Can employee ownership and human resource management policies clash in worker cooperatives? Lessons from a defunct cooperative

Abstract

The article analyzes the interaction between employee ownership, HRM policies and practices, and HRM outcomes in what was the world's biggest industrial worker cooperative for decades, and now defunct, Fagor Electrodomésticos. Using longitudinal internal data and detailed interviews with key stakeholders, this paper sheds light on how employee ownership conditioned HRM policies. HRM outcomes—such as job satisfaction and absenteeism—are also analyzed over a long period of time. Chronic nepotism when recruiting new members, failures in the training policy, impoverished and Taylorist working systems, and reverse dominance hierarchies are analyzed as factors that increased free riding and caused low satisfaction and the disengagement of working members. This case study contributes to the literature on HRM and worker cooperatives as it provides some insights that are rarely found in that literature. It also provides guidance to worker cooperatives about increasing the fit between employee ownership and HRM policies and outcomes.

Corporate governance as a key aspect in the failure of worker cooperatives

“…Interviewees also highlighted long lasting human resource problems that became chronic, such as high absenteeism, nepotistic recruitment and selection practices and the low commitment of members (see Basterretxea et al, 2019).…”

“…Council. This destructive spiral generated fear among subsequent managers that then tried to maintain social peace by keeping proposals that might be opposed by worker members off the agenda that lead to a 'reverse dominance hierarchy' (Basterretxea et al, 2019) and contributed to FED's demise. Nevertheless, some interviewees felt that a 'reverse dominance hierarchy' is part of the raison d'etre of the cooperative model itself.…”

Convergences between the Social and Solidarity Economy and Sustainable Development Goals: Case Study in the Basque Country

“…Nevertheless, the so called "degeneration thesis" has recently come under scrutiny. The argument is that degeneration is not inevitable and that cooperatives can also regenerate themselves [53,54].…”

I am therefore I own: Implications of organization‐based identity for employee stock ownership

“…Given the prevalence of these stock purchase plans, it is somewhat surprising that academic research seeking to answer questions about the impact of such plans on employees and employers has been slow to emerge. However, a recent special issue of Human Resource Management is an indication of increasing scholarly interest in the topic (Basterretxea, Heras‐Saizarbitoria, & Lertxundi, ; Kang & Kim, ; Kim & Han, ). Despite these recent advancements, very little is known about the determinants of an employee's decision to participate in a stock purchase plan and the inherent risk borne by employees.…”