A new model for American business: Your thoughts please...

[Jackpine Radical]

The workplace has proved itself incapable of providing adequate health care and retirement plans for its workers. This is particularly the case with small and start-up companies, who lack the advantage of large employee pools. The result is a damping of creativity in the marketplace. People are less likely to engage in risk-taking and innovation when they must do without adequate health care and retirement financing in order to do so.

Thus universal health care and a fully funded government retirement system would result in the creation of many new small businesses in new areas such as green technology, precisely where they will answer the emerging needs of society.


A model for a company in the coming age:

The company will be worker-owned. You will earn increasing shares in the company as a function of the number of years you are employed in that company. If you leave the company for any reason, you may hold your shares until your death. However, when you die, the company will give your estate a fair cash settlement for your share and the remaining workers will retain ownership of the company. This is necessary in order to keep ownership from spreading out among people who have no vital interest in the company.

Not all workers will he an equal share in the company. For example, it would be expected that the entrepreneur who starts the company will retain a larger share of ownership than the other employees. Also, shares in the company may be differentially assigned on the basis of the type of work done. Each worker will receive wages or salary commensurate with their job responsibilities, and in addition each will receive a share of the profits commensurate with the number of shares they hold. Thus every worker will have a stake in making the company more profitable in the long run.

After World War II, an American expert in production processes went to Japan and taught them the management system that they then used to beat the rest of the world in the marketplace for a couple of generations. I believe that his methods can be modified readily to suit the circumstances of an employee-owned company. Here are the basic 14 points he taught:

1. Create constancy of purpose and continual improvement – long term planning must replace short term reaction
2. Adopt the new philosophy – by management and workers alike.
3. Do not depend on quality inspection – build quality into the product and process
4. Choose quality suppliers over low cost suppliers – to minimize variation in raw materials and supply.
5. Improve constantly – to reduce variation in all aspects e.g. planning, production, and service.
6. Training on the job – for workers and management, to reduce variation in how job is done.
7. Leadership not supervision – to get people to do a better job, not just meet targets.
8. Eliminate fear – encourage two-way communication, encourage employees to work in the organization’s interest.
9. Break down internal barriers – department’s in an organization are “internal customers” to each other and must work together.
10. Eliminate slogans (exhortations) – processes make mistakes not people. Management harassment of workers will create bad relations if no effort made to improve processes.
11. Eliminate numerical targets – management by objectives (targets) encourages low quality.
12. Remover barriers to worker satisfaction – including annual appraisals
13. Encourage self improvement and education for all
14. Everyone is responsible for continual improvement in quality and productivity – particularly top management

[Jackpine Radical]

1. Another shot. Anybody??

[scarletwoman]

2. I've always loved the idea of worker ownership, and you've broken down the details very well.

Back in the early days of the food co-ops on the West Bank in Minneapolis, all the hippie enterprises were worker-owned. There were no shares or dividends, though -- we weren't exactly that well organized, but in the case of the food co-ops, your "shares" were discounts on the food you purchased, and the size of the discount was related to how many hours you worked -- at $.50 an hour. :)

I worked for the People's Mill for awhile, grinding organic wheat and rye for flour -- it was a hoot hauling those 50 pound sacks around and climbing up to empty them into the hopper. Besides our $.50 an hour, we earned chits to spend at the stores we supplied.

I eventually ended up being a cook at the New Riverside Cafe, also worker owned. I think we made $1.75 an hour by then, and we ate for free. Our weekly meetings were awful, though. Our rules were that every last decision had to be made by full consensus of the whole group -- this could take HOURS! Ach! The fun part was that all us cooks could come up with new recipes to try out anytime we wanted.

Those days were really remarkable; there was a whole interwoven network of worker-owned enterprises built around food at one point -- from hippie farmers growing organic food, to the People's trucking company that moved the food around, to the People's Mill, to the food co-ops, to the restaurants like New Riverside and the Seward Cafe, who bought their supplies through the co-ops. The co-ops have survived, although in much altered form. The Mill and the trucking company died, the New Riverside Cafe closed down -- although I've heard someone revived and re-opened it, but I have no idea if it's the same worker's paradise it was in my day.

Sorry about rambling so... The thing is, I always the worker-owned concept to really succeed, but I saw a lot of the downside to it back in those days. The model you've outlined looks MUCH more viable than what we hippie idealists were attempting back in the day.

The one element missing -- I hate to say it -- is capital. Where does the money come from in the first place to start an enterprise from the ground up? My own thoughts on that point are that either the workers somehow have enough cash to pool together to get started, or that in our brave new post-corporate world of worker-ownership, worker-owned venture capital companies will be created. Do you think there are some rich old hippies who'd be up for that?

Best,
sw

[Phoebe Loosinhouse]

3. Interesting. I love the concept of worker-owned companies

http://www.usatoday.com/money/companies/2007-04-03-esop-usat_N.htm
That link is about ESOPs (Employee Stock Ownership Plans) and has some good points about both the up and the downside.

What you are describing sounds almost more like a collective or a co-op, especially since you seem to be restricting ownership to employees only which might make it difficult to raise funds in the future as opposed to a publicly owned company. But, I don't see why in some specific situations that it couldn't work. In the end it comes down to the actual real-life people involved in such a venture. As described by scarletwoman above, committee decision making can be torturous and not always a good thing and a couple of nincompoops can upset an entire applecart.

I also think that employees who do have some kind of stock ownership via 401K matches and the like do not use the power they already have. No one reads their annual reports and most people just sign the proxy form or don't bother responding at all. They could make more of a show at annual stockholder meetings and ask questions and push for more and better employee benefits. I think they are cowed and afraid of losing their jobs if they make waves.