These companies with no CEO are thriving
There's a grocery store
in Brooklyn, New York,
with sales per square foot 4 times
as high as any other grocery store
in the area.
10,000 people work there,
and it doesn’t have a CEO.
This place is the Park Slope Food Co-op,
and it’s one of 3 million cooperatives,
or co-ops for short, around the world.
Co-ops are a big part
of the global economy:
they employ 280 million people—
10% of the world’s workforce
and the equivalent of over $2 trillion
flow through their doors every year.
How is it possible that a business
with 10,000 workers doesn’t have a CEO?
To answer that, we have to talk about what
a co-op is and why they were founded.
Let’s rewind to 1844.
A group of 28 weavers in Rochdale, England
came together to create
and co-own a store.
By buying in bulk directly from suppliers,
they could negotiate prices,
which allowed all of them to buy stuff
they couldn't otherwise afford.
They ran the store collectively
and democratically,
which was remarkable at the time.
The Rochdale Society of Equitable Pioneers
wasn't the world's first co-op,
but it was the first to publicize
its principles—
principles that guide co-ops to this day.
Today, there are all kinds of co-ops:
REI in the US and S-Group in Finland
are large consumer co-ops.
Credit unions and mutual insurance
companies are financial sector co-ops.
And when farmers or other producers come
together, that's a producer co-op.
And then there are worker co-ops,
like Mondragon in Spain or
The Cheeseboard in Berkeley, California,
which are founded to provide jobs
to people in the community.
Some consumer co-ops, like Park Slope,
require their members to work shifts
in the store.
In exchange for their work, members pay
15 to 50% less for groceries,
and they influence what products
are— or aren’t— sold there.
Three crucial things to know about co-ops:
first, all co-ops are jointly
owned by their members,
whether those members are consumers,
producers, workers, or whoever.
Unlike traditional companies,
which can have outside shareholders,
all owners of a co-op are also members.
Second, co-ops are not founded
to maximize profit.
Many do turn a significant profit,
but that’s not their core mission.
So evaluating a co-op purely
by traditional business metrics
ignores the most important reason
for their existence:
how well do they serve their members?
And third: co-ops are controlled
democratically by their members.
But how do decisions get made?
It varies.
At a small worker co-op
like The Cheeseboard,
day-to-day operational decisions
are just made by the workers.
As co-ops get larger, they do institute
some form of leadership or management.
Park Slope has a general manager
who leads the 80 or so employees.
And the largest network of worker
and consumer co-ops in the world,
Mondragon, has a president
and managers who lead
the roughly 30,000 worker-owners
and 50,000 contract workers.
But leadership roles in a co-op are very
different than in a traditional company.
The leadership implements policies
that its members or worker-owners
have agreed upon, by vote.
And at Mondragon workers,
can vote to fire the president.
At a co-op, there’s no single person
with overarching, top-down power
over everyone else,
like a CEO would have
in a traditional company.
Meanwhile, in both co-ops
and traditional companies,
major company-wide decisions
are made by voting.
But who votes and how is wildly different.
In a traditional company, voting rights
usually come with shares of stock.
The more shares you own,
the more votes you have.
Take Alphabet,
the parent company of Google:
there are thousands of shareholders,
but the two founders control 51%
of the votes
and therefore the direction
of the company.
In a co-op, every member
has the right to vote,
and in most co-ops,
every member gets one vote.
That difference results
in radically different policies
than you’d find at traditional companies.
For example, Mondragon limits the salaries
of its management
to about 6 times what the lowest paid
worker makes.
In Spain, CEOs of traditional companies
make, on average,
143 times as much as a typical worker.
At Park Slope, there’s a monthly
general meeting,
where any member can show up to vote,
and a motion needs a
simple majority to pass.
It then gets taken up by
the Board of directors,
which is composed of co-op members,
for official approval.
At The Cheeseboard, the worker-owners
try to reach consensus on major decisions.
This means that some decisions
can take a long time.
For example, in the late 1970s,
the workers debated whether to post
a sign outside declaring
that The Cheeseboard was a collective
for one and a half years.
But the extensive discussion,
and disagreements,
around that decision made it a solid one—
The Cheeseboard still advertises
the fact that it’s a collective
almost 50 years later.
And that’s not all that’s
working well at co-ops.
Studies in the UK show that co-op
start-ups are almost half as likely
to close within five years
as traditional businesses.
And in one study,
researchers polled 600 workers
at two in-home healthcare businesses:
one was a worker co-op and the other
was a traditional company.
The workers did similar work
with similar salaries.
The biggest difference?
Co-op workers were
about 40% happier with their jobs.
