The co-operative story

Leadership and prospective member engagement

TCL is a financially sustainable employee owned co-operative which opened its doors in 2013 and by the end of 2017 will have 50 employee members. The idea for TCL arose from founder, Robyn Kaczmarek’s experience working in the homecare sector and seeing the challenges of low wages, poor working conditions, isolation and training affecting staff morale and the quality and continuity of care provided to older people and people with disability.

“I was shocked at the quality of care provided by agencies, people were falling through the gaps and there wasn’t enough service or continuity of staff for people to be getting good care… People weren’t in the office so they didn’t complain.”

Robyn Kaczmarek, founder

The poor working conditions Kaczmarek and her colleagues faced in Sydney were representative of the challenges faced nationally by care workers: low wages, strenuous work, high workloads, limited support networks, lack of career progression, and barriers to accessing training and skill development resources6,5,7,10.

Conducting on-line research, Kaczmarek discovered Sunderland Home Care Associates12, an employee-owned co-operative located in the UK; an empowering model in which employees work in, and have a financial share in the ownership and management of the business.

Sunderland was founded in 1994 with 20 members providing care services to the aged and disabled. Since then, Sunderland has grown significantly to become the largest care provider in Sunderland with an annual turnover of approximately £6.8m (AU$13 million) and 470 employees.  The co-operative’s success has placed it at the cutting edge of employee ownership in the public service market in the UK11.

Sunderland’s unique democratic structure of employee ownership combined with a high standard of care at scale was an attractive proposition. The employee ownership structure was vital in delivering on Sunderland’s mission to ‘always keep people first’12.

In 2011, Kaczmarek contacted her network of service providers to gauge their interest in joining an employee owned co-operative. The result was four prospective members coming forward, all with extensive experience working in the homecare industry. They formed the original steering committee, which went on to become members of TCL and hold positions on the board. TCL began trading in July 2013. In 2017 TCL moved to a distributing structure (meaning profits can be distributed to members) to take advantage of NDIS opportunities and grow the business with employee members. 

Formulating the original proposition

The Sunderland Home Care Associates provided the genesis to form a co-operative, however they provided limited guidance on how to establish an employee owned co-operative.

The steering committee turned to Cooperative Home Care Associates (CHCA)2, a home care agency in the South Bronx (USA) owned by its 1,920 employees (11). This was a well-trodden path, with the founder of Sunderland Home Care Associates visiting CHCA on a research trip prior to developing the business plan. Both CHCA and its training affiliate Paraprofessional Healthcare Institute3 (PHI) offered a significant amount of guidance and open source information. PHI offered downloadable resources and online training, with a particular emphasis on promoting a quality working environment as the platform for quality care. The resources provided by both organisations proved invaluable to the steering committee and formed the basis of TCLs initial recruiting strategy.

Over the same time the steering committee worked to establish a local network of individuals and organisations that had experience establishing or operating employee owned co-operatives, including academics at the University of Sydney Business School and small co-operatives on Sydney’s northern beaches.

Through their research, they came into contact with Bob Corben of Central Accounting & Taxation Advisory (formerly Corben Consulting), an accountant with experience assisting fishing co-operatives in Wollongong. Corben and his colleagues provided much needed insights into the tax advantages of co-operative structures, which also served to inform the type of legal entity adopted by TCL. This relationship still exists to this day, providing on-going advice as TCL grows and evolves to better meet the needs of its members.

2 Paraprofessional Healthcare Institute is a leading authority and advocate on the direct-care workforce located in the Bronx, New York

3 Cooperative Home Care Associates is an employee owned home care agency located in the Bronx, New York

 

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Figure 2 – The foundation of TCL

Developing the initial business plan

The development of the business plan was a vital first step in establishing TCL. At the early stage of entrepreneurship, TCL had a limited view of what the business would look like, which meant that business plans had to be continually iterated – work that was invaluable when beginning to draft the rules of the co-operative.

“All of the work that is required to develop a robust business plan makes it easy to write the co-operative rules.”

Robyn Kaczmarek, Founder

The majority of research was undertaken using online and open information. The most useful resources came from social enterprises in the UK and PHI, which provided a number of free toolkits developed to assist groups establish new co-operatives.

TCL also joined Social Enterprises Sydney, where they learned how to develop business plans for new social enterprises. This was a process that proved immensely helpful in identifying their target market, value proposition, potential government funding opportunities and cementing what TCLs core offering would be.

“In hindsight the original business plan was really useful… it was an important first step.”

Robyn Kaczmarek, Founder

Students from the University of Sydney’s Business School completed a business plan as a project for an entrepreneurship subject in early 2013. While the plan wasn’t used extensively, it did provide useful suggestions.

As a result, the key objectives of TCL were developed12:

  • To improve the quality of life for both our members and those individuals we care for;
    • The Co-operative is the employer and provides training, quality standards, insurance, payroll, administration and management arrangements to the employees of self–managed local teams;
  • To assist self-organising local teams to carry out their functions or activities;
  • To assist in the organisation of the local teams and to assist any such local teams in such circumstances and such manner as may seem proper for the
    co-operative;
  • To establish and expend funds both for the general conduct of the co-operative and to enable the co-operative to carry outs its aims and objectives;
  • To promote public education and facilitate community involvement of co-operatives;
  • Not for profit object – the assets and income of the organisation shall be applied solely in the furtherance of its above mentioned objects and no portion shall be distributed directly or indirectly to the members of the organisation except as bona fide compensation for services rendered or expenses incurred on behalf of the organisation.

Establishing TCL

The model rules of Australian Independent Living Enterprises (trading name The Co-operative Life) were drafted in accordance with the Co-operatives Act 1992 (NSW) and was registered as a non-trading co-operative without share capital in October 201312. In 2017, TCL changed its rules to become a distributing (trading) co-operative with share capital.

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Leadership and member engagement

TCL makes significant investments in the continuous engagement, training and development of its worker members. 

Business management

A business coach is employed to educate both prospective and existing worker-members on how they are expected to contribute to the success and longevity of TCL. This is a significant investment to ensure individuals understand the principles, values and vision for TCL. When joining, members are expected to formally sign on to uphold the values of TCL, including the 80:20 rule – 80 per cent of a worker members’ time is committed to delivering services and 20 per cent of their time is committed to training.

Training

To source well-trained employee members, TCL initially developed an innovative and collaborative approach known as ‘Training to Career’.  This course, focused on caring for older people and people with disability, was provided by a registered training organisation certified by the Australian Skills Quality Authority. The early sessions attracted approximately 40 interested individuals, with around half going on to complete the training. From this group of graduates, 14 joined TCL as the initial workforce, with the majority of remaining as members.

Today, TCL provides specialist training focusing on improving the business skills of employee members such as budgeting, basic accounting and financial metrics. This is vital training, given the limited experience care workers typically have in business management and understanding the metrics of TCL’s performance.

Decision making

TCL holds weekly and monthly meetings with local teams and covers strategic issues, operations such as resourcing and budgets as well as additional training.

“I’m a part of this company, my opinions are listened to, I’m an important small part of this company, I have a say.”

Rhonda, member

Determining the ownership and governance structures

TCL was established as a non-trading co-operative without share capital. This business structure was chosen for its alignment to the mission of TCL, to improve the lives of people through empowering employment and quality care. In 2017, TCL changed structure to become a distributing co-operative with share capital to better take advantage of NDIS opportunities and grow the business with employee members. Profits can now be distributed to members in the form of a dividend.

Registering as a not-for-profit and non-distributing co-operative model enabled TCL to receive charity status under the Australian Charities and Not-for-profits Commission (ACNC) and tax concessions on GST, income tax and fringe benefits tax. 

TCL has established a simple governance structure which is evolving as the business becomes more established. Further development is required with input from technical governance and co-operative experts. Currently TCL has a Board consisting of five directors; a Chairperson, Deputy Chairperson, Secretary, Treasurer and ordinary Director. The Board rules state that four of the positions must be held by employee members and one position filled by a non-member, providing much needed technical experience in managing Boards12. At its monthly Board meetings, TCL uses a consensus voting method where each member is entitled to a single vote12. Twenty per cent of all active members are required to requisition a meeting12.

The principle of democratic ownership is ingrained in the decision making of TCL. Employee members hold weekly team meetings to ensure every member has the opportunity to contribute to the direction of TCL. These regular meetings ensure that employee members’ views are represented and voiced at the formal Annual General Meeting. Quality of care and conflict resolution protocols are provided by TCL to ensure a consistent standard across the co-operative.

An important element underpinning the success of TCL is the process of membership. Experience to date highlights that before employees become members of TCL, a period of building trust and experiencing what it means, in practical terms, to be part of an employee co-operative is required. TCL allows a period of six months for this process, providing training on co-operatives and technical skills development. Employee members initially find the employee co-operative to be quite different to their previous experiences, in particular the autonomy and involvement in decision making.

All employees are offered membership once they have completed their six month probation period. Membership involves agreeing to the co-operative principles and paying an initial joining fee and annual membership fee. These are set at a nominal amount of $10 each12. The rules of TCL allow for a joining fee up to $100 which enables fee increases if required in the future12.

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Figure 3: The governance structure for TCL

Capitalising the venture

The initial funding for TCL was provided by Robyn Kaczmarek , including financing the business plan and assistance from legal and accounting professionals. Bank Australia (formerly known as bankmecu) provided TCL with an overdraft facility, which acted as a safeguard for the business. To date TCL has not drawn on the overdraft facility, using revenue from servicing clients to pay for operational expenses, improving systems, and expanding the number of local teams.  This financial stability is one of the comparative advantages of the TCL in comparison to many not-for-profit homecare providers that are more reliant on government block funding to manage cash flow.