The culture of UK employee-owned worker cooperatives

Publication Date18 February 2020
Pages761-776
DOIhttps://doi.org/10.1108/ER-12-2018-0327
Date18 February 2020
AuthorDavid Wren
SubjectHR & organizational behaviour,Industrial/labour relations,Employment law
The culture of UK employee-owned
worker cooperatives
David Wren
Department of Management, Sheffield Hallam University, Sheffield, UK
Abstract
Purpose This paper presents exploratory, empirical data from a three-year study of organizational culture in
for-profit, employee-owned businesses within the UK, comparing ownership types (direct, trust, and
cooperative). It outlines the study and then focuses on worker cooperatives. Culture is illuminated through the
lens of performance and reward management.
Design/methodology/approach Qualitative data was gathered from three worker cooperatives based in
the North of England, using semi-structured interviews, participant observation, and document review and
was compared to qualitative data collected from other types of employee-owned businesses.
Findings The findings suggest a di stinct culture within wo rker cooperatives enc ompassing five key
values: a whole life perspective, consistently shared values, self-ownership, self-control, and secure
employment.
Research limitations/implications Additional time with each cooperative and a greater spread of
cooperatives would be beneficial. The research was carried out during a period of organizational growth for the
case organizations, which may influence attitudes to reward and retention management.
Practical implications The results inform recruitment and retention policy and practice within worker
cooperatives and highlight concerns regarding the stresses of being a self-owner. These are important
considerations for potential worker co-operatives alongside policy recommendations to advance employee
ownership.
Originality/value A comparative analysis of culture, performance, and rewards across different employee
ownership types has not been undertaken before. This addresses an under-researched area of employee
ownership regarding HR practices. Within the UK, recent research on the culture(s) of worker cooperatives is
limited.
Keywords Organizational culture, Employee ownership, Worker cooperative, Performance management,
Reward management
Paper type Research paper
Introduction
This paper offers an empirical account and comparative analysis of organizational culture
within employee-owned businesses (EOBs), with particular attention to worker cooperatives
(WCs). It is the first paper of a wider study that explores variations of culture across three
dominant types of EOBs within the UK (Wren, 2016). The ownership types are worker
cooperativesenterprises,where workers exclusivelyown and controla co-operative business;
directly-ownedwhere shares are personally owned by employees, and trust-ownedwhere
shares are owned on behalfof employees through a perpetual trust (Pendleton and Robinson,
2015). The aim of thewider study was to investigate the effect that employee ownership (EO)
has upon organizational culture. From there, a narrower focus emerged on how the WCs
organizationalculture varies from the other typesof EO.
This study is important because it is a unique comparative analysis of EO cultures
through the lens of performance and reward. EO is under-researched. Although much has
been written on culture and HR practice, its application within EOBs is less known
(Wright, 2010;Nuttall, 2012). Pierce and Rodgers (2004) cite a lack of understanding of
The culture of
UK worker
cooperatives
761
I would like to acknowledge my PhD supervisors Prof. R.Ridley-Duff and Dr M. Clark as well as my post-
doctoral mentors, Prof. P. Prowse and Dr J. Snook who have supported me as I have developed this
paper.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 19 December 2018
Revised 21 August 2019
13 January 2020
Accepted 13 January 2020
Employee Relations: The
International Journal
Vol. 42 No. 3, 2020
pp. 761-776
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-12-2018-0327
different forms of ownership, and Kalmi (2007) highlights the neglect of scholarship on the
impact of alternative forms of shareholding in the UK that might support radical approaches
to employment relations (Fox, 1966).
There has been an increasing interest in EO (Lampel, 2012). Sauser (2009,p.163)said,
the employee-owned company is a concept whose time has come,and Nuttall (2013)
states that the UK is experiencing a decade for EO. In 2012, it was the UN Year of the
Co-operatives,and the UK government expressed a desire to increase EO. This is important
as cooperative start-ups are almost twice as likely to survive the first five years of operation
compared to companies, and still, they remain the best-kept business secret
(Co-operatives UK, 2018). Cooperatives follow a set of seven principles declared by the
International Co-operative Alliance (ICA) (ICA, 2014): voluntary and open membership;
democratic member control; member economic participation; autonomy and independence;
education, training, and information; cooperation amongst cooperatives, and concern for the
community.
The Nuttall Report into Employee Ownership(Nuttall, 2012) investigated barriers to EO
and identified the two primary obstacles as lack of awareness and disadvantageous tax
implications. It also recommended further research in EO (Recommendation N, p. 9), which
would assist social entrepreneurs in creating EOBs, as well as founder-owners contemplating
a transition into EO (BIS, 2013). By researching culture(s), this paper contributes to emerging
debates on EO and enhances our understanding of how EOBs operate. The research
question asks:
How can attitudes to performance and reward management in worker cooperatives contribute to an
understanding of the impact of EO on organization culture?
Performance and reward are used to illuminate the cultures. This is appropriate as
performance is rewarded, creating a virtuous cycle of behavior (Armstrong, 2012) and
specifically within for-profit EOB, employees receive a share of the surplus, as a reward.
Performance management can impact culture by defining what is acceptable or not
(Bach, 2005). Co-ownership can influence the performance of employees who have a personal
interest in the profitability of their organization.
This paper has four sections. It examines the current literature and then explains the
research methodology. The five themes identified are explored, and then the conclusions
apply the findings to questions about the operationalization of WCs. Future papers will report
findings on other EO types (direct- and trust-owned) and explore findings common to all three
EO types.
Literature
Erdal (2011) positions EO as a response to the issues raisedby Wilkinson and Pickett (2010),
Norton and Ariely (2011)and Stiglitz (2013) regarding thegrowth and impact of inequality in
society. Wilkinson and Pickett (2010) suggest a causal link between income inequality and a
variety of socialand health problems. Erdal (2011, p. 139) views the employment contractin a
conventionalfirm as an agreement through which the employee is rented.Employees do not
benefitfrom the organizationsprofitability, as ownersdo, receiving limited wagesand benefits
that perpetuate inequalities at work. In comparison, EO ensures employee-owners receive a
share of all gainsthat accrue to workers throughenterprise ownership (Lewis, 1954).
Stiglitz (2013) suggests that income inequality stifles economic growth as the greatest
proportion of earnings goes to a tiny minority, and employees do not have the spending
power to regenerate the economy. In the USA, 1 percent of the population owns 50 percent of
the wealth (Norton and Ariely, 2011), and hence Blasi et al. (2014) propose taxation changes
and greater information regarding EO that would reduce inequality. Austin (2014) calls for
the expansion of WCs in New York, to cope with unprecedented levels of income inequality
ER
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