Chris Galloway, Director, CoActive Developments Worker Co-op
March 13, 2023
| *(Please note that this is the second of six posts for a series of blog posts over the coming weeks that will outline some of the many benefits of transitioning to employee ownership). |
View last week’s post here: https://coactive.ca/selling-the-farm-to-the-workers-5-benefits-of-transitioning-ownership-to-your-employees-part-1/(opens in a new tab)
Benefit #1 – Increased employee engagement through workplace democracy!
“Employee engagement” is a concept that is generally used by Human Resources professionals at large corporations, to describe the level of enthusiasm and dedication that a worker feels toward their job. It is believed that if an employee is “engaged”, they will generally care about their work, and about the performance of the company and feel that their efforts make a difference. According to Gallup’s most recent State of the Global Workplace, only 21 percent of employees are engaged at work and only a third are thriving in their overall wellbeing, and most say that they don’t find their work meaningful. Why is this?
In the wake of the recent COVID-19 pandemic, an ongoing economic trend predominately in the USA and other parts of the industrialized world known as the Great Resignation (also known as the Big Quit), whereby large numbers of employees have voluntarily resigned, is an indicator that people are clearly fed up with their employer and their relationship with employment. For decades now, the wealth gap has been growing wider and the effects of this concentration of resources can be felt throughout society, including in our relationship with traditional employment.
Even in Canada, where it has been reported that the Great Resignation didn’t really materialize, over a third of employees feel “totally burned out”, and while this hasn’t led to mass resignation, many workers have been simply swapping jobs. Quitting for an extended period of time is clearly difficult, especially at a time of high inflation, but even if the Great Resignation isn’t apparent in Canada, it is clear that this has been a time of reflection and maybe it is more of a time of Great Rethink rather than a modern-day General Strike.
”It’s not so much a Great Resignation but a Great Rethink … of the type of work that people want to do” David Coletto, CEO, Abacus Data
It is clear that the economy is not working for the average person, and that work in general is becoming less secure, and so what about if this so-called period of the Great Rethink led to more workers (and owners) considering employee-ownership as an option? You can see where I’m going, and if we have a situation where most workers are fed up, want to quit but can’t, and are totally disengaged and burned out then why would it be any better if you are not just a worker, but you are a worker-owner?
Employee-ownership gives much greater power and autonomy to workers to help them better control and plan for their future and thus increase their wellbeing. Put simply, by giving employees a stake in the business, they are engaged in a way whereby work is no longer just a job. In effect, they’re running their own enterprise. This in itself leads to a greater level of self-belief and renewed emotional investment in the company they work at and now own.
It does seem crazy that we continue to promote the benefits of democracy over authoritarianism and yet this is what the vast majority of us are enveloped within during most of our waking hours. Surely, creating greater democracy in the workplace (and of course equity in the relationship between capital and labour) is desirable? The best example of a workplace that has democracy embedded in its DNA are worker cooperatives, who by their very nature are guided by the cooperative principle of democracy, and the cooperative value of equity.
When considering workplace democracy and its impact on employee wellbeing and engagement, I think it’s a good idea to look at the Mondragon Corporation, in the Basque region of Spain. The Mondragon Corporation is a federation of worker cooperatives that is the seventh-largest Spanish company in terms of asset turnover and the leading business group in the Basque Country. At the end of 2019, it employed almost 82,000 people in 257 entities, the majority being worker cooperatives, in four areas of activity: finance, industry, retail and knowledge. If you’re a newbie to Mondragon and you are interested in learning more I recommend you read this recent article from The New Yorker.
Of all of the studies that have been conducted on the success (and failures) of Mondragon, one of the major research areas of focus is the relationship between how democracy and participation in ownership affects employee engagement and the general wellbeing of workers. It should be said anecdotally, that the main findings of the multiple studies that I have read have shown that the democratic participation of worker-members in management and ownership is considered a beneficial psychological state that leads to positive outcomes both for the cooperatives and their worker-owners and employees.
In a recent study from 2022 titled “Participation and Organizational Commitment in the Mondragon Group”, it was concluded that ownership creates a emotional attachment between a worker-owner and the entity (cooperative) and that this assists in increasing the level of personal commitment to the ongoing operations and future success of the entity. Additionally, the study concluded that worker-owners of Mondragon cooperatives were highly willing take on greater responsibilities for the sake of the business, particularly during difficult times. Talk about increasing employee engagement!
Before signing off, I want to finish with a question and a call to action for owners: what is the best way to show your employees that you value them for all their hard work over the years? I may be biased, but what better way than to “hand the keys to the farm” to the workers! We all know that if you feel valued in what you do then you’re engaged, so if you want to spike engagement (and productivity!) then consider selling your business to the workers!
CoActive Pilot Project
CoActive will be conducting 10-12 feasibility analyses over the next 12-18 months at little or no cost to a business that wishes to determine if employee-ownership works as an option for them. We hope that by screening our applicants that we would have at least a 75% continuation rate through the next stages of the transition process. By the end of our pilot project, we will compile several case studies for analysis and sharing with other agencies. We firmly believe in cooperative principle #6: cooperating amongst cooperatives, and so reach out if you want more information or if you are interested in working together. For more information either email info@coactive.ca or contact us on LinkedIn or Facebook.