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Code of Governance

The Worker Co-operative Code of Governance was written by Worker co-operative members of Co-operatives UK and the original can be found here: [1]. As this is a wiki please amend and improve as you see fit.

Introduction

We all want our worker co-operatives to succeed, both as businesses and as democratic Co-operatives. Yet we often seem to be forced to choose between these ideals. The co-operative dream is submerged by business needs, or arguments about co-operative principles get in the way of managing the business.

The writers of this document combine many decades of worker co-operative experience. We realised that we already had the solution – successful worker co-operatives use good business management techniques co-operatively. It is not a choice. It is a balancing act. This Code of Governance helps worker co-operatives achieve this balance.

‘Governance’ refers to the overall direction, supervision and accountability of a co-operative. This means, in practice, having the procedures in place to run your co-operative and business effectively – from documents clearly defining what membership of the co-operative involves, to procedures ensuring sound financial management or guaranteeing that members develop skills needed to run the business into the future.

This Code brings together the fundamentals of worker co-operative governance for the first time. Based on the seven co-operative principles agreed by the International Co-operative Alliance in 1995, it explains how to use these principles to both run your business and govern your co-operative successfully.

The Code of Governance provides a framework for you to follow and is supported by examples, literature, contacts and case studies. Exactly how you put the co-operative principles into practice (democratically, of course) is up to you. We are confident you will rapidly see the benefits.

The Code

Principle 1: Voluntary and open membership

Membership is open to all workers able and willing to accept the responsibilities of membership.

Worker co-operatives function best as an inclusive team of members who have long-term collective interests in the success of the business.

Your co-operative should:

  1. Offer open and voluntary membership for those workers who are able and willing to accept the responsibilities of membership.
 2. Agree the rights and responsibilities of its members (a member job description or similar).
 3. Provide all workers with meaningful information about membership.
 4. Include a probationary period and membership training for workers who want to become members.
 5. Ensure the majority of workers are members and the majority of members are workers

Principle 2: Democratic member control

Members should actively participate in the governance of the co-operative enterprise. One member, one vote. Elected representatives are answerable to the membership.

Worker co-operatives succeed (as co-operative businesses) when members participate in transparent, fair decision-making. In all but the smallest co-operatives, some delegation of authority is necessary for members to act on behalf of the collective.

Your co-operative should ensure:

  1. Members actively participate in the management of the business.
 2. Democratic processes, or democratic accountability, in all management functions.
 3. Members actively participate in long-term planning.
 4. Effective communication, both between the co-operative and its members and between members themselves.
 5. There is agreed and delegated authority for members to act on behalf of the co-operative and the business.
 6. There are regular reviews of the co-operative's governance and business management processes.

Principle 3: Member economic participation

Members democratically control the capital of the business, some of which is common property. Surpluses (profits) are used for developing the co-operative, paying members in proportion to theirwork for the co-operative and other uses approved by the members.

Your worker co-operative should provide the pay and other benefits that your members need and want. As members, you decide what these benefits will be; you manage the business to provide for them and protect its future.

Your co-operative should ensure that:

  1. It builds up collectively owned financial reserves and capital.
 2. Its pay structure and other benefits, including non-financial benefits, are planned and agreed by members.
 3. If members have individual investments in the business they are non-voting and are achievable by most workers.
 4. Pay levels are sufficient to sustain long-term employment and membership – to maintain skills and experience.

Principle 4: Autonomy and independence

Co-operatives are autonomous enterprises, controlled by their members. Agreements, contracts and financial arrangements with external parties must recognise this.

You should actively plan and manage your co-operative to be a successful business and avoid becoming over dependent on any funder, supplier or customer.

Your co-operative should:

  1. Regularly review its business planning and management processes.
 2. Have financial controls and financial management – including internal audits – of all parts of the business.
 3. Actively manage your operations, personnel, marketing and other business functions.
 4. Manage and control risks (internal and external) facing your co-operative and business.
 5. Assess the management, co-ordination and technical skills needed to achieve your co-operative’s objectives.
 6. Invest in equipment and premises sufficient to allow agreed working conditions and efficient operations.
 7. Benchmark your co-operative and business performance against recognised performance standards, including this Code of Governance.

Principle 5: Education, training and information

Provide education and training for members, elected representatives, officers, managers and employees to improve their contribution to the development of their co-operative. Promote the nature and benefits of co-operative organisation to the public.

Education, training and personal development enable worker co-operative members to become multi-skilled workers able to undertake whatever work is required and participate in the management and development of the co-operative business.

Your co-operative should ensure:

  1. All members and prospective members receive training in membership and co-operative skills.
 2. Members and workers receive technical (vocational) skills training for current and future needs.
 3. Professional development and training for officers, specialists and elected representatives.
 4. Management skills and techniques are acquired to permit efficient co-operative business co-ordination.
 5. The nature and benefits of co-operative organisation are promoted to the public and your local community.

Principle 6: Co-operation among co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement byworking together at local, national, and international levels.

Co-operation between co-operative businesses is key to business success for co-operatives. Principle six enables co-operative businesses to ethically outperform the private opposition.

Your co-operative should:

  1. Network with co-operatives of all types and promote member-to-member links.
 2. Prioritise co-operative-to-co-operative trading.
 3. Practice fair and honest commercial competition between co-operatives.
 4. Seek active co-operation with other co-operatives to achieve economies of scale, access to business opportunities and long-term business development.
 5. Join Co-operativesUK and participate in national and regional co-operative activities.
 6. Actively share information and good practice with fellow co-operatives.

Principle 6: Co-operation among co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement byworking together at local, national, and international levels.

Co-operation between co-operative businesses is key to business success for co-operatives. Principle six enables co-operative businesses to ethically outperform the private opposition.

Your co-operative should:

  1. Network with co-operatives of all types and promote member-to-member links.
 2. Prioritise co-operative-to-co-operative trading.
 3. Practice fair and honest commercial competition between co-operatives.
 4. Seek active co-operation with other co-operatives to achieve economies of scale, access to business opportunities and long-term business development.
 5. Join Co-operativesUK and participate in national and regional co-operative activities.
 6. Actively share information and good practice with fellow co-operatives.

Principle 7: Concern for community

Co-operatives work for the sustainable development of their communities.

Co-operatives are community-based businesses. If your co-operative builds good relations with your local and wider communities you will create goodwill and opportunities for your co-operative and members.

Your co-operative should:

  1. Actively control the environmental and social impact of your business.
 2. Agree and achieve ethical business standards.
 3. Operate at high health and safety and worker welfare standards.
 4. Prioritise and promote Fairtrade and other ethical and sustainable initiatives.
 5. Participate in your local, and wider, community and promote co-operative principles in community activities.

Practical Applications for The Code

Co-operatives UK is currently investigating creating an online tool to help members check their adherance to the Code and benchmark themselves against other worker co-operative members.

Although more used at an organisation wide level some worker co-operatives have started to use the Code at a team level to aid discussion around co-operative working at a team level.

See Also