Tuesday, 04 August 2020 16:07

Employee Buyouts Model Has Potential Despite Obstacles

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*GUEST POST* By Kenzie Love, CWCF Communications and Executive Assistant

As Saskatchewan, like other provinces, confronts the challenges posed by the impending surge of retiring baby boomers, it seems natural to look to the employee succession solution. Ideally, employees taking over a business would provide jobs for those who would otherwise lose them if it shut down, income for a retiree counting on selling the business to finance their retirement, and the continuation of a store or service that would be sorely missed, particularly in a small town. But despite these apparent advantages, employee succession remains relatively uncommon, not just in Saskatchewan but throughout Canada. 

Hazel Corcoran, Executive Director of the Canadian Worker Co-op Federation, believes a lack of knowledge and understanding of the worker co-op model bears much of the blame.

“The worker co-op model tends to be not well-known in Saskatchewan,” she says. “When people hear or think of co-op, they think it's going to be owned by consumers or farmers, and they don't think of an employee-owned option.”

Corcoran believes an increased emphasis on supporting and promoting the worker co-op model could make it more attractive, something the organization Co-operatives First is working to achieve. Founded and largely funded by the Co-operative Retailing System through Federated Co-operatives Limited, Co-operatives First supports and promotes co-op development in rural and Indigenous communities throughout western Canada. 

One recent co-op succession success story, although not employee-owned, was the development with support from the Alberta Community and Co-operative Association of an “investment co-op” in the Alberta hamlet of Sangudo, which helped preserve the town’s butcher shop and a cafe. A couple of provinces over, the Kootenay Bakery Cafe in Nelson, BC, is still going strong almost two decades after it was purchased by its employees, but is something of an anomaly. Kyle White, Co-operatives First’s Governance and Education Lead, believes that Canadian culture may be less receptive to the worker co-op model than elsewhere.

“The way that we approach things like business and work and employment is probably a little bit different than other parts of the world, certainly in places in Europe, where employee ownership is much more the norm,” he says. “In Canada, I think we've got just a different perception and a separation between employment and business ownership.”

The challenge may be particularly acute in rural areas. While the negative impact of even a single business shutting down makes keeping small businesses in rural areas afloat particularly important, many small businesses in these areas have few or no employees, an obvious obstacle for any employee takeover. And even where there are employees interested in the concept, there needs to be a business that’s breaking even — or better — and a surrounding community that provides a viable market.

White acknowledges that these circumstances present a tall order for employee succession. But while not glossing over the challenges that exist, he continues to have faith in the idea’s potential.

“Broadly speaking, this sort of business transition is a great way to retain services, keep assets in communities, keep jobs, all the while keeping ownership of the economy local,” he says. “So broadly I think the model aligns really well with what small towns in particular need.”

For more on this topic, visit CoopConvert or Co-operatives First.



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Last modified on Monday, 31 August 2020 17:41