Differences Between Worker Cooperatives and Collectives
The terms "cooperative" and "collective" are often used interchangeably. While there is some overlap between the two, these terms have distinct meanings:
A cooperative is an organization that is owned and democratically-governed by its members. Each member owns one voting share, and has one vote on major decisions as outlined in the organization's bylaws. Cooperatives generally adhere to the seven principles outlined by the International Cooperative Alliance.
A worker cooperative is a cooperative in which the workers are the only member-owners. This means that each worker owns one voting share, and is able to participate in the governance (and often the management) of the business. Because workers are the only people eligible to become member-owners, outside investors or consumers do not participate in the governance of the cooperative. Some worker cooperatives have elected managers, or managers who are hired by the elected Board of Directors. Some worker cooperatives that are not collectives have a flat management structure at an operational/worker level with no managers, but key decisions made by the Board of Directors.
A collective is an organization that is managed without hierarchy. This means that every member has equal decision-making power. Some decisions may be delegated to individual members or sub-committees, but no one has the special, un-recallable authority usually granted to a manager. The legal structure will specify that all Members are automatically Directors and must accept the responsibilities of Directorshop, or that the organization is managed by Member meetings.
A worker collective is a particular kind of worker cooperative. A worker collective adheres to the same cooperative principles as does a worker cooperative. However, worker collectives also adopt a non-hierarchical (often called a "flat" or "horizontal") management structure. This means that all workers are equal co-managers: nobody has un-recallable decision-making power or authority over another worker. Smaller decisions may be made by individuals, department teams, or committees, but all collective members participate in both major management and governance decisions.
As you can see, the word "cooperative" refers to a specific ownership structure. Cooperatives can be owned by workers, community members, or both. The word "collective" refers to how members participate in the management structure. Collectives manage worker-owned cooperatives, consumer cooperatives, non-profits, or volunteer activist projects.
In a cooperative with a hierarchical management structure, the manager or management team makes most operational decisions. A Board of Directors, comprised of and elected by the members, makes governance-level decisions and often hires and supervises the manager(s). Most cooperatives use some form of majority-vote decision-making, especially when large numbers of members are voting for Board Directors or bylaws changes. However, some hierarchical cooperatives use consensus decision-making amongst the Board Directors.
In collectives, all members typically participate in the decisions that directly affect them. This may mean that all workers in a given department or management committee make decisions related to their work together. In the case of smaller collectives, most workers may participate in most management decisions. In most collectives, all members participate in the governance of the organization, fulfilling the roles traditionally reserved for Board Directors. However, some larger collectively-run organizations elect Board Directors to fulfill certain limited tasks. Many collectives useconsensus decision-making. However, some collectives use a form of majority vote or some combination of the two.
While both cooperatives and collectives reject the hierarchal ownership structure of typical corporations, the two take different approaches to their management structures.
In cooperatives with hierarchical management structures, every member is also an owner (or every worker, in the case of worker cooperatives). The Board of Directors is comprised of and elected by members, but is empowered to make governance decisions on their behalf. Where there are managers (who are often either elected or hired and supervised by the Board) are empowered to make operational (management) decisions. However, many worker cooperatives (especially the experience in the UK) do not have managers.
Collectives tend to strive to abolish hierarchy. This means that all collective members are equally empowered to participate directly in the governance and management of the organization. Some roles and decisions may be delegated, but all members are equal co-managers. Because all members are equally responsible for the success or failure of the organization, there is often a rigorous intake process before a newcomer is approved as a full collective member.
There are many different types of cooperatives and collectives. Every organization develops its own unique structure and processes, based on its particular characteristics and needs. More detailed case studies can be found to Worker Cooperatives- Part 2.pdf in this short presentation on worker cooperative structures [PDF].
The United States Federation of Worker Cooperatives also has some useful documents from hierarchical and collective worker cooperatives in their online document library.
These are spotlighted conversations from this page's Discussion Area.
- Are there certain types of worker-owned businesses that tend to favor structuring as collectives or as co-ops? Why do you think this is the case?
- Examples of collectively-managed organizations with elected Board Directors include Rainbow Co-op and Portland Collective Housing.