Workers and consumers on boards?

The proposal by the Prime Minister to have consumer and possibly worker representatives on the boards of British companies has had a fascinating reception. If it were a leftist suggestion, then it can be pigeonholed as an attack on the interests of investors. But it is not. It is an idea that has emerged as one of the ways in which markets can survive and thrive in an era of inequality.

In some quarters, the response has been silence, disbelief. In others, a hope that it goes away. I don’t believe that it needs to.

In the co-operative sector, we have ample experience of what to do and what not to do, the tips and the hints and the disciplines needed to make this work. At its heart, the power of the model is that you have independent non-executive directors, but they are independently informed about a key element of company culture and performance, rather than, as at present, largely independently ignorant – and reliant on flows of information from the centre.

At present, corporate governance as an information system, is still top down, centrally controlled. Of course, you need some control and sufficient coherence, but the alternative model is what the great Shann Turnbull calls ‘cybernetic governance’ drawi information from multiple stakeholders.

I have published a longer piece on the Prime Minister’s interest in mutuality on Huffington Post and today had a letter on the origins of all this, published in The Times.

Do it with care, but yes…bring it on!

A short history of values-based innovation

My book Values on values in business is out soon, published by Greenleaf.


The book focused on practical tools to bring values to life in an organisational setting and it is for all businesses. But looking back, I can also see that the history of the co-operative sector that I am in is a history of innovation on the basis of values. Here are seven that I think stand out.

1. Equality for women

From the beginnings, in the 1840s, one member, one vote rule also applied to women – at a time when women were not normally allowed to own property or vote. Only in the 1920s, 70 years later, were women allowed to vote in the UK. 

2.Access to credit

In 1854, Friedrich Raiffeisen decided to take on what he described as the “vampire” loan sharks, Credit unions now provide a genuine people’s bank for over 186 million people in 97 countries.

3. Shorter working hours 

The Coop Crumpsall Biscuit Factory became the first only 8 hour day works in Britain when it introduced limited working hours in 1901. Nearly a century ahead of its time, it wasn’t until 1998 that working hours in the UK were limited to 48 hours.

4. Workplace democracy

Mondragon, now the world’s largest worker co-operative, with the slogan of humanity at work, was founded in 1956 in Basque Spain. Every member, ultimately, has an equal vote.

5. Sustainable energy

In 1980, with oil prices rising, three families in Ny Solbjerg near Aarhus – the Lauritsens, Vangkildes and Sorensens – decided to form a co-op to install a 55kW wind turbine. Within two decades, co-operatives like theirs had made Denmark a world leader in renewable energy. 

6. Fair trade

In 1988, coffee farmers in Oaxaca, Mexico joined together in the co-operative UCIRI (Union de Comunidades Indígenas de la Región del Istmo) to launch the first ever certified fairtrade product, sold to consumers in the Netherlands under the label of Max Havelaar. Today, three quarters of all fair trade is produced by co-ops. 

7. The right to work

In 2001, workers in Argentina took over failed businesses as unemployment soared. When Argentina defaulted on its debts, unemployment rocketed to one in four of the population. As companies collapsed, workers responded by occupying factories and continuing to trade in the new form of worker co-operatives. 170 businesses, some with over 200 employees, were rescued in this way by their workers and 93% of these are still operating.

Values are how you see the world and values can inspire you to change it.

To change someone’s behaviour, start with their values – not yours

A teenage pregnancy changes the life chances for both mother and child over the short and long term and not surprisingly there are big efforts made by health professionals worldwide to cut back on their numbers.

The key is seen to be awareness, but the weakness of so much health education is that it starts from the worldview of the professional – which is rational and factual. It doesn’t start from the mindset and values of those who are being targeted.

The Lancet recently reported on just one such example, which in fact had the opposite effect of what was intended.

The idea behind the programme in Western Australia was simple. Give teenage girls in school ‘simulator dolls’ to take care of that cry and wet themselves. That should teach them how hard life is looking after a little one.

It is not a new idea. Around ninety countries worldwide have the same programme. But remarkably, few of those seem to have been tested to check whether in fact it works.

The study in Australia showed that there, in fact it did the opposite. Teenage girls that were targeted came out more likely to get pregnant, than less (36% more, compared to schools without the programme).

The intervention achieved what was intended in terms of understanding, which is to show that life might be hard with a little one, but it also triggered their values of caring, self worth and attachment by asking them to imagine caring for a baby. Their values won out.

There has been a movement in recent years of health education to learn lessons like this, through using the toolkit of social marketing. I was privileged to work with Dr Jeff French to set up the first UK social marketing effort with the NHS in England over ten years ago. The European Social Marketing Conference runs over the next few days, with a World Social Marketing Conference due in the USA in 2017.

It is not that a direct prompt on values is always right, when it comes to behaviour change, but if you don’t start from the values of those you are focusing on, then it is your values that fill the gap. And then, it is only you that is persuaded.

——

Values: how to bring values to life in your business is published in October 2016 by Greenleaf.

How to get practical on ethics: my new book on values in business is out soon

The idea that business is about money pure and simple has endured because it is an idea that is simple. That there might be other motivations, and ones more effective at helping people to work together, feels complex. So when it comes to values, the challenge is to get simple and practical. 

How do you chart the values at work in a business? How do you bring values to life? How do you recruit for values?

This is the focus of my new book, which is a short book (90 minute read) called Values: how to bring values to life in business. It covers a range of practical tools to make values count.

It will be published by Greenleaf – pre-orders up now on https://www.greenleaf-publishing.com/values – next month, around the time of the first World Values Day.

A new financial instrument for co-operatives?

Following our collective efforts the UK Government has confirmed co-operative and community benefit society debt securities will be eligible for the new Innovative Finance ISA.

In the past few days our lobbying has prompted government officials to pause in their final drafting of the Innovative Finance ISA regulations to pay particular attention to society eligibility and set things straight. We are very pleased to have clear assurances that for the purposes of the new ISA the term ‘company’ can now be interpreted as including societies.

In summer 2015 HM Treasury consulted explicitly on whether or not to make society debt and equity eligible for the Innovative Finance ISA. We have consistently argued strongly in favour of debt securities being eligible. HM Treasury had never ruled this in or out, but it did omit any reference to society eligibility in its November 2015 consultation response and then referred only to including ‘companies and charities’ in its notes on the draft legislation.

While we don’t have a formal indication of a change in policy, we have been given an assurance that subtle changes to cash ISA rules in 2015 allow for an interpretation of ‘company’ that can be taken to include societies going forward – which is welcome news. [Please note though, this is not legal advice, simply an indication of how the law could be read].

The input to the consultation of so many co-operatives, has made a practical difference.

What happens next?

The ISA legislation will come into force as part of the Autumn Statement in November. It will then be for regulated financial institutions such as banks, building societies and larger credit unions, to explore whether or not developing a co-operative or wider social investment ISA is feasible. There are opportunities here, but they won’t happen overnight.

I am speaking at the International Summit of Co-operatives in October on our sector hopes and activities around co-op and mutual capital.

For now, a future opportunity is here.

 

What we can learn from Robert Owen

It is a pleasure today to talk at a Blue Plaque going up near Kings Cross in London to Robert Owen, the great social reformer and co-operative advocate of the early 19th century.

The man is historical, but his ideas remain contemporary, and ones that we can still learn from.

In the early nineteenth century, he cut the hours of his cotton mill workers from 17 hours a day to 10, and banned the employment of children. Over four years, the business made a profit of £160,000 and a return on capital of 5%.

Robert Owen was fascinated by the potential of a more co-operative culture. In 1812, he wrote the first of his “Essays On The Formation Of Character”. As he described it, character is a set of habits, behaviours and beliefs that are shaped by the environment in which we find ourselves and in which we have grown up.

Owen set out to make character visible. Black, blue, yellow and white were the daily colours assigned by Owen to workers in his pioneering mills at New Lanark. Black was bad behaviour, blue indifferent, yellow good and white was excellent – a shared and open form of feedback.

For children, Owen invented the world’s first workplace nursery, or crèche – the New Institution for the Formation of Character – which opened on January 1st, 1816, financed out of company profits. As soon as children could walk, they came to the creche and, at the age of three, they entered the infant school.

The teachers were specifically instructed to be kind and encouraging in order to instil self-confidence. If you encourage a co-operative culture, then you build the opportunity for participation and well-being.

“Any general character,” Owen commented, “from the best to the worst, from the most ignorant to the most enlightened, may be given to any community, even to the world at large, by the application of proper means.”

In an age of inequality, we can still learn from the ideas of Robert Owen.

Breconomics – the new agenda?

The Brexit campaign was won on the campaign slogan ‘Take back control’. And in her comments on the agenda ahead, the new Prime Minister Theresa May has vowed that her government would give people ‘more control over their lives.’

The reason why control has become such a potent rallying cry is not hard to see. Our economy has become more complex, decisions more distant and politics less able to shape what happens in society. The make-up of local high streets is determined by global market forces, not just the choices of local people. Work, for millions of people, has become more precarious as technology develops and labour markets change. Home life is more risky for many, as more people are in private rented accommodation.

A rising lack of control is something we have identified in our data on the economy and business over the last two years. On the one hand, the evidence is clear and strong that if you give people a voice and a stake in economic life, they are more motivated, more productive and more open to innovation. On the other hand, long-term trends are working against that sense of control.

As I have written before, in Unfinished Business published by ResPublica, the number of individual shareholders on the London Stock Exchange has halved over the last thirty years (from 20% to 11% as a proportion of overall ownership). The number of people in secure, social rented homes has close to halved over the same period (from 20% to 11%), while those in private rental has doubled (from 9% to 22%). The percentage of people who are self-employed – the so-called ‘precariat’ – has increased by around a third (30%), again over the same period.

own3 own2 own1

 

 

 

 

This is matched by our customer data, looking at how they view business and the economy. 59% of people simply think the economy is out of control. 62% think they lack influence over the businesses they use. Not surprisingly, 68% of all workers and 75% of part time workers want more influence at work.

Ironically, transnational institutions – like the European Union – exist in part to exert some control over these forces. But the referendum result showed that they themselves appear beyond influence and so simply compound the sense of disconnection people feel.

As such, Theresa May’s aspiration to give people control over their lives and create an economy that works for everyone, is welcome. We have Brexit. Can we therefore have Breconomics – an agenda to give people more of a stake and a say in the world around them?

I have written on this ‘control agenda’ in the Huffington Post, and elsewhere on voting for economic democracy, suggesting five key themes for such a Breconomics.

  1. We need to harness the enthusiasm for local ownership.
  2. We need to make it easy for employees to have a voice at work.
  3. We need to recognise the needs of self-employed workers.
  4. We need to make it easier for small businesses to compete collaboratively.
  5. We need to give more people a say over the businesses they use.

Co-operative and mutual ownership – where those closest to a business own and control it – offers a way to achieving these aspirations of course. But this, social economy is just part of a bigger picture of the control agenda.

It is a time for new thinking. Whether you voted for Brexit or not, what Breconomics can now look like is vital to all those of who want to see an economy that works for everyone.