Alex Begg & The Problem With Managers

It made the news recently that Ayr based weaving company Alex Begg & Co would be making fifteen shop floor workers redundant in an attempt to cut down costs, due to a “softening in demand and uncertainty over Brexit”. This seems like a weak excuse when comments made by the workers themselves are taken in to account. An insider who contacted the Ayrshire Post claimed that “We were really busy, but it has quietened down quite a bit in the last year and the company had to take out a bank overdraft. But all they seem to do is keep employing more and more management. Now they have decided to pay off the shop floor workers… There’s no management at all going, just the shop floor workers.” This is not uncommon in businesses facing troubling times. Those in the position to make decisions will never vote themselves out of a job, so they calculate how many of the workers below themselves they need to get rid of to keep the company in profit and salvage their own paycheck.

The insider went on to say “They’ve just spent around half a million pounds making new offices, new decking and new computers for office staff. And believe it or not they just spent thousands sending two managers on a team building jaunt to Las Vegas.” So, FIFTEEN of the people that create the products that Alex Begg & Co makes profit from will be out of work just in time for Christmas.

Top-heavy management structures are all too common within businesses, especially in manufacturing. It is believed that a hierarchy is needed, and productivity is only achieved through people telling other people what to do and how fast to do it. However this doesn’t have to be the case; more and more we’re seeing long lasting success in businesses that structure themselves differently. Self-Management (a flat system where workers set their own goals which are reviewed by their peers) and Worker Co-ops (businesses owned by the workers themselves, with decisions made democratically) are just two alternatives to hierarchical business structures which have their roots in Syndicalism (a highly misunderstood and feared term due to its associations with Anarchism), a system in which there are no managers and all workers take collective control of the running of the business. This may sound absurd to some, that workers can get on just fine managing themselves and for these businesses to remain viable, so let me explain…

Having a top-heavy company structure can be inefficient and costly. Having so many layers of approval slows down the system of work. Not only this but having so many managers can result in good ideas being twisted or killed outright by people that are looking out for their own personal interest. It’s a problem that gets worse the more layers you add. Concentrating decision-making power into the hands of individuals- who themselves are often so removed from the realities of production as to be ignorant of its requirements- increases the risk of harmful mistakes that affect the entire business, especially the higher up you go. Decisions that seem smart high up the chain of command often end up being unworkable on the ground and workers on the frontline of the business with experience and insight into the actual production of the products are ignored. Or worse, sacked right before Christmas so bosses can justify expensive new offices and “team building” excursions to Vegas. Having people in far away, incontestable places of power means that bad decisions can’t be challenged and become a huge risk to the business.

In contrast, a self-management structure means that nobody has a boss, employees have a less rigid role in the company and negotiate their responsibilities with their peers depending on what their skills are and what they can bring to the company. There are no job titles or promotions to fight over, knowledge is valued above arbitrary titles. The amount of money that workers earn is decided by peer review and there is no option to move production to other countries so that managers can pay foreign workers less money and gain more in profit. A good real-life example of this working is the Morning Star Company in California. This company processes and distributes tomatoes across a number of large factories and is highly profitable. It is believed that the Morning Star Company is the most efficient tomato processing company in the world and they have no management at all. The company’s vision as described on their website reads “We envision an organization of self-managing professionals who initiate communication and coordination of their activities with fellow colleagues, customers, suppliers and fellow industry participants, absent directives from others. For colleagues to find joy and excitement utilizing their unique talents and to weave those talents into activities which compliment and strengthen fellow colleagues’ activities. And for colleagues to take personal responsibility and hold themselves accountable for achieving our Mission.” Those that work at the Morning Star Company are trusted to do the jobs they are good at and are kept accountable through self-written milestone goals called “Personal Missions” and through review from their peers.

Businesses similar to this have been cropping up all over Scotland. The Worker cooperative sector has grown from 30 businesses in 2015 to 100 in 2018. In Glasgow alone, there has been an overall 17% increase in the co-op economy. For those businesses which have switched over from traditional management structures to worker co-ops, turnover has increased by 35%, and profits are up by 55%. In general worker owned businesses tend to be much more stable as they don’t run the risk of being undone by one bad managers decision.

There is no doubt that there are hardworking managers out there that do their best to contribute to the success of a business and steer away from abusing the power they are given. The point is that there is more than one way to structure a business and it seems that those companies that do move away from hierarchy and the politics of power tend to operate better in the long run.

So, perhaps if Alex Begg & Co wish to future-proof themselves and move forward with creative solutions to production, they should first fire the managers, and let the workers do what they do best.

Photo by Christopher Burns on Unsplash

Worker Ownership in North Ayrshire

Joe Cullinane from North Ayrshire recently announced his plans to introduce a scheme to increase worker owned businesses in the area as part of a community wealth building strategy.  In this article we’ll take a look into what worker ownership means and why this could be good for North Ayrshire.

Worker ownership can mean a lot of different things; it can be a business where every employee gets a vote on decisions the enterprise makes, or it can be a business were the management is elected by employees to make these decisions. The structure is variable, but the basic principle is that every worker gets a say in how the business is run. This turns the workers into worker-owners.

The basic central idea is that people doing the job generally know the job the best- if given the chance to make choices in their work the people at the coal face will know the best course forward. We’ve all had managers that knew nothing about how the workplace actually runs, leaving you to try your best to cover for their (ahem) “hands-off” management style. Worker ownership avoids this awkward and annoying occurrence by making it so that management is more accountable to the workers, and not the other way around.

On top of this worker co-ops have a proven record of success; a taxi company in Texas was able to compete with and then drive out of Austin companies  like Uber and Lyft, at a time when taxi companies structured like more traditional businesses are struggling to keep their head’s above water. This isn’t a one off example either, a study by former professor of Economics at the University of Leeds Virginie Pérotin showed that worker co-ops were able to compete with traditional firms and that many are in fact more productive. This is largely because workers tend to be more motivated when they have a say in how their labour is used. Professor Richard Wolff, an american economist suggests that a combination of the fact that co-ops are more productive and its workers are more motivated is why these organisations stay in business at a far higher rate in their first year compared to more traditional business.

This system is not only beneficial for the businesses themselves. The Emilia Romagna region of Italy has taken the concept of worker run businesses to heart, with nearly two thirds of its population members of a co-op, producing about a third of the region’s GDP. The north of Italy has always been a very economically strong place and the fact that co-ops can and have taken such a large claim to the local economy speaks to the strengths of co-ops.

Italy has another interesting policy in support of co-ops, namely that instead of taking their regular unemployment benefit, people can choose to take a sum of money up front and use this as start up capital towards a co-op. So rather than being unemployed and on the dole, you and a few friends can come together and start your own business. This helps keep unemployment low and means that instead of layoffs leading to mass unemployment, it leads to the nurturing of enterprise.

At the time of writing we don’t know that much about Joe’s own plan to introduce worker co-ops to Ayrshire, but what we do know is that it would likely be a lot less radical than the policy in Italy. Joe specifically spoke out about introducing co-ops to Ayrshire at a meeting discussing family business succession. Family run businesses form a large part of the local economy, unfortunately these don’t tend to last forever- eventually someone in the family decides they want to do something different with their lives and this, along with other factors, leads to many of these businesses not surviving past the second generation. Joe’s plan would give the workers a chance at running these businesses and could prevent them losing their jobs. While the specific details are not available at the time of writing, the policy is being worked on by the Community Wealth Building commission in North Ayrshire.

It’s no secret that North Ayrshire and Ayrshire as a whole have a long running issue with unemployment and an economy that lags behind the rest of Scotland, plans like this to revitalise the area are more than welcome in my opinion, and I will be watching for the CWBC’s final draft of the policy keenly. Looking at studies by Professor Wolff and Pérotin, as well as a working example in Italy my only worry is that this policy may not be radical enough.

Photo by Guilherme Cunha on Unsplash