Как основать производственный кооператив. Руководство для фрилансера в ИТ-сфере (перевод)
For many, a “cooperative” is something about construction, garages, or agriculture. However, according to this model, many companies in different areas of the world are organized
Recently, I have been interested in IT cooperation issues and I believe that, under certain conditions, this model has significant advantages.
What do you think?
- How much is this model applicable in Russia?
- What are the pros and cons?
- Are there any among us who have had successful or not successful experience in creating an IT cooperative?
It is recommended to read not only to freelancers, but also to all who think about the future, and the possible trajectories of the development of their career.
Why create a production cooperative group of freelancers?
What is a production cooperative?
How to create a production cooperative in IT?
Stories from production cooperatives of the technical sphere
Why create a production cooperative group of freelancers?
At first glance it may seem that the establishment of a freelancers' cooperative contradicts the very essence of this kind of activity. In the end, to be independent, the boss himself, wandering freely lonely wolf, is, like, the main motive of freelancing.
Many of us, having experience both in employment and in the status of a freelancer, then, having become part of a production cooperative, discovered that such a model combines the best of both formats of employment. You still enjoy all the privileges of freelancers, and remain the boss to yourself, but you do not need to pull everything alone. Here are some of the advantages that a cooperative membership offers to a freelancer:
Availability of support
In most cases, freelancing is “something thick, something empty.” In times of crisis, or during the holidays, you have teammates who are familiar with the client and are ready to come to the rescue - after all, as a member of the cooperative, they have the same authority and respect as you.
Providing customers with a 24/7 service in a comfortable mode.
For those who always have to be available to the customer, and be ready to receive a call at any time of the day or night, it is possible to share this burden. This is especially true when you decide to start a family, or go to school. And since a cooperative is a democratic union, each participant can take on a fair share of nightly duties instead of one or two recruits all the time dragging this strap.
Ability to pump extra skills
Over time, we all become good specialists in our work - perhaps even too much. But changes in technology, or in the industry, can easily destroy a niche that has been worked so hard for many years. As part of the team, we work closely with colleagues who have different skills that are different from ours, but nevertheless close to them. And in this case, the natural mutual exchange of expertise enriches everyone. The format of a production cooperative, being shared in its essence, encourages the exchange of skills between professionals who in a traditional company could see each other as competitors.
The effect of economies of scale in overhead and administration costs
Combining efforts reduces overhead costs by aggregating purchasing power when leasing office space, purchasing information systems, accounting and legal services, and other production needs. Regardless of the format of your cooperative, it automatically becomes a “customer pool” (in other words, a “no-need-pay-for-all-one” club, because many objects and systems can be shared, and it may also turn out that your new colleagues have skills in those areas of services that you previously outsourced).
The ability to take large-scale customer projects
Did you have to refuse to work due to the fact that the client’s tasks exceeded your capabilities? Or to regret that he took up the work, which in fact turned out to be a little higher than your abilities? As a member of the cooperative, your business opportunities are greatly expanded, because then you will not have to cope with the whole volume alone. At the same time, you may have flexible arrangements with other members of the cooperative, without “all or nothing” requirements, as is customary when working for hire; For example, in a cooperative, its members may be allowed to continue to conduct their own projects with existing customers (or even with new ones), provided that they are also looking for new large-scale projects and are required to take part in their implementation.
Availability of more volume and variety of work, covering more niches
A cooperative of five people can do five times more work than a loner, but the increased volume also gives new perspectives on the market and a greater number of customers. Just due to the fact that you become more visible in the market, you open up opportunities of a higher order, with more “brains” connecting to the analysis and decisions on how to use these opportunities
Professional colleagues support
Even the most difficult situations are much easier to resolve if several “heads” are connected to this, with a different vision of the problem. Daily mutual aid and the spirit of solidarity make even the most tedious work less stressful, and in such conditions satisfaction with work in general increases.
More than just the sum of participants.
The effectiveness of individual team members can grow arithmetically, while the team's efficiency grows geometrically. Each new employee brings to the group additional interpersonal dynamics, more opportunities for the birth of fresh ideas and new views. And the team, most often, makes better and more informed decisions than each of its members individually.
What is a production cooperative?
Before we proceed to a detailed description of how to establish a cooperative, it is important for us to clarify the basic terms. In today's business reality, the co-op format is relatively uncommon, so you may not be familiar with some concepts and structures. Let's deal with them!
A cooperative is a format for organizing a business that is owned and operated by its members, designed to serve their interests. Unlike most business formats, in which profits are distributed according to the share of owners' investments, remuneration in a cooperative is distributed based on how they used the cooperative. And unlike other business formats, where owners have the right to vote on the basis of how much they invested, the cooperative is managed on a democratic basis, where each member has one vote, regardless of the size of the investment.
There are 3 main types of cooperatives. You may be familiar with the notion of cooperative producers — most of them are large agricultural cooperatives, such as Organic Valley, Sunkist and Ocean Spray, in which independent producers combine to collectively process, sell, or distribute their products. The cooperative's work in this case is to process, sell or distribute the products of its members, and all the profits it receives are returned (as dividends proportional to purchases) to producers in proportion to how they used the cooperative.
Producers participating in a cooperative usually choose the Board of Directors, which manages the enterprise and hires employees who work in it.
You may also be familiar with consumer cooperatives — retailers such as food cooperatives or REI, credit unions or housing cooperatives, where members are consumers of the goods or services that the cooperative provides. The cooperative’s job here is to buy high-quality goods or services and sell them to consumers at a low price. The profit is returned to the cooperative members as dividends (in proportion to the volume of purchases), and they elect the Board of Directors managing this association.
But the purpose of this guide is to introduce you to production cooperatives, which are enterprises owned and operated by the people who work for them. Employees in these enterprises are owners and make a profit according to the extent to which they worked for the cooperative. They themselves control it, perhaps by electing a Board of Directors, which sets policies and hires managers to organize the work. The hierarchical structure adopted in the previously described types of cooperatives, rather characteristic of production cooperatives of medium and large size. Small cooperatives are usually managed / work collectively.
A collective is a group of decision-makers practicing direct democracy. Instead of using representative democracy by electing the Board of Directors to make decisions and monitor their implementation, the team simply meets and makes decisions together. In collective management, decisions are made by a majority vote, either by consensus, or by other means. Usually with such a system there is practically no hierarchy. Like most teams are not production cooperatives (because they do not manage the business and do not own it), so many cooperatives are not managed collectively (because they control through representatives, not directly). However, a large number of small-scale production cooperatives use a collective management format. A cooperative is a form of ownership and management. Collective management is a form of management.
Is a production cooperative commercial, non-profit or non-profit? These definitions can be interpreted in different ways, which can be confusing, and is one of the reasons why we use the word “surplus” instead of “profit” for the sector of production cooperatives. It is certainly true that production cooperatives seek to run a “healthy” business, which means making a profit, paying all expenses and also having a balance after that (surplus capital). But a commercial organization usually refers to an enterprise that is owned by one or several investors, whose goal is to make a profit from investments (for owners). If making a profit means making additional money, remuneration for the owners (who do not work in the enterprise), then the cooperative does not receive profit,
On the other hand, non-profit organizations usually provide educational, charitable, and other services, and must reinvest all retained earnings into their own operations to meet special state or federal tax exemption requirements and other benefits. Production cooperatives rarely engage in charity and the fact that its members are its own owners also contradicts the principles of non-profit enterprises, which, strictly speaking, do not have owners. Using these definitions, the production cooperative can not be attributed either to commercial companies or to non-profit ones.
However, it is easy to place a production cooperative somewhere in the middle of these two categories: after all, on the one hand, it seeks to get additional profit from the management of a commercial enterprise, on the other hand, it returns it to employee-owners, or reinvests, rather than sends to outside investors-owners . For this reason, production cooperatives call themselves non-profit enterprises.
Is a production cooperative a separate type of legal entity? Again, these terms have several interpretations, and may vary from state to state (“US state” - translator’s note). The principles of a production cooperative (employee ownership, a democratic system of control, the distribution of additional profits according to the contribution of each, etc.) can be specified in the regulatory documents of a legal entity of any type: partnership, limited liability company, limited liability partnership, or a standard corporation.
If you do not really find fault, production cooperatives can even be equated with non-profit organizations or individual entrepreneurship. However, in some States of America statutes of such enterprises are regulated by law - essentially a hybrid of partnership, commercial and non-profit organization, which clearly states how production cooperatives should be organized, what structure to have, and which of them can count on special tax conditions. , the right to have the word “cooperative” in the title, and other advantages. Some production cooperatives decide to follow these legal requirements, others do not.
Therefore, when you are asked: “Are you a production cooperative?” They may mean: “Does your business belong to the employees and is managed by them according to the principles of the cooperative?” Or “Does your organization comply with the legislative requirements of the State for cooperatives?”. Yes, they can even ask about whether your business is managed collectively or not. Especially if you are just starting a new business, it is important to make sure that all participants in the discussion have a common understanding of the subject.
How to create a production cooperative?
You may notice that the following text provides information that is very similar to the sources cited. This is due to the fact that it is impossible to cover a large number of important stages in creating a startup in the format of a production cooperative as part of this brief guide; at least at the level of immersion in the question that is necessary for a serious high-quality start of your business. Fortunately, other authors have already done this work, so we just give a general idea of the process and tell you where to find more detailed information.
1. Find future cooperative partners
So you want to organize a production cooperative. Fine! Unfortunately, it is impossible to do it alone. You will need to find partners - at least two, but better to begin with, from three to five. Perhaps you have in mind friends, colleagues (or even competitors!), With whom you are ready to work together. If not, it could be people with whom you are not familiar yet: you can search in the Union of Freelancers, in relevant groups on social networks, or by the list of contacts in your industry. Let people around you know that you have a desire to establish a cooperative, and see who responds!
2. Agree on a common development concept.
Gather a team, explain why you want to start a production cooperative, and get ready to listen, because now it is a common project! Most likely, everyone will have a different opinion on what the cooperative should do, so the format of the organization that you eventually launch may differ from your initial presentation. At this stage it is very important to be flexible and open to new ideas. For example, one may be important to reduce costs through teaming, while for others the main motivation will be the ability to take big projects due to the presence of participants with diverse skills.
Will you be a group of specialists who do roughly the same thing, or will you become a team uniting workers with different specializations? How will you divide the projects? What type of customers to serve? Why? This is not necessarily a bad sign if the interests in the group diverge. Perhaps you should run a few cooperatives!
Before starting the launch, you need to write a concept for the development of a cooperative that suits and inspires each team member. At this stage, it is not necessary to prescribe everything in detail, however, it is important that everyone has a clear idea of what the production cooperative will do and what is the benefit of joining compared to individual freelancing. And it is important that everyone understands the basic principles of democratic governance (separation of power and responsibility) and ownership (total risks, total remuneration).
3. Develop work processes
Soon, you will have to start making decisions. Before moving on, you need to adopt a decision-making process that satisfies everyone. It will be applied at the stage of creating a cooperative, and, possibly, will evolve into a management model after its launch. There are two main questions to answer: (1) who will make decisions, and (2) how will they do it? For example, what issues require group discussion and involvement of the whole team in decision making? What decisions can be delegated to individuals or small groups? Will the group make decisions by a majority vote? Overwhelmingly (for example, 75%)? Or will the group use a modified or formal consensus? The process should be very clear, especially with regard to quorums, votes, time limits,
Direct democracy governance is the norm in small production cooperatives, but it is imperative that every team member really accept this model before you go this route. If all participants are serious, it can work perfectly, but if not, it can turn into a nightmare. Decision making is much more than counting votes. You need to think about “inclusiveness, your dedication to following democratic principles, relationships between people in a group, and all questions related to group discussion: the rights of speakers and responsibilities (setting the agenda, informing, formulating, persuading, voting, and the possibility of difference of opinion) , and also about the rights and duties of listeners (comprehension and discussion) ”[Gastil, p. 16].
Take the time to develop scenarios in case the discussion comes to a standstill. We offer to read on this topic:
McLeod, Andrew and Williams, Rachel Deciding how to Decide and Consensus Decision Making. Northwest Cooperative Development Center, Olympia, WA. 2008
Gastil, John Democracy In Small Groups: Participation, Decision Making & Communication. New Society Publishers, Gabriola Island, BC. 1993.
Kaner, Sam, et al. Facilitator's Guide to Participatory Decision-Making. New Society Publishers, Gabriola Island, BC. 1996.
4. Create a launch plan to get you started.
Great, you have a team, an agreed development concept and a general idea of how you will make joint decisions. Now it's time for the first joint project: transform yourself from a group of interested people into a workable, full-fledged production cooperative!
Spend some time working out steps 5-10, described below, and form a launch plan based on this.
Break the project into smaller tasks, estimate completion dates and deadlines, compare them with human resources, according to the skills and experience of the participants, break them into groups. Here you can test (and debug) the decision-making process that was approved in step 3. The facilitator, coordinator, or chair may need to be there to guide people and make sure that the work is done and everything is going more or less as planned. Make sure everyone is ready to learn together, in the process of working together.
5. Analyze yourself and your abilities.
You are a group of freelancers totally absorbed in your core specialization, right? It seems to be so. At the same time, the majority of cooperative participants most likely have skills and experience that they do not “demonstrate”, or even forget that they are available. Your new venture will demand a more global vision, and it is more likely that prosperity will wait if everyone fully understands what contribution can make to the success of a common cause. Experience in areas such as marketing, business proposal preparation, bookkeeping, business management, negotiation, meeting organization, training, technical support, office maintenance and even politics can be invaluable to a cooperative.
Before you go further, spend some time on the real excavations. Think about conducting a survey that will go beyond the summary, contain open and verifiable questions. This process usually brings pleasant surprises; upon completion, almost everyone is impressed by the fact that they have learned something new about their team and their changing perceptions of its capabilities. Thus, this process not only clarifies the available resources of the cooperative, but also helps to unite the team, and also gives rise to ideas for entering new markets, offering new services, in other words, opportunities that you have not even thought about before.
6. Test the feasibility of the idea: measure seven times
At this stage, the confidence of all the participants is quite high. As a group of independent professionals, you most likely feel that your knowledge is sufficient for success. When starting a business from scratch, it makes sense to conduct a market research and an economic assessment of feasibility in order to substantiate and quantify your excellent idea in detail. If there are not enough customers in the market, or the cost of your services is too high for their income level, it’s better to know advance and not spend money and time on an idea that does not justify itself.
In your case, you run a business similar in many respects to what the cooperative team used to do alone before, so most likely you already have a fairly clear idea of whether the cooperative business model is feasible. But if you want to add new elements to your business model, you need to think carefully about what financial indicators you can achieve. In any case, an economic assessment of expediency (informal or strictly formal, depending on your needs) is an important step in the development of your cooperative.
So, you are at the stage “measure seven times”. This is not only a manifestation of caution (and the so-called “legal expertise”); You can also be sure that all team members are aware of the opportunities they face. There is another reason - this is team training, because it is extremely important that you have common expectations regarding the future of your cooperative. Do a SWOT analysis to determine your strengths, weaknesses, opportunities and threats (step 5 to help you), and brainstorm on how to mitigate negative factors and make maximum use of positive ones. What make changes? Do you need an office, additional equipment, accountant assistance, etc.? Do you want to start small and still work at home in the living room, and then grow into a separate office? Or are you ready to immediately invest in some things?
Gather a team of members of your team from those who like to delve into the numbers, spend time on calculations, and then organize a general presentation. Pay special attention to finance - although you may not need large investments from cooperative members, dedication combined with financing will increase your chances for success.
Recheck your margins, expenses, tax liabilities, etc. Make a conservative forecast of your expenses and income. Create both optimistic and pessimistic scenarios and make sure that everyone is aware of them and aware of the possible risks.
Although your team has enough knowledge of the market in which you are planning to work, it will not be superfluous to organize non-standard marketing research. Many who have experience in launching cooperatives emphasize the need for a relatively objective economic assessment of the feasibility of an independent person in order to be recognized as trustworthy; contacts can be obtained from the Democracy at Work directory listed in step 8.
Consultation of a professional marketer in your field will at least allow you to verify your assumptions and give a critical view of industry trends and new markets. Some cooperatives prefer to outsource their marketing activities so that employees can focus on the production tasks they like to do. It is necessary for your team to arrange a vivid marketing presentation, where everyone will tell about the results of the research, and then the spirit of cooperation will facilitate the search for new, larger clients.
The result of this process will also become the basis for the development of your business plan, which will be discussed in the next steps.
7. Business plan
If you have faithfully completed all the previous steps, at this stage you just need to “put it all together.” Perhaps the development of a business plan will not open anything new for your team, but in the process you will notice areas that require more detailed study or group discussion. It is also important for introducing a new member of the cooperative - a freelancer who is thinking about joining your team - will want to see the business plan of the company and get all the information necessary for making a decision.
If you want to take a loan or get a line of credit at a bank, potential lenders will want to familiarize themselves with the business plan and wish it to be worked out in great detail. (So, once again: if you start small with self-financing, you may not need a very formally written business plan. But if you need to attract new participants or loan funds, it should be written according to all the rules). It is important that your business plan clearly reflects the financial and other risks for its participants, and then your potential partners will be able to make an informed decision before investing time, energy and their capital.
A traditional business plan usually contains: a brief summary of the document, information about the company, a description of the products and services, marketing and financial plans, as well as various accompanying documents. Since you, as a group of professionals, are well acquainted with the industry, you may be able to write most of the forces of the cooperative. (On the other hand, an independent assessment will add credibility to lenders if you need additional funding. If you plan to attract a professional later, focus now on gathering information and developing basic strategies, and leave the final gloss to it).
8. Organizational plan
Finally, the time has come to decide on the type of legal entity that your cooperative will use and arrange it. Will your co-op be a partnership, limited liability company or corporation? Does your state have special cooperative company law? You should learn the advantages and disadvantages of all possible types and discuss them with the team. The most important questions are: the extent to which the owners share the legal responsibility of the organization; how the enterprise’s profit is taxed; how easy it is to register a legal entity and manage it; and how easy it will be to add or exclude members in the future.
You can contact existing IT cooperatives to share their experience with you. If you have the opportunity to hire an experienced lawyer to help you deal with legal issues to avoid serious trouble in the future, this is definitely worth doing. (But beware of lawyers who do not understand the peculiarities of the work of cooperatives. Some of them have strong false beliefs in this matter and will only confuse).
When you decide on the legal structure, create your basic statutory documents, management and operational procedures. You may need a partnership agreement (for a full partnership), the Charter of the organization and a memorandum of association (for an LLC), or a Certificate of Registration of a Corporation (in the case of a Corporation). Among other things, they must include the following: initial capitalization of participants, responsibility, decision-making procedure, distribution of profits, succession, withdrawal of participants and liquidation procedure.
This stage can take a lot of energy, but a little forethought in these matters will prevent very painful situations in the future. Some people easily cope with this kind of work. You need to find these in your team and give them the opportunity to lead this process. Again, the help of a lawyer here will be very useful, or you can borrow the Statutory Documents of functioning production cooperatives for processing.
If you have developed the documents yourself, you need a lawyer who, at least, will check them before you go any further. You also need to create an initial operating plan where all the policies and procedures by which your cooperative will work will be described.
9. Registration and launch
First, before you get the first dollar of income, find a good accountant who will set up the accounting of your cooperative. If there is a person on your team who is “friendly with numbers,” he can fulfill this role; otherwise, you may need the help of an external specialist. In any case, set up this work in advance. You’ll say thank you for this later.
Now that all the preliminary preparatory stages have been completed and you are ready to take the final steps and legally establish your business. Next, submit all the necessary documents and wait for confirmation; register with your state and federal government to obtain employer details; register your business. (Probably, small business start-up guides are available in your state or city that will help you not to miss a single step). Collect initial cash contributions from all participants (“equity participation”) and deposit them into a bank account opened for your cooperative. Take the time to study the different types of business insurance and purchase the insurance that suits you (it is especially important to provide third party liability insurance,
10. Doing business
You did it! Although, wait, this is just the beginning. Start your business! Share information about your new status with existing customers, or advertise to find new ones. Be sure to disclose the benefits of your cooperative in your marketing activities; You may be surprised to learn that people are happy to work with you, as they perceive your team as democratic, trustworthy, responsible and ethical, or for some other positive ideas about you.
Most likely, many things will manifest only after you really start working together: not quite working structures and procedures, situations that you were not ready for will emerge. It's okay, just be sure to fix your operational policies and procedures and revise them if necessary.
Be sure to often meet the entire composition of the cooperative. Keep detailed records of each meeting - write down the issues discussed, decisions made and actions taken. Carefully record and keep these records as they are legal proof of your business decisions.
Make sure your employees are aware of the state of affairs in the cooperative: its policies and procedures, financial situation, etc. Most production cooperatives believe that this contributes to the continuous training of all participants - in the areas of finance, business management, marketing, and corporate development. a culture that strengthens business and helps prevent problems. Maintain relationships with other production cooperatives in your industry and in the region to gain support and maintain a spirit of solidarity. If there is a local federation of production cooperatives in your area, join us!
History of the creation and functioning of production cooperatives
This is followed by the stories of ten small democratically controlled IT service providers, told from the first mouth. Seven of them are production cooperatives from all over the United States, providing a wide range of technological services (design, programming, hosting, repair) with different business structures. They are followed by the stories of three cooperative enterprises, which can not quite be called production cooperatives: one in the process of transformation into a cooperative, an informal producer cooperative and an informal consumer cooperative, managed on a voluntary basis.
Each of the ten authors speaks from different points of view - you will read the history of the formation of cooperatives and their activities, learn about financial structures, business start-up history, teamwork, aspects of organizing the group’s work and decision-making process, working conditions, pay / distribution schemes and values companies, as well as experiences of interaction between different cooperatives — all 10 stories demonstrate a huge and inspiring range of options available for use in democratically controlled groups.
STORIES: Brattleboro Tech Collective
By: Jason Mott
As a software engineer, I walked out of the corporate environment. I gained my technical skills during the IT boom of the 1990s. During this decade, I managed to grow into a fairly experienced software engineer. However, the feeling that something was missing did not leave me. There was no respect from management. I felt exploited. It reminded me of my first years at the factory as a worker. I was always aware of the problems of the “working people”, but in the end I realized them. I began to realize that wealth is built on cheap labor, that is, the exploitation of people who are not paid as much as their time is actually worth.
The reason that my colleagues and I wandered from one job to another, faced dismissals, was that corporations, without any shame of conscience, sought to reduce the cost of labor. With particular effort, they forced us to compete with the Indian labor market, where work costs a penny.
I wanted to work for myself, but I was not interested and didn’t even spend the energy to unite with anyone. I was impressed by the trade union movement, but I did not see in this way, which would ensure ownership of my own work. The second option is to start your own business. However, I knew that if I followed this path, then one day I would become that “bad guy”, seeking to get cheap labor. No, I wanted to be the master of my own work, and never even try to take over someone else's. In addition, I did not want to work alone.
It was a great decision to join the movement of professional owners! As soon as I learned about this format of business, I began to look for opportunities to become part of it. And that led me to the Brattleboro Tech Collective (BTC) in Brattleboro, Vermont. BTC was a subsidiary of Eggplan Active Media.
BTC writes and maintains open source web applications. When creating a company, the motives were not only the passion for web technologies and the participants' desire to be equal owners, but also the desire to maintain a very personal, and therefore fragile relationship in the team, to watch that they were in balance. The structure in which all employees are owners is unique in that each member must equally participate in the control of cash flow, management and earnings. This inevitably leads to conflicts, which, with the wrong approach to their solution, can destroy the entire system, on the functioning of which each participant depends.
To avoid all this, BTC has created a culture of honest relationships, intensive communication and respect for each other. We established a procedure for holding a monthly general meeting during the whole day, where we discuss all the issues that everyone’s mind can affect the cooperative’s members, positively or negatively. At this meeting, we make the most important decisions using the consensus model. We also created a rule that underlies all other rules: their constant adjustment along the way. This means being flexible enough to change the established procedures if they no longer work.
When BTC began its work, the two founding members decided that they would not have remote employees. They all had to live in or near Bratlboro and work in the same office together. This became the basis for effective communication necessary to ensure a healthy team atmosphere. As part of the “adjustments along the way” rule, this rule has since been violated, and we have one remote member. But it is important to note that he worked with us for the first few years at the BTC in the Brattleboro office. In addition, he still personally attends monthly meetings. We still have the rule that any new member should start working in the Bratlboro office so that we can get to know her or him well enough to maintain the necessary communication intensity.
Thanks to our structure, we have created an incredible company owned by employees, based on solid principles that have proven their effectiveness. These principles include limiting the number of working hours per day and per week, setting a decent rate for work that takes into account the value of our work, being very attentive to what clients we work with, and getting pleasure from the work we do. These principles not only allow us to produce high-quality software for our clients, but also give us the opportunity to own our own work!
STORIES: Design Action Collective
Posted by: Sabina Basra
Design Action Collective is a graphic design studio in Oakland, California. We are a company created to meet the need for visual communication for progressive movement, the driver of which is our mission. We are also a production cooperative with six members.
Design Action was founded in 2002 as a wholly owned subsidiary of Inkworks Press, owned by printing workers, established in 1973 to provide support for the social change movement.
When the revolution in the field of designing for the printing industry happened in the 1980s, the Inkworks computer prepress department quickly expanded, offering layout services and graphic design services. As graphic design became an increasingly important element for non-profit organizations and activist groups, Inkworks faced the fact that design and prepress processes were not always well combined. After a series of discussions on how to ensure the high-quality implementation of both directions, it was decided to allocate the design direction into a separate business unit.
Thus was born the company Design Action. Two Inkworks designers went there, and they were replaced by prepress specialists. Having started working at home in a living room in Berkeley, as a small studio of 2 people, Design Action quickly expanded and expanded the range of services provided. In 2003, we moved to the center of Auckland and initially shared office space with Ruckus Society and the Third World Majority. Then we began to attract new members of the cooperative. In 2008, Design Action moved again, and now occupies more than 2,000 square meters. office space in downtown Auckland.
Despite the fact that we are also working closely with Inkworks, each company is an independent production cooperative. We work with the same clients, and Design Action has managed to expand the range of services by developing design for the Internet and multimedia, as well as for other types of printing, such as printing on T-shirts and banners. Now we also offer the development of full-cycle advertising campaigns, including copyright, communication strategies, which are becoming increasingly important for campaigns whose work is aimed at making social change.
Without urging to chase the image, neglecting the essence, we in Design Action are sure that the “For Social Justice” movement has enough good ideas, theories and even good reliable models to implement the necessary changes. At the same time, the other side spends billions of dollars annually, bombarding citizens with messages that there is no alternative to the current device. Therefore, it is so important for progressive organizations to find a way to clearly convey their concept of the development of society, and the task of Design Action is to provide opportunities to realize this through visual communication.
At the same time, Inkworks was able to pay more attention to the technical side of printing and prepress - to modernize its printing presses, as well as to launch an online order-taking system. Thus, the separation turned out to be a win-win for both companies.
Design Action originally borrowed most procedures from Inkworks. We have a clear decision-making system and an equal payment system. The probationary period for admission to the cooperative is 9 months, and we do not have a down payment. Weekly team meetings are held during off-hours, but are considered as a contribution to the enterprise as a political project.
Most day-to-day decisions are made by a two-thirds majority. However, some of the more important decisions that strongly influence the work of the entire cooperative (for example, hiring and firing) are made by consensus. We also have weekly production meetings (as scheduled), where we distribute work and inform each other about upcoming projects. Each participant has administrative duties, responsibilities for project management, design development and production. In working roles, positions there is no separation. We have an accountant who visits us once a week, but we all have to be aware of the state of our bank accounts, payroll and invoices to customers.
Design Action Company is registered as a California cooperative modeled on Rainbow Grocery, Arizmendi cooperatives and other similar formats. Members of our team are actively involved in various social movements, and the company is also a member of the Gulf Production Cooperative Network, the Federation of Production Cooperatives of the United States and our Union of American Communications Workers (AFL-CIO). The fact that we are part of the Union allows us to have a voice in the labor movement and ensures that we continue to adhere to Union standards as our cooperative grows. Design Action also has been certified as a “Green Company” in the Alameda District.
At the end of each fiscal year, a part of the profit is distributed to each member of the team in proportion to the hours worked this year. 75% of the profits are distributed among all participants according to the principle mentioned above, and the remaining 25% is left to the cooperative. Remuneration is paid in installments to ensure cash flow in Design Action accounts.
Most of the members of the Design Action team are non-white people who are native speakers of Indonesian, Spanish, Hindi and some Bengali languages. We strive for diversity in our team when we attract new members. In the future, we hope to organize internship and training programs so that more people become specialists in political graphic design.
STORIES: Electric Embers
Author: Brent Emerson
Electric Embers (EE) is a production cooperative that provides Internet hosting services to progressive non-profit organizations, cooperatives, artists, and other related organizations. We strive to help our customers first imagine, and then create a world that will be fairer, more stable and beautiful, providing an Internet hosting service that is different from the ordinary in terms of environmental friendliness, economy and social responsibility.
EE's roots go back to 2001: Adam Bernstein set up and deployed open source software to provide his consulting clients with the ability to use high-quality communications within small budgets. At the same time, I was engaged in transferring my Linux hobby server, used for friends and family, into a small side business. We met as technical consultants working on a non-commercial basis, and soon we were co-founders of the IT underground.
It soon became clear that we were faced with a dilemma: we liked working with non-profit organizations, but we did not have the opportunity to actively use our favorite UNIX-like operating systems and free open source software. Our small hosting companies became the launching pad, and we naturally began to cooperate: Adam leased his area when I needed an upgrade, I was engaged in supporting his clients, when he went to India for a long time; we jointly bought and used a backup server. Over time, we realized that by working together, we can achieve more than ourselves. And so, in May 2003, Electric Embers was born.
The progenitors of EE as a legal entity became me and Adam, as sole proprietors. We studied various options and chose the format of a general partnership, which seemed the simplest and most reasonable solution for the development of our self-managed business. Writing a partnership agreement, in which we consolidated our democratic principles of governance, was not very difficult (with the help of a couple of books), and I was able to file the tax returns of our company without any help from an accountant. Nevertheless, by 2005 we decided to add a third employee (and now we are looking forward to the fourth, and maybe the fifth), and the static partnership structure turned out to be an obstacle to this; technically partnerships must be terminated and re-registered upon arrival or deletion of a partner.
As our business grew, we also began to understand the personal property responsibility we had, using the form of a Partnership. Thanks to our membership in NoBAWC, we had the opportunity to learn about the different types of legal entities used by other production cooperatives on the coast. This time, keeping in mind the need to protect the responsibility and succession of members, we reformed into an Electric Embers cooperative consisting of three participants, choosing what seemed to be the most appropriate structure: we united in accordance with the California Consumer Cooperatives Act, following the format concept of membership and patronage. We hired an experienced lawyer who helped develop the Bylaws, and consulted with a professional accountant about our bookkeeping — he is now preparing income statements for us.
EE does not have a single working space - all 3 participants work from their homes in Auckland and Portland, San Francisco. Each of us works 4 days a week in a sliding schedule, so 2-3 people are on duty every day. We talk for 1-2 hours once a week during working hours; for the rest of the time, all our communication takes place via e-mail, or in the ticket system, which we use to organize the work of projects for clients, or in direct messages to each other. When we all lived in the same metro zone, we often held meetings at one of us, rather than by telephone, and then worked together all day to develop a comradely spirit and maintain social connections, which is difficult to do at a distance. . All our decisions are made by consensus; Now there are only 3 members in the company, the process is fairly loosely organized,
Every two years we get together for a short “corporate event”, during which we develop a strategic plan for the development of our cooperative, which is then re-evaluated and updated in the future. As our business grew and our systems improved, we became two “clones” (which duplicate each other’s work functions) into a unified team of three people, with different specializations, chosen on the basis of the interests and skills of each. Our division of labor is a balance between coarse symmetry (we can all perform equally well the duties of regular system administrators and customer support staff), and growing specialization in certain technologies, as well as other aspects of running a business.
As a result, EE can provide a good level of customer service on an ongoing basis, regardless of who is at work today, while benefiting from the use of deeper skills that participants gain by focusing on specific tasks.
Looking into the future, we have to admit that, despite our slow but steady growth over the past 5 years, our industry is unpredictable. On the one hand, the main technologies that we use are 20-30 years old. On the other hand, it often becomes clear that the Internet is on the verge of change: from a structure where many powerful users on the network freely exchange data, and there is a place for organizations such as EE to a structure where several companies are located in the center of network storage and control the flow of information.
We try to find a solution to this problem every 2 years, while updating our strategic plan. One of the results of this is that we consider personal customer service as our main product, not the Internet technology itself - we will never compete with Google for price or fashionable technology, but our customers are delighted with how we communicate with them and respond to their requests. Other issues we face are: should we advertise ourselves more aggressively to ensure faster growth? What is the optimal size for our business? What salary corresponds to our work? What gives more benefits to business - working together in one office or working from home? Is our current division of labor fair and sustainable? We are not able to be both marketers and accountants
STORIES: GAIA Host Collective
By: Benjamin Bradley
GAIA Host Collective offers Internet hosting services, domain registration, provision of managed dedicated servers, creating managed applications for organizing e-mail newsletters, managing the base for them, and developing custom web applications with open source. We try to contribute to environmental sustainability and support the social justice movement through non-profit organizations and cooperatives.
The history of the GAIA Host Collective began with the company Onechoice Digital, which provided Internet hosting services and was registered as an individual entrepreneur, owned by web designer Charles Streider, now co-founder of Gaia Host. Onechoice was sold to a new enterprise, Gaia Host Collective LLC, founded in October 2004 by Charles, in collaboration with Mark Bucchereli. Having bought an existing company, rather than creating it from scratch, Mark and Charles spent the first two years trying to increase their customer base and build a basic technical and organizational business infrastructure. At the end of 2006, Mark's professional priorities changed, and he began to gradually go out of business. At the same time, Charles began to discuss with Benjamin Bradley joining the team. Over the next two years, Charles and Benjamin spent a lot of time expanding the range of services offered, improving their internal business infrastructure, and forming strategic partnerships with web designers and website developers who shared their values. As of September 2008, we feel that we are ready to attract a third co-owner employee.
Why did we choose the format of a production cooperative?
Charles: “I strive to build relationships in the form of collaboration in my personal life as well as at work. Having experience in traditional corporations and Internet start-ups, I consciously worked on the creation of a production cooperative based on my initial business. I believe that employee-owned businesses can play a key role in creating a fully democratic society of empowered people. ”
Benjamin: “I heard about the model of the Mondragon Corporation, the amazing success story of employee-owned cooperatives. I was disappointed in the format of work in a tightly regulated structure, over which I had no control, and where I received a small reward. Most of all I was tired of wasting my time and energy on a company that gave me practically nothing in terms of satisfaction with life, except for monetary rewards. Before, several years ago, I had more than once thought about how to empower workers, believing that the employee-owner would be more interested in the success of the business, more creative in solving problems, and this would provide him with a higher quality of life. ”
We decided to register GAIA Host Collective as a limited liability partnership in Massachusetts, and not as a cooperative. The choice of format LLC has given us the following advantages:
- We could become a bit more creative and organized like a group of equals, embodying our organizational principles in LLC
- In LLC, the owners do not have to be “employees”, which allows us to work on a net profit distribution model without restrictions that accompany the presence of employees
- Ease of creating and registering an organization. To create a cooperative, three members are required, and GAIA Host was only launched by two people.
- Ease of preparing annual financial statements and a simple tax calculation system
The main disadvantage of this structure is that each member of an LLC is obliged to pay self-employment tax on the basis of its profit, while a member of a cooperative can pay self-employment tax, taking into account only wages. (This problem still exists, and the legal precedent of one co-operative on this matter is under consideration in court, and is awaiting the decision of the IRS as of the summer of 2008.)
GAIA Host does not have a central office; employees work from home or wherever they want. We distribute the shift of duty among themselves so that technical support is available to customers 24 hours a day, but we do not have a fixed work schedule the rest of the time. Thus, each participant freely chooses his place of work and, to a large extent, his own schedule. This gives everyone greater freedom, but may cause difficulties in group work.
We have developed a set of “best solutions” to maximize the uniqueness of this format of work, as well as smooth out potential problems:
Setting priorities. When questions arise for discussion, we distribute them according to the “priority of urgency”:
A serious problem - you should contact another participant by phone for an urgent consultation. The problem of medium urgency requires attention in the near future, but is not critical. Problem that does not matter - you should send an email for discussion in the usual manner
Weekly meetings. We meet online (in private) to discuss unresolved technical issues, business planning, scheduling and other issues of medium urgency. During the period when Benjamin worked intensively on increasing the turnover of business, we had meetings twice a week, and as soon as he reached a satisfying level, we reduced them to once a week.
Personal “reflection”. We share personal “reflection” during our weekly meetings, which means that each participant must voice their stresses about the business, and not only. We can also discuss “intuitive” feelings during these meetings related to business, customers or members of our team. Since we have little contact with each other directly, it is vitally important to work out in advance potentially destructive situations, and not to allow them to boil and turn into insults. This helps us at GAIA Host to maintain a very high level of trust in each other and work effectively relatively independently for months.
Making decisions based on consensus. GAIA Host has committed to use the principle of consensus as our decision-making model. Reaching a consensus was relatively easy with only two members participating, although sometimes we “pulled back” from the decision when in essence we agreed to disagree.
The balance of decision making, taken individually and collectively. Most everyday tasks are routine anyway. In general, the solution of all questions that go beyond the category of “previously emerging problems” is left to the mercy of the participant who faced them. Collectively, large-scale financial purchases must be made, as well as significant changes in the technical infrastructure.
Tracking responsibility. The purpose of our accountability system is to maintain the high quality of the work performed by our team. To date, we report on missed deadlines and unfulfilled obligations, as well as errors that have significantly affected finances, time costs or our image in the eyes of the client. Anyone can file a statement of responsibility for any member of the company, including himself. This idea is still at an early stage of implementation, but it has already worked well to increase our awareness of the issues listed above.
GAIA Host Collective is now entering a phase of great growth. We have already expanded our physical infrastructure and are in the process of adding a third employee-owner. When this happens, the interpersonal dynamics of the team will change significantly, moving from a team of a couple of people to a group. We enthusiastically take on these challenges and are looking for opportunities for both personal and professional growth. In the process of finding a third member of our team, we request specific technical skills, and also expect him to be interested in developing business as an organization.
However, the main criterion for selecting potential candidates is the desire to work in a company like ours. Since GAIA Host is an employee-owned team, the foundation of our business is people. GAIA Host provides more opportunities for participants to realize their values in work. We care about people and the environment and want these values to be reflected in our work.
Authors: all members of the Quilted team
Quilted is an employee-owned company that integrates technology and social transformations, providing graphic design, web development and strategic consulting services to individuals and organizations with similar objectives. We focus on a very user-friendly, custom-made design and use open source technologies such as Drupal, WordPress and Ruby on Rails.
Quilted came into being because a small group of people recognized the sincere need to make a living from what we care about and have a positive impact on the world. As a result of our first meeting in Brooklyn at the end of 2004, we evolved from a network of five independent freelancers to a three-person limited liability company in mid-2007, which included two full-time employees and a trainee in Gulf area. And in Boston, we have one full-time employee for today, as well as one potential candidate for part-time participation.
By the time of our initial meeting in 2004, two of us — Erik Hopp and Ben Mauer — had already begun to work subcontracted, but everyone was united in their discontent with the situation at that time. The initial inspiration from the freedom that freelancing gives, by that time, and we suffered from a lack of structure, a lack of social intercourse, consistency in work and stagnation of skills. Those who worked for hire were disappointed by the often devastating nature of work in a corporation: the lack of real interest in the work, as well as the feeling that your work has at least some value for society.
For two years, we worked as a network of independent freelancers under a common name and portfolio, on an exclusive subcontracting basis, but our business indicators declined, as three members of the original group decided that freelancing did not suit them. Someone got a job, someone went to study in graduate school. At the end of 2006, Erik moved from New England to the Gulf region and began working with Colin Sagan, between them a real professional “chemistry” arose, and then Erik suggested Colin to join Quilted.
With a new surge of energy and a small, very motivated group, we decided to make the leap and create a joint business. After much study, we chose the format of a limited liability company (LLC). Quilted has always been presented as a cooperative or team owned by its employees, where each participant has equal weight in decision making, an equal share in the reward for success and equal responsibility for failure.
We found that, unfortunately, the legal model of the cooperative is complex, it lacks role models, professional experience and resources for those who want to create a democratic working environment that goes beyond the Gulf region. Unlike California cooperatives, the LLC format exists in all 50 states, and almost any lawyer and accountant understands its basic legal and tax nuances. We consider one of our long-term goals to spread information about how LLC can be used as an effective legal form for cooperatives and collectives, and thus reduce the “barrier to entry” that does not allow, in our opinion, many people, to launch their cooperative, although they like the idea.
Over the past year, Quilted has made significant progress in expanding our business opportunities, in the productive cooperation of a team working not only within the coast, but also in creating a work system that supports Quilted as a business, and its participants as individuals. Our first student, Alex Hage, recently completed an internship and began training as part of the company's second, Kyle Wagener. We also hired a fourth non-founder employee and consider her as a potential member of the cooperative, Michelle Moon Lee.
Today Quilted is firmly on its feet, but we, as an organization, are continuously learning. Our structure is constantly being reviewed to better meet the needs of business, team members and our community. Here is a brief description of our current model.
We make decisions based on informal consensus, not on a voting or veto system. Sometimes the participant agrees on the matter, even in the absence of complete satisfaction, upon reaching agreement that, as the project or situation evolves, it will be able to make changes.
We are ready to accept new participants after passing a trial period of at least 6 months and 520 working hours, after which we can draw conclusions. Also, a potential participant must contribute to the capital in the amount of $ 5,000.
We work according to the hourly payment system, issuing invoices to our clients on a sliding scale from 150 to 0 dollars per hour, based on their solvency. Both the current member and the prospective member are equally paid $ 25 per hour for all client and internal work, and each student is paid $ 15 per hour. The social package is provided in the form of monthly or annual payments for maintaining health and wellness, equipment, etc. A certain percentage of the profit at the end of the year is reinvested in the business, and is also set aside for future subsidized projects. The remaining profit is divided between participants based on the percentage of hours worked.
We have two weekly meetings, weekly individual inspections and quarterly appraisals of participants. On Mondays, we have a workshop where we get a brief summary of our financial condition and review the budget, status and next steps for each project. We hold a strategic planning meeting on Fridays, where we reflect on Quilted business, think about improving systems that will help us work more efficiently.
Weekly individual inspections have proven incredibly effective in clarifying individual labor issues, helping people to solve complex problems and creating a spirit of belonging between offices on different coasts. Every three to five months, we get together for a week-long corporate event and conduct a quarterly assessment of our business activity, where each participant has the opportunity to share his personal and professional goals, and we can think together about ways to achieve them.
The future of Quilted looks promising. Already, all participants have a steady income, performing important work for them, in a democratic working environment, and our clients are increasing their business potential at affordable prices. We are seeing more and more opportunities for our company to grow decisively and confidently and to strengthen the business model in order to be able to exert more tangible influence on society. We make a small contribution to the promotion of the concept of a democratic society, developing our business as an example of a cooperative with collective management, and serving as one of the models in the variety of ideas that shape a socially just future.
Posted by: Johai Gal
There are many versions of TechCollective lineage; each person has his own story. I can only speak for myself. My story began 3 years ago. Like many technical specialists in the Gulf region (the key role here belongs to the fact that we are technical specialists, and not just web developers and graphic designers), I did not feel important in the company, but rather felt undervalued where I worked for moment. I have observed that technicians, especially those who specialize in hardware, tend to be treated as younger. I had an intention to create a cooperative of technical specialists. I had wild ideas about creating a huge company, a kind of supermarket, such as CompUsa, but working in a cooperative system. Fortunately, I called Dave at NoBAWC and he convinced me to step back, start small, first find the right people, etc. After several meetings, I was disappointed and I suspended work in this direction.
By coincidence, I ran into Sven, my old friend, who moved to Silicon Valley for a very well-paid job (about $ 45 per hour). Needless to say, he had a great job. But he increasingly felt himself ignored and powerless even at such a job. So, on Thanksgiving, we met and developed a plan. I stayed in the staff of a little-known non-profit organization (it is possible to do so), and started working at the Central Computer Center, in the center of San Francisco. I decided to go there to assemble a team. To put it mildly, it was very naive.
After 6 months of exhausting work (it was HORRIBLE), doing low-paid technical work, I became close to many of their employees and managers. I gathered a lot of information, being there, as a whole in the industry, and on their specifics of work. It was at that moment that they not only stopped raising wages, but also began to lay off employees for artificial reasons. It was a multi-million dollar company, treating its employees like dirt. It was then that several employees from there decided to meet. I was not the first to offer to leave the company and create my own (perhaps grabbing some Central customers!). However, I was the one who first proposed the idea of a cooperative. And they really liked this idea! We decided to meet next Saturday in Subway near Central. Was supposed to
And then an amazing thing happened! Meeting on Saturday gathered almost 2 times more people than expected. Not everyone was familiar to me - there were people who had previously left Central, or employees of other IT companies. Sven was there too. We met and unanimously decided that we would begin the process of legal registration and agreed to meet next Saturday. It all started right then. In the next few weeks, we chose officials, came up with a name, a logo and made up a work schedule.
At first it was very difficult for us, we didn’t know anything about business or about accounting. We initially registered as a partnership, realizing later that this was a very bad idea. We wrote regulations, were determined with payment, etc. There was a lot of controversy here, but in the end we stopped at exposing different payments for different works. For example, a web developer or programmer earns twice as much as a regular technical specialist, since they bring in twice as much money. Of course, they get paid so much only when they do this particular job. We also focus on paying for industry standards.
Immediately, we began to receive phone calls and work requests from other cooperatives and non-profit organizations. Some of our old friends from other companies also offered us work. We worked very hard, sometimes 14 hours a day. It was a hard first few months.
There were also internal problems. I became hostile with one of our founders. Enmity has spread not only to work together, but has acquired a personal character. In short, he decided to leave after four months. Not only because of hostility, he also realized that he did not believe in the cooperative model - after all, it really does not suit everyone. I was forced to do the work of an accountant and webmaster instead. It was very hard, I did not have a predisposition to mathematics. I began by taking a few private lessons. Thank God for sending me Melissa from Arizmendi; she helped me more than she could imagine!
It's been almost a year and a half. We are registered as a California cooperative corporation. The number of our participants has grown - both in frames and in hours worked. From the new members of the cooperative, we demand an entrance fee, although no one has yet received it (there were moments when it was simply impossible). We purchased a store in Mission on 23rd Street. Our customer base has also grown significantly due to powerful progressive movements in society and in the business community. We are currently negotiating the acquisition of another technology company whose employees have agreed to join TechCollective as full members. They were, of course, so included in the discussion process, as was the owner of the company. Hopefully that one day we will follow the Arizmendi model and expand (but each location will be independent and belong to its members). That's the whole story!
STORIES: Web Collective
Author: Alex Tokar
Web Collective is a seven-person cooperative that provides professional-level Internet expertise to companies and organizations focused on sustainable development. We are in Seattle and registered as a legal entity for 16 months.
Our path to building a Web Collective began with shared values, unshakable idealism and a common desire to find pragmatic solutions. We knew that we needed work, but we also realized that democracy in the workplace, saving the earth and social justice are important to us. Even without taking into account the values, it was clear to us that mutual trust is the most important component of success. The main driver of our evolution from individual owners to cooperative owners was the growing trust in each other. Evolutionary compensation policies and business practices reflect this growing trust and serve as markers of this in this transition.
The Web Collective began its existence in 2002 as a partnership of Internet professionals who met, volunteering at the Business Alliance for Local Living Economies (www.balleseattle.org). We found that people performing similar work and naturally competing can also naturally be partners. We started with subcontracting for small projects, and gradually confidence grew between us, as we had the opportunity to be convinced of the honesty and professionalism of each other.
In 2005, we met a student at Antioch College, who was studying the process of forming a production cooperative for his thesis. Although we were still not sure that we wanted to create a cooperative, we agreed to become his guinea pigs. Since for his thesis it was important for us to meet off-line, we planned a time for discussion. For several months, contacting only to share our thoughts about the format of the cooperative, we trusted each other more and understood our goals better. The main conclusion of the thesis is that the dialogue, namely, the process of listening to the ideas of other participants without any specific goal is crucial for our successful collaboration.
We decided to create a cooperative for several reasons. First, we wanted to take larger and more interesting projects. Secondly, there was a desire to benefit from economies of scale thanks to the joint accounting and office use. We also liked the idea of having the opportunity to go on vacation, so that there were people nearby who could answer calls while retaining their right to vote in work management. However, we still had to learn to trust each other more to combine finances. To this end, we have identified the most urgent common problems that can be solved with the help of small, concrete steps. The most important decision taken at the initial stage was an obligation to work together one day a week, even if at that time we are engaged in our own projects. The establishment of this rule has expanded our opportunities for informal communication and brainstorming, and has promoted collaboration between the participants. We worked with Interra on the Boston Community Change project, which allowed us to gain experience in joint project work.
At that time, until the time of legal registration, we limited the number of founding members to seven in order to simplify the decision-making process. Then we went to a three-day cooperative to develop common values and a concept of development, and there they decided to apply the principle of formal consensus for decision-making.
The evolution of our compensation system reflects the growing trust in each other within the team. Initially, most of us were individual entrepreneurs who subcontracted with each other on projects using a fixed rate. Then we began to participate in tender projects together, which required greater transparency and risk sharing. If the project was delayed or completed earlier, we would have suffered or won equally. It so happened that on different projects set completely different hourly rates. This was a problem in terms of a fair approach, as not all participated in all projects, but we all benefited from well-executed projects.
In accordance with the tradition to refer to the main agreements when creating titles, we called our first compensation plan for the newly created cooperative (May 2007) “Boot Strap-On”. Since we were already working together, it secured everyone. In order to balance the risks associated with the needs of the cooperative, we assigned a monthly fee for the company's expenses to each, and set an hourly rate for paid projects. This helped solve the problem of differences in payment for different projects. Each of us also made a contribution to a cooperative member.
In July, we switched to the “Boot Shining Sooth Sayers” payment system. In accordance with this policy, we set a base salary equal to the rate for twenty hours of work. Participants were paid hourly wages, standardized for all projects, and Web Collective paid its members time spent on unpaid projects. Mandatory testing of the fixed number of hours was not required.
We also experimentally introduced a bonus system called “What is important now!”, Which allows us to quickly highlight the general priorities of the company and then distribute the bonuses depending on the contribution of participants to these projects.
After a year of work, we were ready for our last transformation, this time it was a transition to a full salary payment system. According to the policy of “wallets-kidnappers”, we are now paid a fixed monthly salary, based on the established number of hours of employment per year. Each of us now has an obligation to work out the time stated for the year. Monthly hours spent are no longer paid directly for monthly payments.
People can significantly exceed the stated time of work, as well as experience a shortage of time. Now we even have paid holidays in the amount of six weeks per year! If at the end of the year we received payment, but did not fulfill the obligation for the elapsed time in full, we must company for this time. In order for this system to work, it is necessary to track in detail the time of each.
Over the past 16 months, significant changes have occurred in our policies and ways of doing business. The level of trust was a limiting factor in our development, its increase has become an important component of our success.
STORIES: Chicago Technology Cooperative
Author: Jim Kraner
Chicago Technology Cooperative (CTC) is a team of web developers and designers who create websites and online applications for non-profit organizations and public associations. In less than four years, the organization has increased its staff to nine people and works with clients from all over the United States. The CTC structure is rather unique, but I don’t think any of us would like to work anywhere else! As one of the founders of CTC and the current “managing partner” responsible for operations, I would like to tell a little about the history of its creation and tell about our values to other people who are thinking about creating a cooperative or team.
CTC was founded in early 2005 by three colleagues who worked on the development of non-commercial technologies, performing different roles - from consultants to volunteers. Based on our experience, we concluded that there are no vendors on the market that would provide affordable and efficient IT services to non-profit organizations on an ongoing basis. We created a cooperative to be able to help non-profit organizations in need by solving their IT needs, and to do it on our own terms: use free software such as Linux, instead of relying on Microsoft's handouts! Virtual office with low overhead costs instead of a chic office in downtown Chicago! Most importantly, we wanted freedom in managing our daily work and career as a whole.
The first two years of the cooperative’s work were very complex: we had no money, no office, no real business and management skills, no marketing plan ... and too often, there were no customers. During this time, two of the three co-founders moved to other organizations, and the CTC staff was staffed by one founder, several part-time friends, and friendly freelancers. Everything progressed slowly, but we gradually began to work on more and more large projects during this period, which allowed us to eventually achieve some recognition in the Chicago non-profit community.
This led to the emergence of even larger projects. Finally, in the winter of 2006-07. we got such a big project that it made it possible for some of our freelancers to work full-time, so our permanent staff grew to three employees.
Over the past two years, the number of CTC employees has tripled and reached 9 people working in almost five different states. We gained experience in projects with different clients, ranging from neighboring tiny associations of citizens, to large national funds. Our employees are recognized as leaders in the software that we use, we publish software and case studies, and we also regularly speak at conferences. The key to success was that we relied in our work on principles shared by many teams and cooperatives.
Technically, our cooperative is a commercial corporation established according to the laws of the state of Illinois. In our state, as in many others, there is no legislation concerning traditional production cooperatives. Considering that our main mission is to assist non-profit organizations, rather than make a profit, sometimes the question of reorganizing us into a non-profit structure came up. However, we decided to leave the current appearance of the legal entity in order not to deal with the many rules and regulations that apply to non-profit organizations.
Unlike some other production cooperatives, we have not yet formally distributed the company's property to the whole team. It is still being discussed how best to do this - conversations on this topic, begun even before the founding of the CTC, continue in subsequent years. Approaches to the distribution of property, management, responsibility, and "profit" differ in each cooperative. We, most likely, will not finalize the structure until we achieve stability in size and we do not have more time to discuss issues relating to the team. The only thing we agreed on is that we all want the company to be jointly owned, where all teammates can be not only colleagues, but also co-owners.
The governance model is also often discussed, although we were able to find a hybrid between direct democracy and a benevolent dictatorship, and it works quite well. We try to remain as flat and non-hierarchical as possible: each team member has a say and we encourage everyone to participate in discussions on long-term planning, management issues and strategies until a sense of satisfaction is achieved. This happens both formally, during spontaneous common corporate events, and informally, in the process of daily interaction in our group chat. In the process of developing the company, it became clear that some team members, in fact, have no desire to participate in management discussions or in decision making - however, we continue to send them invitations to these meetings.
When we work on projects, it is impossible to remain a completely flat team: each project requires a manager to coordinate tasks between several team members and communicate with clients. We have one “managing partner” who sets priorities and distributes tasks among our several parallel projects; this officer also performs the general administrative and financial responsibilities that one person is supposed to perform.
Although we still do not comply strictly with the definition of a production cooperative, all CTC members are very pleased with the current situation and our prospects for the future. Currently, CTC allows each member to:
- work in an ideal environment with colleagues sharing many key values;
- work on interesting projects that satisfy us both as technicians and as individuals;
- be free to plan and control your career while maintaining a job and medical insurance.
The history of the creation and work of our cooperative was very interesting and intense, and we hope that we will continue in the same way in the foreseeable future!
STORIES: Tech Underground
Author: Brent Emerson
Tech Underground (TU) is not a cooperative of employees. More formally, one would call it a producer cooperative. Its members are independent technical consultants working in the local non-profit sector, providing IT consultancy services. They became part of the TU, for jointly selling services and having a community to collaborate, support and educate each other. TU is an example of an alternative way of doing business in which the balance of teamwork and individual responsibility is respected.
The history of TU began in 2001. Immediately after the Internet boom, The Management Center (TMC), a well-known non-profit consulting agency in San Francisco, came to the conclusion that it was time to launch an IT consulting service. They hired a program coordinator, whose work combined counseling for individual clients, as well as managing a network of freelance consultants. TMC sold its consulting program to clients in the following way: transferring projects of its network of freelancers and taking part of the payment for each hour to cover overhead costs. In a short period of time, freelancers got to know each other, attracted others working with non-profit organizations, and started meeting about once a month, or so, in informal meetings managed by the program coordinator.
The IT consulting program was successful, but the effect of the Internet boom was unpredictable: TMC also invested heavily in one of its main sources of income (the popular nonprofit job opportunity Opportunity NOCs), but was quickly replaced by a newcomer named Craigslist (site with electronic announcements). TMC was forced to wind down many of its areas, and technical consulting was one of the first.
We, freelancers, inherited TMC customers, but we suffered from the lack of a supporting network that formed between us. We all liked the benefits of independent work, including the freedom to manage our work (for example, the choice of equipment and software that needs to be promoted and supported, as well as which clients to work with and for what reason), and the lack of overhead (and, as a result, the need to take a lot of money for the work and reduce the rate of specialists). But we also felt the benefits of membership in a larger organization: access to technical expertise of colleagues, availability of labor resources to cover up emergency support, if necessary, well-organized marketing activities, and a search system for new clients, as well as market identity.
In 2002, wanting to recreate the elements of the TMC program, the four founders of the TU wondered where to start: should I register as a non-profit organization? As a result, we have chosen the simplest organizational and legal structure: its absence. We could not even have a partnership (after all, by default these are people united by joint business), because we did not have common assets and we did not work with clients on behalf of one organization. TU has become an informal pool of consultants who have separate business relationships with clients; A source of information for non-profit organizations that need technical assistance, a marketing resource and a resource for attracting clients, which will provide these consultants with services, will become a source of mutual assistance, cooperation and support.
We began to hold regular monthly meetings to develop materials that will help us sell our services together, as well as to communicate and exchange experiences. We created a quick guide to fix our policies and procedures. With regard to potential liability, we held a series of meetings and, ultimately, more clearly defined the contractual relationship between the client and the consultant and other systems in order to preserve our informal structure and at the same time protect ourselves. After the change of several generations of newcomers, and a period of sluggish activity of the participants, we regrouped, having spent a long time on self-determination and thoughtfully reviewing our Guide.
Responsibilities in a team are distributed in a certain way. The webmaster updates and monitors the operation of the shared website. When we receive a request from a potential client, the New Client Coordinator contacts him, and then sends the request to the Consultant Group Coordinator, who may end up serving the client.
If the TU cannot find a consultant among the participants of the association who is able to serve the client, the client is given recommendations from which external professionals can be contacted. The community coordinator governs the process of adding new members. There is an individual person who is responsible for document circulation and monitors the work system. He is responsible for the order in the storage system of all records and other documents, stores all written records and other systems of the group in order. There are also occasional meeting coordinators and secretaries who keep meeting minutes that help organize TU meetings every 6 weeks.
Where the TMC program failed, the self-managing model of the cooperative that the TU uses shows its effectiveness. Our fees (paid directly to consultants instead of going through filter stages, where overhead is deducted) are quite low to save our customers money, but high enough to support our needs. Customer-consultant relationships remain strong and are implemented directly. And unlike the group of disparate consultants, we have a lot of strong advantages that the consulting team gives us, increasing our reliability, expertise and geographic coverage. It is beneficial for TU customers to work with a united team, because it has more skills, knowledge and experience, greater accessibility than a single person.
In addition, the TU affiliate network provides a higher level of support than we originally expected. System consultants regularly assist each other and connect with clients who require a wide range of skills. We use our contact lists as a source of advice, industry information and answers to the most complex questions. The developers worked together on projects requiring both planning and customization; and often the TU system consultant is ultimately involved in the implementation! When two TU members began to provide Internet hosting services (eventually transformed by Electric Embers), new opportunities emerged for easier interaction and communication between the host and the consultant.
In the future, participants hope to provide free services together on days of group services for organizations that are not able to pay for their services. With six active members and 14 honored retired professionals and former members, Tech Underground belongs to the thriving non-profit IT community in the San Francisco Bay area.
STORIES: May First / People Link
Author: Alfredo Lopez
May First / People Link was created in 2006 as a result of the merger of two progressive technology organizations: the May First Technology team (a group of consultants engaged in providing services to non-profit organizations) and People Link, an Internet provider with left-wing views, founded in 1994 year
The period of time when the company was born, in many respects determined what kind of company MF / PL became, because we were formed simultaneously with the technology, and the way it was used changed radically.
The social justice movement (representing a significant part of the nonprofit community) and the progressive movement in general, became more and more familiar with communication technologies and appealed to them more readily as these technologies became more convenient to use and became a ubiquitous part of our life. More and more people learned how to use them, and more and more people learned how to work with them.
And we broke through the social shell, which was often hidden behind this technology: local networks, the interaction of which was limited to data exchange between offices or desktops. Now everyone has used Internet technology. More than a billion people went online as a result of the most breakthrough changes in society in modern history, and activists of our movement could communicate with all these people, work together to develop and use software, share any information with them, and then perform actions based on this information using this software.
In these circumstances, May First Collective found that its future is financially fragile and politically untenable. And People Link was limited to a small staff and resources, and was not able to achieve its goals.
Two members of the May First Collective, Jamie McClelland and José Guillen, began meeting with People Link founder Alfredo Lopez every week to discuss the situation and understand how to respond.
During these months of discussion, it became clear to us that something special was happening: the Internet was not just technology, but also a movement of people, so natural, dynamic and unpredictably powerful, like nothing else that existed before it appeared.
We immediately realized that the traditional formats of "providing services" on the Internet do not correspond to this reality. If the Internet is a movement, much of which consists of a progressive community, we, as progressive activists, should be involved in its organization. We must find an approach to it on the same principle as activists usually use to interact with any mass movement.
At the same time, we realized that such an approach is impossible if we follow the usual organizational patterns and culture. This movement is due to the use of technology and consistent practice: communication. In this context, the political organization on the Internet is also an IT company, and all information technology activities in this environment are in fact political.
The sticking point in these discussions was the choice of a name that would reflect what we did. We decided to combine the stories of the two organizations by simply connecting their names, and so was born May First / People Link. support.mayfirst.org
MF / PL today exists as a membership-based organization that participates in the organization of the organic Internet, supporting a jointly managed system for sharing Internet resources. We are like a union or cooperative. Our 270 members (mostly organizations) pay annual fees, which are used to buy and maintain a network of 38 servers that host more than 500 websites and several thousand email accounts.
In accordance with this vision, MF / PL rejects the idea of paying for Internet services. In MF / PL, a member pays fees and uses all the resources he needs and wants. For example, members usually have more than one website, some have five or six. There are no restrictions for e-mail, mailing volumes and other resources.
No one pays for it all.
Participants also provide technical support and network administration, and all our systems are sharpened for it. We use a publicly available support system at, which allows all participants to post questions and comments in applications, which can be answered by any participant who has logged in and viewed them. Anyone, participant, or not, can access and read all requests. For us, the process of technical support is another organizing tool - a form of training and coverage of any Internet users.
MF / PL currently has no paid staff. While our main activity is to provide tools for continuing our political work on the Internet, MF / PL is also an activist organization involved in educational work, organizing its events, and participating in others.
Perhaps we are known primarily because we were leading the organization of the Working Group on Technologies at the US Social Forum in 2007, which used Internet technologies to organize an event directly, and then to register, register for work sessions, for information displays , road organization and accommodation. And also for blogging the forum by its members. But this is just one of many events and activities in which we participate throughout the year.
In fact, the MF / PL seminar “Collective Democracy,” in which participants use an Internet program to organize an open, coherent and transparent, democratic process based on the writing of the Declaration of Rights on the Internet, has been invariably popular among participants at many conferences.
Our book, Organic Internet, is published. This is a jointly written group of essays that form a progressive concept for the development of the Internet - it is on sale in paper form, and is absolutely free to download from our site in PDF format.
In the long term, the goal of MF / PL is what we already do every day - to create shelter for any progressive organization and individual citizens of this country through recruiting new members, as we continue to work hard to achieve our goals and build relationships, form coalitions with other progressive Internet companies and providers (avoiding the poisonous capitalist model of competition).