06-24-2015, 12:06 PM
I am a big fan of this idea. I decided to check it out. I found a 44 Page study That was fairly comprehensive, it described many of the aspects both good and bad of co-operatives. As a result i attempted to summarize this for your consideration and joy.
What is it?
A Co-operative is a business that is owned by and run by the employees. There are many types, but the one we will focus on is where employees have equal control and financial reward in the business. These two concepts are known as Control Rights & Financial Stake and are among some (But not all) of the benefits that cooperative workplaces enjoy.
"While worker cooperatives (or employee-owned cooperatives) are currently rare in the United
States, examples of successful worker cooperatives are frequently cited in the literature,
suggesting potential for future development of this type of organization."
It is interesting to note that Art & Media Co-operatives are among the most popular forms of co-operative business in the USA. (in the top 5)
"Roughly 15% of the worker cooperatives listed in the USFWC directory are in the arts and media industry."
"One reason why these categories may have organized in greater numbers than other industries is they have relatively low capital requirements for start-up and require similar skill levels for all employees in the firm. "
I think this is very applicable to the Concept art and illustration Industries, and still but not to the same extent the 3D and Animation Industries.
"These two characteristics are cited in the literature as potentially important factors for success in many worker cooperatives."
So why are these factors important?
Because Low Capital requirements means greater access to entry and availability of jobs.
It means less risk for the individual to take
Similar Skill Levels is an important factor for many reasons.
Because it contributes to a Unity of Purpose, where all those working in the co-operative feel that their contribution is fair and valued at a similar (though not necessarily the same) level.
This contributes a cohesive and bonding effect that keeps cooperative groups filled with intrinsic motivation and improves both productivity and employee hapiness. We will cite evidence of this later.
History: Why do co-operatives form?
Lets look at an example provided in the report.
"The formation of a worker cooperative from inception can occur autonomously, as in the case of Union Cab Cooperative of Madison, Wisconsin (Lawless and Reynolds 2004).
Experienced workers raised start-up funding and operate the worker cooperative. In the case of Union Cab Cooperative, the workers established the cooperative to overcome low wages and poor working conditions."
Now there have been various protests and general unhappiness with the heavy hours and workload that is present in this industry and in some cases low wages. The VFX protest of the oscars was one example
There is a known subcultural phenomenon known as the crunch or crunchtime in this industry, where with deadlines looming for shipping titles, people start to put a lot more hours in often non paid, in an attempt to deliver the best product. I personally have heard or read people talk about this as a problem. How much of a problem i cant say.
Lets take a closer look at Co-operatives and How they function.
There are many different types of structures for Co-operatives, however explaining all of them would be long & potentially damaging to your brain. Your Health is important.
Flat Management Structure:
This is where all people have an equal say in the descisions made by the company. This has both good and bad consequences.
First we will start with the good.
"By itself, worker participation in decision making can promote greater commitment and motivation from workers.
The idea is that workers who have greater authority to make decisions about how they do their work, the type of work they do, and the products they develop will work more effectively and will be more invested in the fate of their employer (Smith 2006) "
I think Personally that this is more than it seems at first. Greater commitment and motivation are powerful benefits but one of the most powerful benefits that comes from descision making is....experience.
I think the experience of making descisions and participating in building your own future with you at the driving wheel is a powerful life changing experience that can only enrich lives for the better and will help people be better able to adapt to other environments as well as understand the types of descisions that are made in a company and how it affects the wider world.
"It can also bring diverse perspectives and generate more ideas, particularly from those employees closest to the production process, the shop floor (Appelbaum and Berg 2000). "
And here i would like to weigh in with another extremely influential idea. That of the wisdom of crowds. This idea was described in James Surwolacki's Book; The Wisdom of Crowds.
The Basic Outline is that the sum (the combined total) of the groups combined ideas is far more accurate at predicting outcomes than an individual's ideas. In the book he then goes on to give many many case examples as well as describing certain mitigating factors and factors that influence the effectiveness of crowds.
Most importantly, i think this idea can be applied to Concept Art and especially to communities where each individual may only hold fragmented knowledge but as a group. they fill in the gaps of each others knowledge.
This could be harnessed to powerful effect in a co-operative company, whereby jobs could be taken and the challenges shared throughout the group, contributing to a final result greater than any individual output.
However, this may outlook may have some drawbacks.
"some authors caution against “too much participation.”
Employee involvement in decision making, introduces inexperienced or unqualified personnel to decision making, slowing the decision process and potentially resulting in poor decisions.
It may bring an excessive focus on grievances and complaints which can reduce morale (Pendleton and Robinson 2010). "
This seems like a reasonable concern. While mitigated to an extent by the Wisdom of Crowds. We are still left with the fact that rather than a specialist making the desicisions, there is a collective descision being made that may not reflect the best outcome.
Also the fact that Everyone has to make descisions might contribute to overall levels of discontent is not something to dismiss out of hand.
However are these concerns more impacting than the positive benefits described above?
"Hansmann (2000) suggests that conflicts in decision making can be mitigated when jobs are similar overall and the number of workers is small in worker cooperatives.
In these cases, workers’ interests are roughly similar and conflicts of interest are less common."
Ok lets move on.
Control Rights:
We have touched on the idea of Control Rights briefly already, where everyone gets a say in the running of the business. I think Concept Art benefits greatly from such an approach because, Concept art is not a Split Second descision making environment whereby every second is critical to sucess or failure. (i.e Military)
Being a contributor to the overall outcome through descision making, can have a positive effect on the artist, and perhaps the group too.
However this previous criticism of unqualified descision making could also be said to be a factor here too. However I think this again can be mitigated by the wisdom of crowds, whereby the input of many people can assure a better solution than a single persons viewpoint.
"The flip side to these arguments is that greater employee participation in decision making may reduce job quality and satisfaction. One reason is that it can greatly increase the workload of individual employee-members since collective decision making involves additional time and
responsibilities.
Some employees may dislike the responsibilities associated with participation, viewing it as a burden rather than a positive benefit of ownership (Dickstein 1991). "
Now I dont think that this will apply to concept artists in general or illustrators etc but i think there is some difference in personal preference how some people like to structure their employement.
Some people like the regularity and stability of a job that is highly structured with little room for participation.
However concept artists and media types in general might have a selection bias, in that they seek out greater participation in general.
And we come across our first real criticism:
"Members may know how to make products, but not how to craft an appropriate business strategy to survive in a changing market. A lack of managerial skill among cooperative members can result in inappropriate responses to market change (Hansmann 2000). "
I think Many of us can suffer problems in this area.
Because concept art is a passion for lots of potential jobseekers, they neglect the business aspect of this, which could cause a fundamental knowledge gap that would be unable to be filled by other members, presumably because they have also self selected to become Artitsts through their interest for art.
However this could be mitigated by teaming up with others with industry experience.
Financial Stake:
This works in both remuneration (Getting paid) & Financial Risk (share of responsibility for the sucess of the co-op)
One of the Benefits of combining equal payment with the flat management structure is the sense of fairness and bonding nature that derives from the shared responsibilities and rewards. It really is a bonding experience in the truest sense of the word (the dictionary definition).
This provides a powerful motivation for the individual to work hard for the groups success.
This is because the outcomes of the group and his or her own outcome are tied together.
Another benefit is that, due to the nature of the co-op, as a company it is far more likely to look after its employees, with both salary, salary rises, benefits like medical care etc.
"Similarly, Meyer (2006) reports average compensation for employees of a worker-owned grocery in the San Francisco Bay area was 40% more than the average for unionized grocery workers in California.
In addition, the cooperative provided healthcare coverage for all members averaging at least 24 hours per week, a benefit typically not given to part-time retail workers. "
This again is because of the Entangled fate that both the co-op and the employee share. They share both the burden and the benefits of their endeavour.
"Empirical results have supported this argument. Craig and Pencavel (1992) indicate that worker cooperatives in the Pacific Northwest plywood industry were more likely to change wage levels than employment levels compared to other types of mills (non-unionized mills and unionized mills) using data for the years 1968-1986.
Burdin and Dean (2009) found that worker cooperatives in Uruguay were more willing to raise wages when output prices increased, and the wage increase was larger than that in conventional firms for the years 1996-2005 "
So Now That we've described the major parts of the Co-operative Business Model, lets have a look at more wide ranging Benefits and drawbacks to the approach not related to its structural forms.
Benefits:
Stability & Longevity:
"Park, Kruse, and Sesil (2004) suggest a number of reasons why employee-owned firms might survive longer than their conventional counterparts. Employment stability (lower quit rates and fewer layoffs) can facilitate increased investment in firm-specific training, which improves firm performance."
It seems that Co-ops are part of a positive feedback cycle whereby the nature of a co-operative helps increase skills in individuals therefore making the business more valuable, but also making them more valuable to the business and that this creates a bigger incentive for them to continue and for the co-op to treat them fairly.
"Robinson and Zhang (2005) echo this notion, adding that employee ownership helps protect investments in firm-specific knowledge and skills for both the firm and the employees. In fact, they argue that employee ownership can be a competitive advantage, “ESO (employee stock ownership) enables firms to build and sustain their competitive advantage by rewarding and protecting employees, who, along with shareholders, make valuable investments” (2005, 484)."
"Employee ownership may increase employee commitment to the firm, making employees more resistant to mergers and acquisitions.
Their empirical analysis used Weibull survival models to analyze firm survival in a set of U.S. public companies from 1988 through 2001.
They report that companies with employee ownership stakes of 5% or more were only 76% as likely to disappear (merge, be acquired, or fail) compared with all public companies and with a control group of similar firms.
For 100% employee-owned firms, the relative rate of failure falls to 33.5%."
So Employee Loyalty Increases, and this ties in with what we were talking about earlier, with the bonding effect and its powerful influence on the outcomes of both the group and the individual.
Improved Information Sharing & Skill Development & Retention:
So we talked about this before with the idea that stability increases information flow throughout co-ops allowing for enhanced employee training and skill retention that increases both the value of the business and the value of the employee.
Here is a citation from the article.
"Improved information sharing characteristic of worker cooperatives and employee-owned firms can directly impact product quality.
Horowitz and Horowitz (1999) present a theoretical model that compares quality and quantity choice in labor-managed and profit-oriented firms.
Their analysis reached no firm conclusions, but rather implied that the outcomes for quality provision vary by which workers (in their model either production workers or quality–enhancing workers) comprise the membership of the cooperative, as well as whether quality and quantity are substitutes or complements in firm production. "
Now Concept artists will generally share advice with everyone and make it available, and there are many outlets for free education. However as the Job environment is constantly changing with new skills and programs being created every year it would seem that a co-op type of place with its linked outcomes and strong motivational factors would place well in both retaining employee talents and fostering better skillsets in its ranks because at the end of the day, their livelyhood depends on it.
Greater Job security:
Worker cooperatives may offer greater job security relative to conventional firms.
Research finds that worker cooperatives are more likely to adjust wages rather than employment levels compared to conventional firms since member workers can participate in decision-making about management.
Well thats a relief. Now we head towards the waterfall of drawbacks and pitfalls. Prepare yourself.
Social Justice:
"Creation of worker cooperatives has often been driven by factors other than expected economic returns, particularly social and economic justice concerns.
When asked to define success, respondents to a survey of worker cooperatives in Canada listed: longevity, living wages, meaningful work, personal development, financial success and profitability, and provision of values-driven products (Hough, Wilson and Corcoran 2010). "
I think this is something that people can relate to in the industry. Its often spoken about the selective and narrow approach that can be taken by an industry driven by a singular overwhelming need to maximize profits above any other consideration. This causes friction between artistic goals and integrity and business margins and economic success.
A Co-operative allows for greater creative capabilities and more potential outlets and skillsets involved in IP creation and so forth.
Drawbacks:
Peer Pressure: Increased Interpersonal Problems
"As the number of supervisors or managers is reduced and reliance on horizontal or peer monitoring increases, there is the potential for excessive peer pressure in worker cooperatives that can increase interpersonal frictions (Eccles 1981; Whyte 1986).
If the peer monitoring is excessive, it can increase worker stress levels, which in turn decreases productivity and job satisfaction."
So as the Group's fate is tied to each other, i can imagine this could have some negative effects on the stress levels and job satisfaction of the individual who is under the said pressure. I wonder how it could be mitgated
The Horizon Problem: Cashing Out
"Another finance-related explanation for failure of worker cooperatives is known as the horizon problem (Dow 2003). Worker cooperatives can suffer from underinvestment because ownership is not transferrable in a capital market; in other words, workers typically cannot sell their share of the cooperative.
Consider a case in which the cost of a long-term investment is upfront or immediate, while the payoff to the investment occurs only gradually or relatively far into the future.
Members looking to leave or retire from the cooperative in the near future, would not realize the returns from the long-term investment.
They would potentially not vote to approve the project investment, preferring to increase their benefits today. "
The future is an unknown variable for everyone, though it can be predicted and accounted for, it is often difficult to say what will happen. As a result the uncertainty of the future can be particularly hard on co-operative groups.
Indeed i see this as a great problem for a concept art co-operative, especially a loosely linked one through trans national communities.
Any ideas?
Culture Shock: Age Differences & Problems
"Cooperatives may be more likely to fail as younger recruits, who have different cultural views and values, enter the cooperatives. A danger arises when the value commitments of the founding generation are come to be seen as outdated by younger recruits.
Cheney reports there is evidence such a shift is beginning to occur at Mondragon. Younger worker-members have more individualistic conceptions of career, which may pose a threat to the continued existence of this cooperative movement."
So intergenerational or more importantly cultural and individual conflicts may cause differences in opinion in the group that are not easily resolved.
I think this is why a wise choice of your fellow partners is an important factor in the success or failure of such a venture.
Insufficient Rewards For High Ability Workers:
"Kremer (1997) presents a theoretical model to demonstrate that redistribution among members can distort incentives to work hard. In conventional firms, workers’ income is based on their productivity, but in worker cooperatives, earnings are often decided by voting.
Workers with low ability are likely to agree with egalitarian earning schemes, while workers with high ability are not.
When workers with low ability outnumber workers with high ability, egalitarian earning schemes are chosen by voting.
This structure will lead higher ability workers to leave the cooperative in favor of greater returns to their abilities, or perhaps, prevent them from joining the cooperative in the first place.
“Workers who believe their ability is greater than the average ability in cooperatives will be reluctant to join the cooperative because they will expect the cooperative to redistribute away from them.”
Of course this line of reasoning assumes that workers value pay above all else.
It may be the case that workers join cooperatives for other reasons; they may value job stability, participatory decision making in the firm, and having a stake in the profits."
In this case it seems that the deciding factor is whether the Other benefits outweigh the presupposed loss of income.
However it is not clear whether this is even the case, it may be possible for a co-operative to earn more than an individual could on their own. In the Entertainment Industry as a Freelancer this might be even more relevant. Due to the synergistic effects of Combined technical skills and market reach.
Well I hope this was useful. Im a huge fan of this idea. I think concept art and entertainment art in general is currently in a golden age of advancement and scope and with this comes many possibilities for a greater future. (VR etc) The mantle is on us to decide how to realize our fate. All opportunity requires risk. In stumbling across this document i felt it would be worth summarizing and sharing because its contents were valuable and perhaps can help those who are isolated as artists either in location or in employement because of environmental factors. A co-operative provides a potentially beneficial stable self directed way to make a living. There isnt much evidence as to whether it works within the CA industry or the entertainment industry as a whole but there is some, for example the level up team could be considered a great example of how a co-operative venture managed to improve their outcomes.
what do you think?
References/Bio:
~ http://coop.econ.iastate.edu/presentations_publications/businessownership.pdf
Techreport (Artz2011)
Artz, G.; Kim, Y. & others
Business Ownership by Workers: Are Worker Cooperatives a Viable Option?
2011
http://www.businessinsider.com/how-to-allocate-ownership-fairly-when-forming-a-new-software-startup-2011-4?IR=T
http://www.marsdd.com/mars-library/profi...red-plans/
The Wisdom Of Crowds
Surowiecki, J
First Anchor Books Edition 2005
What is it?
A Co-operative is a business that is owned by and run by the employees. There are many types, but the one we will focus on is where employees have equal control and financial reward in the business. These two concepts are known as Control Rights & Financial Stake and are among some (But not all) of the benefits that cooperative workplaces enjoy.
"While worker cooperatives (or employee-owned cooperatives) are currently rare in the United
States, examples of successful worker cooperatives are frequently cited in the literature,
suggesting potential for future development of this type of organization."
It is interesting to note that Art & Media Co-operatives are among the most popular forms of co-operative business in the USA. (in the top 5)
"Roughly 15% of the worker cooperatives listed in the USFWC directory are in the arts and media industry."
"One reason why these categories may have organized in greater numbers than other industries is they have relatively low capital requirements for start-up and require similar skill levels for all employees in the firm. "
I think this is very applicable to the Concept art and illustration Industries, and still but not to the same extent the 3D and Animation Industries.
"These two characteristics are cited in the literature as potentially important factors for success in many worker cooperatives."
So why are these factors important?
Because Low Capital requirements means greater access to entry and availability of jobs.
It means less risk for the individual to take
Similar Skill Levels is an important factor for many reasons.
Because it contributes to a Unity of Purpose, where all those working in the co-operative feel that their contribution is fair and valued at a similar (though not necessarily the same) level.
This contributes a cohesive and bonding effect that keeps cooperative groups filled with intrinsic motivation and improves both productivity and employee hapiness. We will cite evidence of this later.
History: Why do co-operatives form?
Lets look at an example provided in the report.
"The formation of a worker cooperative from inception can occur autonomously, as in the case of Union Cab Cooperative of Madison, Wisconsin (Lawless and Reynolds 2004).
Experienced workers raised start-up funding and operate the worker cooperative. In the case of Union Cab Cooperative, the workers established the cooperative to overcome low wages and poor working conditions."
Now there have been various protests and general unhappiness with the heavy hours and workload that is present in this industry and in some cases low wages. The VFX protest of the oscars was one example
There is a known subcultural phenomenon known as the crunch or crunchtime in this industry, where with deadlines looming for shipping titles, people start to put a lot more hours in often non paid, in an attempt to deliver the best product. I personally have heard or read people talk about this as a problem. How much of a problem i cant say.
Lets take a closer look at Co-operatives and How they function.
There are many different types of structures for Co-operatives, however explaining all of them would be long & potentially damaging to your brain. Your Health is important.
Flat Management Structure:
This is where all people have an equal say in the descisions made by the company. This has both good and bad consequences.
First we will start with the good.
"By itself, worker participation in decision making can promote greater commitment and motivation from workers.
The idea is that workers who have greater authority to make decisions about how they do their work, the type of work they do, and the products they develop will work more effectively and will be more invested in the fate of their employer (Smith 2006) "
I think Personally that this is more than it seems at first. Greater commitment and motivation are powerful benefits but one of the most powerful benefits that comes from descision making is....experience.
I think the experience of making descisions and participating in building your own future with you at the driving wheel is a powerful life changing experience that can only enrich lives for the better and will help people be better able to adapt to other environments as well as understand the types of descisions that are made in a company and how it affects the wider world.
"It can also bring diverse perspectives and generate more ideas, particularly from those employees closest to the production process, the shop floor (Appelbaum and Berg 2000). "
And here i would like to weigh in with another extremely influential idea. That of the wisdom of crowds. This idea was described in James Surwolacki's Book; The Wisdom of Crowds.
The Basic Outline is that the sum (the combined total) of the groups combined ideas is far more accurate at predicting outcomes than an individual's ideas. In the book he then goes on to give many many case examples as well as describing certain mitigating factors and factors that influence the effectiveness of crowds.
Most importantly, i think this idea can be applied to Concept Art and especially to communities where each individual may only hold fragmented knowledge but as a group. they fill in the gaps of each others knowledge.
This could be harnessed to powerful effect in a co-operative company, whereby jobs could be taken and the challenges shared throughout the group, contributing to a final result greater than any individual output.
However, this may outlook may have some drawbacks.
"some authors caution against “too much participation.”
Employee involvement in decision making, introduces inexperienced or unqualified personnel to decision making, slowing the decision process and potentially resulting in poor decisions.
It may bring an excessive focus on grievances and complaints which can reduce morale (Pendleton and Robinson 2010). "
This seems like a reasonable concern. While mitigated to an extent by the Wisdom of Crowds. We are still left with the fact that rather than a specialist making the desicisions, there is a collective descision being made that may not reflect the best outcome.
Also the fact that Everyone has to make descisions might contribute to overall levels of discontent is not something to dismiss out of hand.
However are these concerns more impacting than the positive benefits described above?
"Hansmann (2000) suggests that conflicts in decision making can be mitigated when jobs are similar overall and the number of workers is small in worker cooperatives.
In these cases, workers’ interests are roughly similar and conflicts of interest are less common."
Ok lets move on.
Control Rights:
We have touched on the idea of Control Rights briefly already, where everyone gets a say in the running of the business. I think Concept Art benefits greatly from such an approach because, Concept art is not a Split Second descision making environment whereby every second is critical to sucess or failure. (i.e Military)
Being a contributor to the overall outcome through descision making, can have a positive effect on the artist, and perhaps the group too.
However this previous criticism of unqualified descision making could also be said to be a factor here too. However I think this again can be mitigated by the wisdom of crowds, whereby the input of many people can assure a better solution than a single persons viewpoint.
"The flip side to these arguments is that greater employee participation in decision making may reduce job quality and satisfaction. One reason is that it can greatly increase the workload of individual employee-members since collective decision making involves additional time and
responsibilities.
Some employees may dislike the responsibilities associated with participation, viewing it as a burden rather than a positive benefit of ownership (Dickstein 1991). "
Now I dont think that this will apply to concept artists in general or illustrators etc but i think there is some difference in personal preference how some people like to structure their employement.
Some people like the regularity and stability of a job that is highly structured with little room for participation.
However concept artists and media types in general might have a selection bias, in that they seek out greater participation in general.
And we come across our first real criticism:
"Members may know how to make products, but not how to craft an appropriate business strategy to survive in a changing market. A lack of managerial skill among cooperative members can result in inappropriate responses to market change (Hansmann 2000). "
I think Many of us can suffer problems in this area.
Because concept art is a passion for lots of potential jobseekers, they neglect the business aspect of this, which could cause a fundamental knowledge gap that would be unable to be filled by other members, presumably because they have also self selected to become Artitsts through their interest for art.
However this could be mitigated by teaming up with others with industry experience.
Financial Stake:
This works in both remuneration (Getting paid) & Financial Risk (share of responsibility for the sucess of the co-op)
One of the Benefits of combining equal payment with the flat management structure is the sense of fairness and bonding nature that derives from the shared responsibilities and rewards. It really is a bonding experience in the truest sense of the word (the dictionary definition).
This provides a powerful motivation for the individual to work hard for the groups success.
This is because the outcomes of the group and his or her own outcome are tied together.
Another benefit is that, due to the nature of the co-op, as a company it is far more likely to look after its employees, with both salary, salary rises, benefits like medical care etc.
"Similarly, Meyer (2006) reports average compensation for employees of a worker-owned grocery in the San Francisco Bay area was 40% more than the average for unionized grocery workers in California.
In addition, the cooperative provided healthcare coverage for all members averaging at least 24 hours per week, a benefit typically not given to part-time retail workers. "
This again is because of the Entangled fate that both the co-op and the employee share. They share both the burden and the benefits of their endeavour.
"Empirical results have supported this argument. Craig and Pencavel (1992) indicate that worker cooperatives in the Pacific Northwest plywood industry were more likely to change wage levels than employment levels compared to other types of mills (non-unionized mills and unionized mills) using data for the years 1968-1986.
Burdin and Dean (2009) found that worker cooperatives in Uruguay were more willing to raise wages when output prices increased, and the wage increase was larger than that in conventional firms for the years 1996-2005 "
So Now That we've described the major parts of the Co-operative Business Model, lets have a look at more wide ranging Benefits and drawbacks to the approach not related to its structural forms.
Benefits:
Stability & Longevity:
"Park, Kruse, and Sesil (2004) suggest a number of reasons why employee-owned firms might survive longer than their conventional counterparts. Employment stability (lower quit rates and fewer layoffs) can facilitate increased investment in firm-specific training, which improves firm performance."
It seems that Co-ops are part of a positive feedback cycle whereby the nature of a co-operative helps increase skills in individuals therefore making the business more valuable, but also making them more valuable to the business and that this creates a bigger incentive for them to continue and for the co-op to treat them fairly.
"Robinson and Zhang (2005) echo this notion, adding that employee ownership helps protect investments in firm-specific knowledge and skills for both the firm and the employees. In fact, they argue that employee ownership can be a competitive advantage, “ESO (employee stock ownership) enables firms to build and sustain their competitive advantage by rewarding and protecting employees, who, along with shareholders, make valuable investments” (2005, 484)."
"Employee ownership may increase employee commitment to the firm, making employees more resistant to mergers and acquisitions.
Their empirical analysis used Weibull survival models to analyze firm survival in a set of U.S. public companies from 1988 through 2001.
They report that companies with employee ownership stakes of 5% or more were only 76% as likely to disappear (merge, be acquired, or fail) compared with all public companies and with a control group of similar firms.
For 100% employee-owned firms, the relative rate of failure falls to 33.5%."
So Employee Loyalty Increases, and this ties in with what we were talking about earlier, with the bonding effect and its powerful influence on the outcomes of both the group and the individual.
Improved Information Sharing & Skill Development & Retention:
So we talked about this before with the idea that stability increases information flow throughout co-ops allowing for enhanced employee training and skill retention that increases both the value of the business and the value of the employee.
Here is a citation from the article.
"Improved information sharing characteristic of worker cooperatives and employee-owned firms can directly impact product quality.
Horowitz and Horowitz (1999) present a theoretical model that compares quality and quantity choice in labor-managed and profit-oriented firms.
Their analysis reached no firm conclusions, but rather implied that the outcomes for quality provision vary by which workers (in their model either production workers or quality–enhancing workers) comprise the membership of the cooperative, as well as whether quality and quantity are substitutes or complements in firm production. "
Now Concept artists will generally share advice with everyone and make it available, and there are many outlets for free education. However as the Job environment is constantly changing with new skills and programs being created every year it would seem that a co-op type of place with its linked outcomes and strong motivational factors would place well in both retaining employee talents and fostering better skillsets in its ranks because at the end of the day, their livelyhood depends on it.
Greater Job security:
Worker cooperatives may offer greater job security relative to conventional firms.
Research finds that worker cooperatives are more likely to adjust wages rather than employment levels compared to conventional firms since member workers can participate in decision-making about management.
Well thats a relief. Now we head towards the waterfall of drawbacks and pitfalls. Prepare yourself.
Social Justice:
"Creation of worker cooperatives has often been driven by factors other than expected economic returns, particularly social and economic justice concerns.
When asked to define success, respondents to a survey of worker cooperatives in Canada listed: longevity, living wages, meaningful work, personal development, financial success and profitability, and provision of values-driven products (Hough, Wilson and Corcoran 2010). "
I think this is something that people can relate to in the industry. Its often spoken about the selective and narrow approach that can be taken by an industry driven by a singular overwhelming need to maximize profits above any other consideration. This causes friction between artistic goals and integrity and business margins and economic success.
A Co-operative allows for greater creative capabilities and more potential outlets and skillsets involved in IP creation and so forth.
Drawbacks:
Peer Pressure: Increased Interpersonal Problems
"As the number of supervisors or managers is reduced and reliance on horizontal or peer monitoring increases, there is the potential for excessive peer pressure in worker cooperatives that can increase interpersonal frictions (Eccles 1981; Whyte 1986).
If the peer monitoring is excessive, it can increase worker stress levels, which in turn decreases productivity and job satisfaction."
So as the Group's fate is tied to each other, i can imagine this could have some negative effects on the stress levels and job satisfaction of the individual who is under the said pressure. I wonder how it could be mitgated
The Horizon Problem: Cashing Out
"Another finance-related explanation for failure of worker cooperatives is known as the horizon problem (Dow 2003). Worker cooperatives can suffer from underinvestment because ownership is not transferrable in a capital market; in other words, workers typically cannot sell their share of the cooperative.
Consider a case in which the cost of a long-term investment is upfront or immediate, while the payoff to the investment occurs only gradually or relatively far into the future.
Members looking to leave or retire from the cooperative in the near future, would not realize the returns from the long-term investment.
They would potentially not vote to approve the project investment, preferring to increase their benefits today. "
The future is an unknown variable for everyone, though it can be predicted and accounted for, it is often difficult to say what will happen. As a result the uncertainty of the future can be particularly hard on co-operative groups.
Indeed i see this as a great problem for a concept art co-operative, especially a loosely linked one through trans national communities.
Any ideas?
Culture Shock: Age Differences & Problems
"Cooperatives may be more likely to fail as younger recruits, who have different cultural views and values, enter the cooperatives. A danger arises when the value commitments of the founding generation are come to be seen as outdated by younger recruits.
Cheney reports there is evidence such a shift is beginning to occur at Mondragon. Younger worker-members have more individualistic conceptions of career, which may pose a threat to the continued existence of this cooperative movement."
So intergenerational or more importantly cultural and individual conflicts may cause differences in opinion in the group that are not easily resolved.
I think this is why a wise choice of your fellow partners is an important factor in the success or failure of such a venture.
Insufficient Rewards For High Ability Workers:
"Kremer (1997) presents a theoretical model to demonstrate that redistribution among members can distort incentives to work hard. In conventional firms, workers’ income is based on their productivity, but in worker cooperatives, earnings are often decided by voting.
Workers with low ability are likely to agree with egalitarian earning schemes, while workers with high ability are not.
When workers with low ability outnumber workers with high ability, egalitarian earning schemes are chosen by voting.
This structure will lead higher ability workers to leave the cooperative in favor of greater returns to their abilities, or perhaps, prevent them from joining the cooperative in the first place.
“Workers who believe their ability is greater than the average ability in cooperatives will be reluctant to join the cooperative because they will expect the cooperative to redistribute away from them.”
Of course this line of reasoning assumes that workers value pay above all else.
It may be the case that workers join cooperatives for other reasons; they may value job stability, participatory decision making in the firm, and having a stake in the profits."
In this case it seems that the deciding factor is whether the Other benefits outweigh the presupposed loss of income.
However it is not clear whether this is even the case, it may be possible for a co-operative to earn more than an individual could on their own. In the Entertainment Industry as a Freelancer this might be even more relevant. Due to the synergistic effects of Combined technical skills and market reach.
Well I hope this was useful. Im a huge fan of this idea. I think concept art and entertainment art in general is currently in a golden age of advancement and scope and with this comes many possibilities for a greater future. (VR etc) The mantle is on us to decide how to realize our fate. All opportunity requires risk. In stumbling across this document i felt it would be worth summarizing and sharing because its contents were valuable and perhaps can help those who are isolated as artists either in location or in employement because of environmental factors. A co-operative provides a potentially beneficial stable self directed way to make a living. There isnt much evidence as to whether it works within the CA industry or the entertainment industry as a whole but there is some, for example the level up team could be considered a great example of how a co-operative venture managed to improve their outcomes.
what do you think?
References/Bio:
~ http://coop.econ.iastate.edu/presentations_publications/businessownership.pdf
Techreport (Artz2011)
Artz, G.; Kim, Y. & others
Business Ownership by Workers: Are Worker Cooperatives a Viable Option?
2011
http://www.businessinsider.com/how-to-allocate-ownership-fairly-when-forming-a-new-software-startup-2011-4?IR=T
http://www.marsdd.com/mars-library/profi...red-plans/
The Wisdom Of Crowds
Surowiecki, J
First Anchor Books Edition 2005