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This seems fine during the good times, but I can imagine a big problem of having a no-hierarchy worker-owned operation is what happens when the market shrinks a
by ralferoo 3y ago
This seems fine during the good times, but I can imagine a big problem of having a no-hierarchy worker-owned operation is what happens when the market shrinks and you can't afford to pay everyone the promised minimum salary. Do you all just collectively agree to take less money?
What about the one person who actually can't afford to do that because they'd already budgeted assuming that money was coming in?
What about if you need to reduce headcount? Do you just all vote on who should be fired in effectively a popularity contest that will cause build up of resentment later on? Draw the shortest straw? In this case, an "owner" is probably best because they can all collectively "hate" the owner and bond together as staff.
What about if someone is secretly planning to leave in the next few months and wants their money now as salary rather than investing in long term projects for the company, etc... They might destabilise the long-term success of the company if they vote not to invest, but be unmotivated and work poorly if they know some of "their money" was invested and they're never going to see it.
There seem to be so many edge cases where the traditional hierarchy structure seems like the best viable solution. There are some examples of co-operatives in the UK, the most famous is John Lewis. I think they work around it by just running mostly like a normal business, paying fairly normal salaries for different roles, but then bonuses for profit sharing.
- badcppdev 3y agoMore info about John Lewis and its current situation [0] and [1]. Most interesting to me is: "Insiders claim that some years’ borrowings were ramped up in order to avoid having to think the unthinkable and cut the hallowed John Lewis staff bonus, as profits failed to keep up with the pace of store openings." It only takes a few years of mismanagement for a partner owned company like Waitrose to borrow too much and step on the landmine of unserviceable debt. The company is then has to be sold and metastasises into a normal company. Obviously the most unjust thing in that story is that upper management probably not only get paid too much while causing the situation but likely negotiate a personally beneficial settlement for themselves as the ship burns and sinks. 0 - https://www.telegraph.co.uk/business/2023/07/12/john-lewis-rebound-waitrose-dame-sharon-white-bonus-debt/ https://www.telegraph.co.uk/business/2023/07/12/john-lewis-r... 1 - https://www.telegraph.co.uk/business/2023/05/11/can-dame-sharon-white-save-john-lewis/ https://www.telegraph.co.uk/business/2023/05/11/can-dame-sha... (Apologies for linking to that website)
- marcus_holmes 3y agoInteresting that although worker-owned they were still managed by professional managers and had that hierarchy. And it was the hierarchy that failed, not the worker-owned aspect. Managers incentivised to act in their own interests rather than the interests of the organisation is a source of much evil.
- helpfulmandrill 3y agoWell, looking at real-world examples, one large Basque cooperatives managed a downturn by agreeing for everyone to take a temporary pay-cut. > the Erreka Group averted layoffs by temporarily trimming wages by 5 percent. It continued to pay workers stuck at home in exchange for the promise that they would make up some of their hours when better days returned. https://web.archive.org/web/20210103102831/https://www.nytimes.com/2020/12/29/business/cooperatives-basque-spain-economy.html https://web.archive.org/web/20210103102831/https://www.nytim...
- IMTDb 3y agoYou are talking about a 5% reduction. No one even talks about a "round of layoff for hard time" when the number is that low. What would it look like if the company had to downsize by ~30% ? Would people still be able to pay rent ?
- conductr 3y agoDidn’t Covid just hit restaurants pretty hard. If they survived that I’m sure they’ve seen hard times
- helpfulmandrill 3y agoWhat sort of hard times are you talking about? Like the 2008 crash, for example?
- IMTDb 3y agoAny. Eg of what's happening next to me: a tunnel has to be closed for repairs, so it's becoming way harder for customers to access your location. As a consequence you are loosing a lot of customer for whom it's really inconvenient to come now. You have roughly 50% less customers for now. Repairs will last 2 years, and insurance helps you pay for the rent until the end of the repairs.
- helpfulmandrill 3y agoI think most companies would struggle in these circumstances. Co-ops can and do lay people off and/or reduce hours.
- TFYS 3y agoI don't think it would be hard to collectively agree to take less money or reduce everyones hours if the alternative is to lose the business entirely. You could use majority voting to prevent a single person from sabotaging the business. I think the biggest obstacle for worker owned businesses is the funding, not the absence of a hierarchy.
- IMTDb 3y agoFunding is the easiest part. Workers agree to bootstrap the business themselves by loaning their own money to the coop at a pre-agreed rate. Salaries are reduced until that loan is paid back. Increase the loan rate if not enough people are willing to pitch in money.