The success of the PSM

The comparative advantage of a co-operative approach

NCEC provides regular part time employment to 20 worker members previously excluded from the workforce. As an employee owned co-operative, NCEC is able to meet the economic and social needs of its worker members and help them achieve independence and to have a say in how they live their lives.  It achieves this through three key mechanisms: 

1. Member engagement: Member ownership and involvement in decision making results in high levels of engagement and satisfaction. This is reflected in NCEC’s retention rate, with 80 per cent of original members still employed after ten years.

2. Profit reinvestment: NCEC is owned by its members for their benefit. This means that profits are re-invested into the business to improve services, conditions for worker members or to save for future expenses.

3. The Co-operative Principles: NCEC abides by the internationally agreed Co-operative Principles such as economic member participation, education and training and democratic member control, providing robust building blocks for establishing and operating NCEC in line with its purpose.

‘The level of empowerment [created by the public service mutual model] couldn’t have been generated with any of the other available models’

Morrie O’Connor, NCEC President (Kernot and McNeill 2011, 202).

These mechanisms – not found in not-for-profit or for-profit organisations – created comparative advantage for NCEC over other providers of employment services.

A Social Return on Investment (SROI) analysis of NCEC investigated the social outcomes as a result of NCEC operations10. The analysis found that for every dollar spent, an additional $3.31 of value was created for worker members with disabilities and stakeholders. They identified the following outcomes are created for key stakeholders10.

Benefits to members of the co-operative

1. Ability to provide ongoing support

Supervisors develop strong relationships with the worker members and are able to provide support beyond a typical employment relationship. NCEC is also able to assist CLA to better understand any challenges the worker members may be facing and in turn support more targeted and timely provision of services for the individuals.

2. Flexibility to change work tasks and time requirements

NCEC is a more supportive work environment than traditional job placement programs. Worker members, in collaboration with their supervisors, are able to choose jobs to match their individual capabilities, interests and pace of work, modifying tasks to meet the situation at hand.

3. Building workers’ capability at their own pace

Traditional employment arrangements do not have the time, resources, or flexibility to dedicate to people with learning difficulties, which can be effectively managed through NCEC. Similarly, disability employment agencies increase hours when a person is performing well, without considering if the person can sustain this (Kernot and McNeill 2011). The flexibility described above allows for managing time and task requirements for capacity building. This has been effective, with some members improving productivity from 60 per cent to 80 or 90 per cent as measured under the Supported Wages System7.

4. Security of employment

Worker members have job security meaning they do not have an added stress of losing their job if a task is not completed correctly. There are other mechanisms in place to provide structure, including a period of not working if there has been inappropriate behaviour, however this does not impact the worker members’ confidence in regular employment.

5. Improved household incomes

By working regularly, worker members earn money that supplements their income from the Disability Support Pension. With this, they are able to purchase goods and services they value, and they become less dependent on their families. Undertaking regular meaningful work improves their personal wellbeing, making them less likely to use drugs and alcohol and can help to reduce the need for medical and mental health support10.

“I’ve been able to start saving. I can now buy presents for family – like bowls shoes for dad.” John, member6

“This is the longest job I’ve ever had. The longest other job I had was probably 3 months and that was back in 1986. Being long-term employed, being able to try to put money aside for things. You’re not relying on your pension that much. … It’s everyone doing the work and enjoying it.” Craig, member6

6. Belonging and wellbeing

Prior to working at NCEC, worker members typically have low self-esteem, particularly if they have been unemployed for a long time. Through working at NCEC, employees gain confidence, become happier, and their self-esteem rises10. They develop increased pride and satisfaction due to what they are achieving, and a sense of giving back to the community. As a result, they experience an increase in their personal wellbeing and a greater sense of identity, stability and belonging as well as developing dreams and hopes for the future10.

“Because I have a disability I haven’t been able to get a job anywhere, and this place is a place for me. … Being a single mum, it’s good to be proud that my daughter can go to school and say ‘my mum works’.” Kylie, member6

“I found it was really good because we didn’t have to get stressed out all the time worrying about bosses on our back. I like working for [NCEC] because I like being part of the community.” Danny, member6

“I’ve been working in this job for 12 or 13 years…I’m doing new tasks, I’m not being pushed, I always go at my own pace. The people are very friendly around me.” Teresa, member6

The shared value created – the co-creation of commercial and social value

Shared value created occurs when the social and commercial value are mutually reinforcing. For NCEC, there are several aspects of the model and services delivered that result in shared value for the local community, member workers, their families, NCEC, government and customers.

1. Reinvesting in the community

NCEC is focused on being financially sustainable and meeting the needs of its worker members. It does not have the pressure of delivering large profits for shareholders. It also tends to be more efficient in its allocation of resources with management costs reduced through the direct application of funding streams to job creation and the payment of job placement resources. This enables NCEC to focus on meeting the needs of its worker members and to support broader community outcomes by providing local supply and purchasing from local suppliers, to ‘plug the leaks’ of spend occurring outside of the local community.

“Our customers have expressed their satisfaction that, by engaging NCEC, they know who their purchases are benefiting. The NCEC workers then tend to spend their income in the Nundah area. ‘Plugging the leaks’ means that money doesn’t leak out of the community, but circulates within it, to benefit all9.”

2. Less dependence on families

Working at NCEC means worker members have more money to live on and have higher levels of personal well-being which means they are less dependent on the support of their family10.

3. Better services for customers

Improved customer service has been identified in both the parks and maintenance, and café and catering businesses. In the parks and maintenance business this occurs through the sense of pride of the worker members ensuring that the parks under their care are maintained to a high quality, including undertaking or communicating the need for tasks that may be out of the contract scope10. They have also received fewer community complaints. At the café, customers experience improved satisfaction, resulting in return business, as a result of knowing the money spent at the café is used to support the café worker members with whom they develop strong relationships.

4. Lower costs to the Federal Government

Worker member productivity has demonstrably improved through NCEC. Some of the worker members’ wages are supported under the Supported Wages System. Some members, who have been working with NCEC for a number of years, have improved their productivity from 60 to 80 or 90 per cent7. This has resulted in a number of NCEC members now earning above the “assessable income” level for the disability support pension as well as relying less on mental health support services10. This means the government reduces it’s spend on welfare payments and mental health support services.

5. Financial sustainability

In 2013 NCEC generated an income of more than $550,000 from products and services, with a net profit of over $28,00013. NCEC relies on financial support from other organisations to continue its operations. This includes CLA providing financial and in-kind support such as the premises for the café and ad hoc grants, which make up approximately 20 per cent of revenue per annum from organisations such as from the Westpac Foundation, Department of Communities, and Department of Employment, Economic Development and Innovation.

NCEC-figure4Figure 4: Outcomes created for stakeholders as a result of NCEC activities