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The healthiest and happiest companies in the world are democracies.
At Louder Than Ten, the project management training company that I co-founded more than 13 years ago, we’ve seen this firsthand. In the more than 13 years that we’ve been working with digital product studios, agencies, and other creative teams, we’ve noticed a pattern. The more companies involve their workers, the healthier their operations are.
In 2021, we decided to put this theory to the test and make the ultimate commitment to workplace democracy. We became a worker-owned cooperative.
Why Become a Worker-Owned Cooperative?
As a society, we fight for democracy in government but settle for dictatorships in our workplaces, the place where we spend 70%–80% of our waking hours. Companies shamelessly monitor their team’s movements and actions in the name of “productivity.” They use time-scheduling software that dates back to a slave-owning family. They deny workers bathroom breaks. They make health care professionals work through a global pandemic without paid sick days.
In short, many workplaces treat people more like economic units than human beings. Even “cushy” jobs embrace toxic hustle culture and lay people off the second things go south in the company.
At Louder Than Ten, we know that worker-owned cooperatives are scientifically proven to be more sustainable, more productive, and longer-lasting. Our conversion to a co-op was the next logical step in our belief and commitment to an equal power structure—and it just makes practical business sense.
What’s a Worker-Owned Cooperative?
In a cooperative, workers own and manage the company. Unlike a traditional structure, where decision-making is at the top level, every worker has one equal vote on all company matters.
Co-ops live by the Rochdale Principles, and most co-ops do open-book management. This means worker-owners determine how profits are generated, used, and distributed. Unlike traditional companies, where CEOs make 2,202% more than the average worker, co-ops experience small wage gaps.
Co-ops aren’t necessarily anti-profit. It’s just that they’re controlled by the workers. They grow sustainably and ethically, providing a living wage for their members and giving back to their communities when they can. Co-ops reject the idea that people are labor. They know that people own labor.
How to Become a Worker-Owned Co-Op
Heads up: Every journey will look a bit different. These steps just worked for (and keep working for) us at Louder Than Ten when we converted to a co-op:
1. Get educated.
The first step on your co-op journey requires educating yourself and all company members about worker cooperatives. Cooperatives either are built from the ground up or are conversions of other kinds of businesses.
Louder Than Ten maintains a list of helpful resources about co-ops. If you’re starting a new co-op or converting an existing business, we’d suggest working with a professional co-op developer who can help develop the structure and bylaws, strategize the conversion process, and provide facilitation and training.
2. Find the right partners.
You can’t do this alone.
One of the seven cooperative principles identified by the International Cooperative Alliance is cooperation between cooperatives. Finding the right partners and professionals who understand and advocate for co-ops can be hard, so it’s critical to lean on the co-op community for support. Louder Than Ten is based in Vancouver, Canada, so we worked with a local co-op association, the BC Co-op Association, which provided training as well as access to key connections to co-op developers, cooperative-friendly accountants, lawyers, credit unions, and other cooperatives.
3. Write the rules.
Every co-op has a set of bylaws or rules that define how the organization is run that need to be developed before incorporation. These rules should be collectively decided and must benefit the community, the environment, and the workers.
Your rules will cover things like membership eligibility and requirements, governance procedures, share structures, and other core policies. Every set of rules is different and is a reflection of the values and interests of the cooperative. This was our most daunting task in the entire process and required the founding members’ full cooperation, alignment, and vision for the future.
4. Prepare for operation.
This should include discussions about your financial setup and transition plan (if applicable). You’ll also need to form your board of directors, and undertake a number of operational tasks:
- Set up bank accounts.
- Write the business plan (especially if you need financing).
- Form the board.
- Issue the initial shares.
- Design governance systems, like a corporate minute book used to record board meeting notes and a share ledger to track equity holdings.
- Raise money and apply for grants.
This step has a waterfall effect on your business operation. Expect to change your business name and address on everything and anything. Forming a co-op is a layered process, but at the end of it, you’ll be ready to begin operating under the new structure.
If you’re converting into a coop, you’ll need to valuate the company, then sell it to the workers. This can be a complicated process depending on a ton of factors (especially if the current owners will continue on as employees of the new cooperative). So you will need to urge everyone, including your lawyer, accountant, and the workers, to make a fair conversion plan for everyone. The Sustainable Economies Law Center’s “Legal Guide to Cooperative Conversions” is a great place to start.
6. Operate (and enjoy your new co-op existence).
Once you’ve completed the conversion, you can begin operating as the fully democratic organization you have been dreaming of. More importantly, you’ve officially become a part of the cooperative movement and the larger solidarity economy. Your workplace is no longer paying lip service to its employees. It is a truly democratic institution that gives more material power to your people than a lifetime of electoral votes ever will.
CORRECTION: This article was updated at 10:50 a.m. PDT on May 12, 2022 to correct the number of stated principles of cooperatives identified by the International Cooperative Alliance. Read our corrections policy here.
Rachel Gertz is CEO and Digital PM Trainer at Louder Than Ten. She trains tech workers how to transform their companies through democratic digital project management. Her mission at Louder Than Ten is to give back power to the people leading their projects so they can transform the future of work. She can be reached at: [email protected]