Rachel Beglin’s Pioneer editorial published on Sept. 8 piqued some thoughts that I’d like to share here. Rachel examines a business model that I find delightful -- the cooperative. Note that it’s a business model rather than a model for government supervision of business. It’s a capitalist model characterized by its equitable distribution of benefits.
For one, in the cooperative model, some consumers are owners, and some owners are consumers, while some shoppers choose not to be owners, and some owners choose not to shop at their co-op.
A variant model, however, disallows consumers who aren’t owner-members, such as Beltrami Electric.
Those who both own and shop the co-op would be most motivated to improve organizational success, others not so much. But all co-op members have little control over the success of the organization other than to elect board members who will hire and fire management.
Management, actually, is most directly responsible for the performance of a co-op. In any case, member-owners are the beneficiaries of high organizational performance along with non-owner consumers.
Second, closely akin to the cooperative model is the Employee Stock Ownership model, a corporate model where employees earn ownership over time of employment.
Here again, management is most responsible for the success or failure of the organization, but employees -- the workers who make the performance great or not -- are motivated and more able to make the company prosper since their ESOP stake in the company grows as the company prospers.
The employee-owner groups and consumer groups do overlap here much as they do in co-ops, but the level of controlling influence wielded by ESOP employee-owners is greater than the level of controlling influence wielded by co-op member-owners. And, as with co-ops, employee-owners are the beneficiaries of high organizational performance along with non-owner consumers.
Such analyses might be extended to other business models -- corporations, LLCs and sole proprietorships -- comparing the effectors and beneficiaries of high organizational performance for each.
Any of these business models can empower a company to do humanitarian good. But they can be predatory also, as a primary criticism of capitalism is that private ownership enables exploitation of both customers and employees. It falls to management to choose.
Locally, I applaud Lueken’s as an ESOP, and I applaud Otter Tail Power as a C-corp for their invested commitment to human benefit. Of course, I applaud Harmony and other co-ops for the demonstrated humanitarian good they do.
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