What did you say? Worker participation in cooperatives

The focus of this thesis is on cooperatives and the different ways in which they operate as an organisation and how they manage their employment relationships compared to investor-owned enterprises. In particular, this thesis investigates worker participation within cooperatives, with its empirical research located within the financial sector. While cooperative banks and credit unions have been an integral part of the finance sector for over a 100 years, there has been increased interest in the model since the Global Financial Crisis and renewed interest in creative organisational structures and employee engagement. Researchers, such as Pencavel (2001), argue that these organisational structures are unique and worthy of attention as they are capable of supporting both economic and democratic goals. In essence, cooperatives are businesses that are owned and democratically controlled by their members – the people who buy their goods or use their services – not by investors (Pencavel, 2001; Ellerman, 1990). Archetypical cooperatives are expected to follow the Cooperative Principles adopted by the International Co-operative Alliance (ICA). It is through these principles that cooperatives encourage democracy through various forms of member engagement and worker participation. There are a number of types of cooperatives. Producer-owned cooperatives are probably the most common form of cooperative and are typically found in the agricultural sector and are made up of individual producers that have come together for bargaining power. In worker-owned cooperatives the organisation is owned by the employees where they have a dual role as an employee and owner. In comparison, customer-owned cooperatives offer products or services to their members which are most likely to also be customers. To a certain extent, the employees can also be members. Lastly, and as added by Cooperative Business New Zealand, are the financial cooperatives and insurance mutuals. This relates specifically to the industry that they operate in, not the type of cooperative. They are a type of customer-owned cooperative. Specifically, the Cooperative Principles number two and three outline the requirement for democratic control and economic participation. When examining cooperatives in New Zealand’s financial sector, these two principles guided the researcher to explore opportunities for worker participation. The principles of cooperatives not only encourage member and employee democracy but also worker participation. The literature on worker participation indicates that the interests of management or employees could drive worker participation. Management-driven participation is typically focused on the bettering of the organisational performance and the increasing of profit. The literature indicated that when management drive the participation, it is unlikely employees will be invited to participate in strategic matters because employee involvement is not seen to contribute directly to economic performance. This study is based on semi-structured interviews with key informants representing two cooperatives in the financial sector in New Zealand. The results showed there were indications of strategic input from employees despite there being management-driven forms of participation. Moreover, interest in cooperatives and worker participation by New Zealand trade unions has traditionally been spasmodic and the finding from this study indicates a similar position. In one of the cooperatives examined there was union representation, where the primary focus for the union was to focus on collective bargaining. Comparatively, in the other cooperative there was no union presence. Instead, management-driven forms of participation were seen to be adequate by management and in the interests of the employees. Despite these cooperatives adhering to the principles, it was found that the banking regulations in New Zealand appeared to hinder the organisations’ ability to fully exercise cooperative principles, in particular number two and three. The banking regulations place huge onus on the senior management of the organisation to be accountable for the governance of the organisation. This means that democratic member control and member economic participation is restricted. One interviewee explained that the New Zealand banking regulations dwindles the cooperative down to simply a marketing label. Overall, employees of the cooperatives examined were given different avenues for participation ranging from operational to strategic matters. The interviewees suggested that participation was alive in their cooperatives but not because they were cooperatives, rather because it is good management practice