Every year, the nonprofit B Lab publishes a “Best for the World” list. B Lab is oversees the Certified B Corporation® program, and the list consists of companies whose independently reviewed scores on the B Impact Assessment make them exceptional among their peers in one or more of several categories. Consideration is made for how a business benefits communities, customers, the environment, and workers along with how it handles its own governance. There’s also an “overall” category that recognizes standout performance across all of these areas.
A Foregone Conclusion
From the moment we became a B Corp™ last November, it was obvious that XENSHA was going to rank strongly in the “worker” category. Our B Impact Report showed that we earned a score of 49 versus the median of 18, particularly impressive considering that this score is a median among other companies that complete the Assessment.
Then again, how could it be otherwise? As a worker-owned cooperative, we exist for the benefit of our workers. As exciting as it was to see that we had double the median score for compensation, benefits, training, and work environment, it would have been a rebuke if we had merely maintained parity with organizations that are expressly putting other priorities ahead of workers. Add in that we’re currently a company of just five people, and there’s a limit to how much credit we can take for our performance.
We knew all that. Even so, it was a thrill to be announced on the list of “Best for the World” in the Worker category for 2018, and we remain proud of the accomplishment. On each of our Web sites, the basic B Corp™ logo has been replaced with the Honoree recognition image. We updated some of our promotional material to include it, too.
“Wait,” you might be thinking. “If you knew that we were going to score highly for your treatment of workers, why are you making such a big deal out of this award?”
It’s because we are justifiably proud of the accomplishment even though it was a foregone conclusion. Our structure and cooperative values require us to operate for the benefit of our workers. That doesn’t make it any less impressive that we actually do operate that way. It’s not as if it’s easier to run a business for the workers’ benefit, and it’s also not as if we had this choice imposed on us—or that, having made it, we can sit back and relax.
Every day, we have to balance our roles as workers and owners, remembering that each role as its place in our structure and needs to be respected in order for us to continue what we are doing. Seemingly obvious at first glance, this is actually not so simple as it seems; in fact, the inability to balance these roles is what doomed the great producer cooperatives of the 1880s, which for a time seemed ascendant in the manufacturing of everything from shoes to barrels.
When You’re the Fat Cats
Calling for higher wages and more generous benefits to be funded by someone else’s money is pretty simple. Flexible work arrangements, paid leave, a funded retirement plan—these are just no-brainers among protestors on the street screaming about fat-cat shareholders siphoning wealth to the Top One Percent. When you are the people to whom whatever residual value is siphoned, however, the situation is different. Wages and benefits that are owed to employees must be paid, even if the owners lose money in the process. When you are the owners and the workers, you are making promises to yourselves, but being on both sides of the deal makes you no less liable should you fail to honor the deal that you made with yourselves.
We regularly re-evaluate what we’re doing and how we’re doing it. Right now, there’s a vote underway to decide how we’re going to handle paid vacation. We used to have a plan where we could buy vacation by deferring pay, but it turned out that such vacation could not be carried over from year to year because of a tax doctrine called “constructive receipt.” An accrual system of the sort you see in many businesses has special implications for us, because every benefit literally means fewer dollars for operations.
A few months back, we had another big decision. We had just adopted a wage model to replace our earlier commission structure, so that we could better implement our commitment for a living wage and also because we were finding it hard to pay bills without any economies of scale. Very shortly thereafter, a big windfall came in, a final commission payment from a program in which no one was doing any work and which was the result of some customers renewing under our umbrella before we formally left the program. Our new model made clear that this revenue belonged solely to the cooperative, with no wages owed on it because there was no work done. The worker who had been responsible for the original sales wanted a commission, on the basis that the windfall was attributed to his effort whether work had been done or not.
This was a serious challenge to everything we were doing, and it looked for a time as though it could cause a lasting split. Instead, we reached an agreement that whenever we got revenue for which no work had been done but whose attribution could be made to one or more specific members, we’d divide among them a cash bonus equal to 15% of the windfall. That agreement took shape because everyone involved had a strong desire to keep the cooperative functioning, which would be impossible if any one person acted solely out of personal interest at the expense of the others.
Towards the Bright Future
We’ve never been clear how long XENSHA will last. Our overhead costs are quite low in absolute terms, and we can easily envision a sustainable workload that provides living wages, strong benefits, and social value for the long term. We’re also a company based on incredible flexibility that makes part-time employment common, which in turn makes it hard to guarantee even the relatively modest revenues needed to support our overhead costs unless and until we get to a minimum number of workers. XENSHA could just as easily disintegrate within the next year as thrive for the next decade.
Whatever the outcome for our cooperative, however, that outcome will not be a referendum on the strength of the cooperative model of worker ownership and democratic control. The challenges we face at the same as any typical small business: capitalization, scale, demand, and above all, commitment. If we can’t make what we’re doing work, it will be because we have too few customers and too little revenue to cover unavoidable costs such as licensing, insurance, and supplies. We’re struggling with these things, for sure. We’re doing that without blaming the problems on our workers, or trying to cut their pay to rates that need government subsidies to live, because our values demand that we put people first.
That’s why we’re proud to be Best for the World in 2018.
This article explains we did and why. Please don’t interpret our choices or views as professional legal or financial advice. Your circumstances may be quite different than ours, or we may have made a bad choice that will come back to bite us later.