The hybrid cooperative

Jon Farquhar Simpkin outlines his vision for a new breed of cooperative

Although I like the ideology of employees owning the company, this is not always practical, especially in the modern world where cooperatives have to compete in a tough free market environment. If cooperatives want to attract investment and be able to compete against mainstream businesses then they need to adapt.

Cooperatives have to compete against private business, and since the cooperative movement began, private business has come out on top. It is time to bring cooperatives into the 21st century so they can compete and win, and at the same time keep their philosophy of providing better working conditions and better wages.

The time has come for a hybrid cooperative.

A hybrid cooperative is a business model that the Isaan Cushion Company is pioneering to the world. It takes influence from the cooperative model but also from the standard mainstream private business model.

In short this is how it operates:

All employees are put on a basic salary. Any surplus profits are shared out among the employees. However, the employees do not have any ownership of the company. The owners/investors will have the final say on any decisions; but they will strive to create a culture of listening to employees.

Once the investors have had their initial investment re-paid they will be included in the surplus of profits, but will only receive the same amount as the employees. As the company grows and the value of the company increases, shareholders will see their investment increase in value; this is their reward for putting their money into the company. This also applies to the entrepreneur who created the business.

This model is needed because, although we are fans of the cooperative model, we feel the model has weaknesses. The ‘one member one vote’ approach cooperatives use slow the company down in times when it needs to act quick and decisively. Another weakness is trying to attract investors. The vast majority of investors are looking for a return on their invested capital. Many traditional cooperatives have had problems bringing in private investors because of their business structure.

However, there are also weaknesses in the standard private business model. If a business makes profit then surely everyone who has helped the company make that profit should be rewarded with their share of those profits. The profit should not just be given to the few at the top. This is also a great way to increase people’s wages and to close the gap in society between rich and poor.

The hybrid cooperative business model keeps the best features of both private and cooperative. We feel this approach will encourage unity, sense of community inside the business and make it more productive and fairer. This approach will also encourage more private investors to invest in businesses with a social mission at their heart. Unlike fair trade businesses, hybrid cooperatives can offer their products and services at competitive costs while still making sure the employees receive a fair wage.

Follow our hybrid cooperative experiment at www.isaancushioncompany.com