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Welcome to step 4 in my series on how to build a cooperative from the ground up. In step 1, I gathered my group of co-op enthusiasts. In step 2, this fictional group started researching our potential niche for the work. Step 3 drafted a working vision to propel our work forward. In step 4, we continue our foundation by deciding… how we decide. If you missed a step in this series, here’s the table of contents:
Introduction to cooperatives
Building a cooperative: step by step guide
- Collect information, clarify needs, and assemble your founding members.
- Discuss needs and vision; coordinate organizing and business research.
- Consolidate a clear vision.
- Design your decision-making process.
- Conduct a feasibility study.
- Create a business plan.
- Define roles.
- Convene your first cooperative owners meeting.
- Convene your first board meeting.
- Begin operations!
There’s one more piece of place-setting to do before we get into it. I may be a professional but a lawyer I am not. My cooperativity project is an experiment. If you try this at home, please tell me how it goes!
design your decision-making process
Like step 3, this is a planning step from the Electric Embers guide. Why is planning for decisions such an important pausing point? I’m willing to bet that if you’re new to cooperatives you’re more familiar with a top-down hierarchy. In most hierarchies, we don’t spend a lot of time deciding how to decide. Decisions flow upward to a level that leaders think is appropriate. We can’t default to the person at the top of the pyramid pulling rank and calling the shots! Most cooperatives use democratic decision-making. This means that everyone plays a role in the kinds of choices that are usually left to the CEO. Decentralizing leadership creates more opportunity for dialogue on these decisions.
The flip side of that can also induce panic in people who are new to co-ops. Do we have to decide every single decision together? No! Once we decide how decisions get made, we’ll know when and how to consult others about a decision we’re facing. Isthmus Engineering is a worker cooperative based in Wisconsin. In a case study I read, one worker there talked about what they love: “The lack of red tape. I’m empowered to make decisions. If I need to make a decision to meet a customer need, I can just do it. I like having the power over the project.”
why we make decisions
Andrew McLeod from the Northwest Cooperative Development Center wrote the guide Deciding how to Decide. He writes that many cooperatives come late to planning about how to make decisions. Workers buoyed by good feelings for their fellow member-owners may find it hard to rock the boat. Or when someone does raise an issue, a debate without a process can go on forever without resolving. Other times, people will feel disconnected from decisions that don’t appear transparently made.
McLeod names six types of decision-making. Most groups, cooperative or not, settle into one of these six broad categories:
- Autocracy: very quick and easy, not much buy-in, requires much enforcement
- Consultative: a bit more inclusive than autocracy, and less error-prone
- Majority: Most familiar and quite inclusive, but still competitive form
- Supermajority: Provides stronger legitimacy than majority
- Consensus: Shifts to building a solution that is agreeable to everyone
- Unanimity: Great when it happens, but not a tenable decision-making process.
These will be familiar to most people. I’ve worked at places that run somewhere between Autocracy and Consultative for big decisions. I appreciate how McLeod describes Unanimity. People are all so different that unanimity often rounds down perspectives into mush. It’s unrealistic to assume that my happy group of folks will never have conflict. Amid the disorientation of a conflict (“we’re fighting! but we never fight! aahhhhhh!”) we’ll already have a process we agreed to follow.
decision-making options
Consensus: consensus decision-making is common in cooperatives. When we seek consensus, we strive to find solutions that everyone can live with it.
Majority: this is how local elections in the united states are often run. Everyone gets a vote in whatever proposals come forward for voting. If half + 1 people vote for one option, that option wins. As we see all the time in elections, that still leaves up to half – 1 people whom the outcome may disappoint.
Supermajority: a bit (but not much) more inclusive. In a supermajority, there’s an arbitrary number larger than half that the votes must reach. As with a majority, there’s still some minority of folks whose votes won’t count.
Consent: like consensus, this model gauges everyone’s comfort level with a decision. Consensus seeks a solution that everyone can live with. Consent seeks a solution that no one objects to. It’s a subtle difference that can mean a lot depending on the group.
Sociocracy: this is another model I like. Groups of people, called nodes, make decisions that fall within their purview. These nodes work to fully understand the problem they must solve. Decision-making happens through a consent-based process. This ensure that nobody is uncomfortable with the decision they make.
case study: Fedore Cooperative
Fedore Cooperative is a worker cooperative in Western Canada. I read about them in a case study written by Claudia Sanchez-Bajo, PhD. She changed the names (including the co-op’s) of those involved to protect their identities. Fedore began with a single investor who bought a building in his town’s historic centre. Over time, the property became home to a bookstore and a cafe. The owner soon decided to convert to a workers’ co-op with 9 members and 4 provisional members. Their cooperative used a consensus model to make decisions. If the members couldn’t reach consensus, though, they would decide by majority.
In 2010, Fedore Cooperative was at an impasse. The bookstore and cafe had both faced tough financial straits. As the business struggled, the members chose to open a grocery store. They needed a loan but didn’t have the capital to guarantee it. Two members stepped forward to cover it. That didn’t end their issues.
The members hoped that the costs to run the store would complement their costs running the cafe. Unfortunately, the grocery store faced stiff competition in the area. Its revenues covered the workers’ salaries but did not return the profits they hoped it would.
The two members who backed the bank loan now found themselves in conflict. One member, Eric, wanted to close the store. He believed that changes to the cafe and bookstore’s operations would bring in higher profits. Sonia, the other guarantor on the loan, resisted those changes. She wanted the grocery to remain open. She believed that the changes that Eric proposed went against the values of their co-op. The remaining membership appeared split between these two camps. A third member, known as Marysa, knew it was up to her to propose a way through the conflict…
And the case study ends there! I had some thoughts while I was reading it. What would have happened if the members chose to resolve their conflicts in a different way? What if majority rule wasn’t the default option when consensus failed? How was the consensus model working before this situation? Did members feel like it had met their needs before or did conflict feel less contentious in the past? We don’t know how this story ends. It does show why it’s important to have a decision-making framework ready before you need it.
closing thoughts
Cooperative member-owners have a lot of responsibility to the survival of their business. Sometimes it’s hard to make decisions. It’s important to consider the power imbalances that are inherent to modern society. They exist even within the equality ideals of a cooperative. At Fedore, two members went above and beyond their costs for membership. This appears to have given them outsize influence in the direction of the company.
The guides above remind us to practice our decision-making process even when people agree. This helps people get used to the process before things get rocky. I’ve practiced consensus decision-making with groups before. I always start them out with something super easy. Once I asked the question, “what restaurant should we use to cater our next gathering?” Most of the groups staked out clear criteria that met everyone’s needs. They narrowed their decision down to a choice that everyone present would enjoy. But one group spent almost 30 minutes debating their choice. By the end of the exercise, they couldn’t agree on a place to eat! Imagine if each group was a mini-cooperative making decisions for the first time. At least one of our fictional co-ops would’ve gone hungry.
Like the three steps that came before, we are still making incremental progress. These steps help ensure we’ve done everything we can to balance power in our new co-op. If we can’t meet the needs of one step, that might be a sign that this isn’t going to work. Luckily for us, we’re moving on to step 5!
my name is josh martinez. i have always loved trying to understand systems, and the systems that built those systems. i spend a lot of time thinking about how to get there from here.
i own and operate a consulting practice, Future Emergent.
say hello: josh[at]bethefuture.space
