multistakeholder cooperation

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Multistakeholder Co-operation Vermont Co-op Summit 14th Oct. 2010 // Burlington, VT Don Jamison // VT Employee Ownership Center Erbin Crowell // Neighboring Food Co-op Association

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There is an inevitable tension in co-operatives between the interests of stakeholders: consumers, workers and producers. A multi-stakeholder structure can address this tension by giving all member types a place at the boardroom table and a share of patronage, leading to a more satisfactory discussion and resolution of issues.

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Page 1: Multistakeholder Cooperation

MultistakeholderCo-operation

Vermont Co-op Summit14th Oct. 2010 // Burlington, VT

Don Jamison // VT Employee Ownership CenterErbin Crowell // Neighboring Food Co-op Association

Page 2: Multistakeholder Cooperation

Agenda

Development of Co-op FormsMultistakeholder ModelsSome ExamplesOpportunities & ChallengesDiscussion

Page 3: Multistakeholder Cooperation

New & Renewed Approaches

“Changing times make it critical to find newand renewed ways of understanding andexpressing co-operative approaches tobusiness and society. Such new and

renewed approaches are best developedon the basis of a deep comprehension of

past and present experience. At the sametime, imagination is critical.”

Brett Fairbairn, Three Strategic Concepts for Co-operatives

Page 4: Multistakeholder Cooperation

Evolution of Co-op Forms

Holistic Vision of a Co-operative Economy Integrated Development of Co-op

Enterprise “Co-Partnership” with WorkersShift to Single Stakeholder Focus:

Philosophical: Primacy of a Single StakeholderPragmatic: Increasing Competition - Focus on

Primary ActivityExternal Influence

Page 5: Multistakeholder Cooperation

Development of Forms

Food Co-ops Agricultural Co-ops Co-op Financial

Organizations Worker Co-ops Fishery Co-ops

Credit Unions Artisan Co-ops Housing Co-ops Utility Co-ops Health & Insurance

Co-ops, etc.

Page 6: Multistakeholder Cooperation

Stakeholder & “User”

Co-op as based on “User”: A user-owned, user-controlled enterpriseorganized for the benefit of the user:The Producer or SupplierThe ConsumerThe WorkerThe Community Member

A Stakeholder: A person, organization orcommunity that is affected by or has aninterest in an organization.

Page 7: Multistakeholder Cooperation

Single Stakeholder Co-ops

Advantages Focus Articulate Stakeholder

Interest Appropriate Systems Simple Structures _________ ?

Disadvantages Isolation Divided Movement Limited Ability to

Influence Systems Marginalization of

other Stakeholders(Users)

Diminished Difference _________ ?

Page 8: Multistakeholder Cooperation

Why (Re)Consider Structure?

Opportunity of the MomentArticulate Advantages of Co-op ModelAddress Question of Marginalized

StakeholdersEngage Stakeholder Loyalty as

Competitive Advantage for Co-ops Innovate!__________ ?

Page 9: Multistakeholder Cooperation

Multistakeholder Approach

Some Combination of…The ConsumerThe Producer or SupplierThe WorkerThe Community MemberOther Co-ops or Organizations

Page 10: Multistakeholder Cooperation

Multistakeholder Models

Advantages Engage Stakeholder

Interest(s) Loyalty of Core

Stakeholders Access to Capital,

Information Innovation &

Flexibility

Challenges Relative Power of

Stakeholders Complex Structures Division of Patronage What if Interests

Diverge?

Page 11: Multistakeholder Cooperation

Multistakeholder Structures

MEMBERS

BOARD OF DIRECTORS

STAFF

Elect

Hire

Hire

MANAGEMENT

Worker Co-op

CONSUMERS, PRODUCERS,or OTHER “USER”

Consumer orProducer Co-op

Product or ServiceA MultistakeholderCo-op includes acombination of

member classes.

Page 12: Multistakeholder Cooperation

Mondragón, Spain

Multisector Co-op Corporation Founded 1956 85,000 Employees 2009 Sales: $20.54 billion Assets: $45.87 billion 256 Co-ops & Subsidiaries Four Areas: Finance, Industry,

Retail and Knowledge “Sovereignty of Labor”…

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Page 13: Multistakeholder Cooperation

Multistakeholder Areas

Sovereignty of labor alongside other stakeholders: Caja Laboral (Credit Co-op)

Workers, Account Holders, Co-ops

Agricultural Co-opsFarmers, Workers

Mondragón UniversityStudents, Workers, Co-ops

Retail SectorConsumers, Workers

Page 14: Multistakeholder Cooperation

Eroski

2009 Sales: $11.68 billion Largest Domestic Grocery

Chain in Spain 2,400 Outlets 2004: 30,000+ Staff Consumer/Worker Co-op Board: 3 Consumers, 3

Workers President is a Consumer Extending model to

subsidiaries

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Page 15: Multistakeholder Cooperation

Eroski Governance Structure

MEMBERSWorker Members // Consumer Members

BOARD OF DIRECTORS3 Worker Directors // 3 Consumer Directors

STAFFUse: Employment, Benefits, Infrastructure

Elect

Hire

Hire

MANAGEMENT

WorkerMembers

CONSUMERSUse: Products, Services, Infrastructure

ConsumerMembers

Core stakeholders or“users” of theenterprise are

represented by twodistinct membership

classes.

Elect

Page 16: Multistakeholder Cooperation

Social Co-ops in Italy

Provision of Social Services Type A: Healthy, Social Services or

Education. B: Employment Members: Workers, Beneficiaries,

Family Members, Volunteers, OtherCo-ops, etc.

Legally Formalized in 1990s -Dramatic Expansion in a decade

2001 Statistics: 7,100 co-ops 267,000 members $6.95 billion combined revenue

Page 17: Multistakeholder Cooperation

Examples in the U.S.

FEDCO Co-op Seeds, MEWeaver Street Market, NCOklahoma Food Co-op, OKFifth Season Co-op, WI

Page 18: Multistakeholder Cooperation

Profile: Fedco Seeds Year founded: 1978 2 classes of members – worker and “customer” –

but just one class of shares. Share price: $1. Board: 7 members. 4 elected by customer

members, 3 elected by worker members. Patronage: Customers (all, not just members) get

60% of patronage dividends; worker membersget 40%, to be distributed in accordance withhours worked.

Re-examination of structure now taking place.

Page 19: Multistakeholder Cooperation

Profile: Weaver Street Market Year founded: 1988 2 classes of members: worker and consumer Share prices: $500 for workers; consumer prices

vary by HH size ($75 for 1, $135 for 2, $175 for 3 ormore).

Board: 7 members. 2 elected by worker members, 2elected by consumer members, 1 (the President)appointed by the above four, 2 appointed by theabove five.

Patronage: This has changed recently. Nowallocated on basis of total hours worked (workers) ortotal amount of purchases (consumers). Boardneeds to set policy re: division.

Page 20: Multistakeholder Cooperation

Profile: Oklahoma Food Co-op Year founded: 2003 2 classes of members – producer and consumer –

but one class of shares Share price: par value ($50) or actual value,

whichever is greater. Board: Officers serve on the board. One VP for

Producers and Customers is elected by each group.One board member is elected by employees. 5 or 6at-large board members are elected by all members.

Patronage: “the surplus from the member patronage business ofthe association shall be allocated to member-patrons in theproportion that the patronage of each member bears to the totalpatronage of all the members of the association.”

Page 21: Multistakeholder Cooperation

Profile: Fifth Season Cooperative Year founded: 2010 6 classes of members: producers, producer groups,

processors, distributors, buyers, workers. Two classes of shares: one for members, the other

for investors. Different equity contributions requiredfor the different member classes.

Board: 7 members. 3 member classes (producer,buyer, worker) elect 1 each. 4 elected by allmembers.

Patronage: distributed “in accordance with the ratio ofeach member’s patronage (business transactions) to thetotal patronage (business transactions) by all members.”

Page 22: Multistakeholder Cooperation

Opportunities in the Economy

Production and Distribution Co-opsValue-AddedSocial Services & Employment Co-opsHealthcareShared Marketing__________ ?

Page 23: Multistakeholder Cooperation

Discussion

Is the multistakeholder approach relevantto our opportunities and challenges?

What are your concerns about such amodel? What is most interesting?

What are some opportunities you see forexploring the model?

Page 24: Multistakeholder Cooperation

Contact

Erbin Crowell

Neighboring FoodCo-op Association

[email protected]

Don Jamison

Vermont EmployeeOwnership Center

[email protected]