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Shared ownership in practice: case studies

Pearls of Rochdale: Worker Cooperative


The Office for Public Management (OPM) is an independent, 100 per cent employee-owned
development centre that works with public services to help to improve social outcomes. As a
result of our work in the area of shared ownership we have been appointed as one of a small
number of expert mentors to the Cabinet Office’s ‘mutual pathfinders’.
After publishing a practical guide to statutory bodies considering transferring one or more of
their services to employee and/or community ownership, which was based on an extensive
review of the literature, OPM conducted in-depth case study research to explore in more
detail the specific questions, issues and decisions that have to be tackled in the move to
shared ownership.
An overall report will draw out the key cross-cutting themes from all of the case studies. This
short report highlights some of the findings from one of these case studies, focusing on how,
in the case of the Pearls service in Rochdale, shared ownership works in practice, how and
why shared ownership was pursued, what the major challenges and key success factors are,
and what impact has been achieved over time.

How does shared ownership work in practice?


Pearls support play, education and child development in Rochdale. The centre collects
reusable materials and objects from local businesses and industry, which might otherwise be
wasted and recycle them into arts and crafts materials providing low cost resources to play,
education and childcare providers. Income from the recyclables side of the business also
supports the provision of low cost new arts and craft materials and work undertaken by staff
in the community such as play training, work with local schools, work with local artists and art
and craft workshops.
Pearls of Rochdale formally transitioned away from Rochdale Council to become workers
cooperative in April 2010. Employees have equal shares in the organisation and equal
powers of ownership. The organisation is small and thus the governance structure is quite
simple; there is no trust or representative body, employees hold shares directly and work on
a one member, one vote system. Those that work with Pearls on a temporary or voluntary
basis are given no formal stake in ownership, but are introduced to the model of a workers
cooperative and its governance and management structure – they are engaged in dialogue
with Pearls owners about the direction the business should take and are invited to
conversations about how to improve or support the running of the service on a day to day
basis. Pearls has been set up as a membership organisation and hope in the future to
develop the membership structure so members have a formal stake in ownership.

Why a model of shared ownership?


after 20 years as part of Rochdale Council, restructuring and the need to make savings
meant letting go of some non-statutory services. Pearls had always been income generating
but were funded by the Council at a cost of around £100,000 per year.
The Service Manager at Pearls was asked to outline through a feasibility review and
business planning, how the service might continue to exist as a local resource once financial

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Shared ownership in practice: case studies

support from the Council was withdrawn. Personal experience in the private sector gave the
service manager a familiarity with business planning and with models of shareholder
ownership; but from the outset she felt that the nature of the Pearls service and its operation
in the community as an organisation collecting reusable’s from local businesses, for reuse
with local children by local play and education providers, spoke to a model of ownership
which built in wider social benefit.
Initially the manager and employees hoped to adopt a multi-stakeholder model with local
education and childcare providers having a stake in ownership and potentially some
remaining ownership on the part of the Council with whom the employees had positive
working relations – this would also have enabled the toy library element of Pearls services to
continue, which was not looking viable under a model of ownership that had no Council
stake.
After appraising the options available and in the face of condensed timescales as the
deadline for transition was moved forward, it was suggested to the Pearls service that the
model of a workers cooperative would provide a structure that could be transitioned to
relatively quickly, which locked in community purpose and which may open doors to some
capital for the first few years of operation, helping replace the funding of the Council as the
organisation established itself.

What have been the major challenges and key success factors?
An initial hurdle for employees and Council staff supporting the options appraisal process,
was knowing where to go for advice about options for shared ownership and from where to
access the right support mechanisms to make any such transition a reality.
After initial business modelling, the employees needed help and support with options
appraisal and, once they had decided upon and set up the workers cooperative structure
(pre-transition in shadow form), they needed independent support for their negotiations with
the Council.
To an extent the model of workers cooperative was deemed appropriate because of the help
and support available in the North West for cooperative structures in the form of grants and
external advice and consultancy to realise the transition.
The second major challenge centred on discussions with existing staff about who might want
to transition, and on TUPE and pensions. Existing staff had differing personal circumstances
and whilst a core knew from the outset they wanted to attach themselves to a model of
shared ownership, others took longer to make the decision to join or to find alternative
employment. This decision was partly influenced by negotiations around terms and
conditions –during options appraisal and business planning, it became clear that Pearls once
independent, would be unable (at least in its first few years) to maintain the same terms and
conditions for staff as they had under Council employment; the staff were willing to accept
lesser terms and conditions in order to maintain and take ownership of the service, but
negotiations with the Council, who were concerned about liability, required technical support
to pass.
Contributing to the success of the negotiations and transition process was the working
partnership working from the outset between the Council and Pearls employees. Both the
Council representative (the former line manager of Pearls staff) and the employees of Pearls
themselves spoke about the value of collaboration at the options appraisal stage. The
transition process was facilitated by cooperation on both parts and by dialogue between the

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Shared ownership in practice: case studies

Council and former employees about the kind or organisation they would both like to see
available to the community.
This partnership approach to planning and appraisal (and the support further into the process
from external advisors) generated a strong business case for the transition; during
negotiations, the justification and incentives the Council needed to transfer assets to the new
workers cooperative, were made clear; when the idea was taken to elected members and
heads of service, this business case and meticulous attention to detail, simplified the
transition.
Finally, success was due in no small part, to leadership and management throughout the
externalisation by existing managers of the Council run service. They took the lead in options
appraisal and in organising the new workers cooperative and balanced this effectively with
the continued delivery of Council services throughout the transition.

What impact has been achieved over time?


The service has been operating as a worker cooperative for under a year and is still
establishing itself and its new model. The focus at present is on strengthening and expanding
the business and marketing Pearls as a model of shared ownership working in and for the
local community. The most immediate impact has been the retention of the service for the
local area and the retention of the jobs of Pearls staff; the workforce was reduced slightly by
the transition as not all former Council employees elected to become a part of the workers
cooperative, but there is stability in a team which in the most part has been long established.
The impact in the local community is not yet being formally evidenced by Pearls – the nature
of their business means they are contributing to a greener Rochdale by re-using and
recycling materials that might otherwise go to waste and by doing so they provide affordable
art, craft and play resources for local children’s services.
Perhaps the greatest demonstration of the value of shared ownership and the community
and customer focus of the workers cooperative model, is the increase in the amount of work
Pearls staff are able to now do out in schools, with play workers and with local artists and the
input of family members, friends and community members to the organisation in the form of
volunteering. Pearls owner-employees report a real sense of collective responsibility for the
business and responsibility to each and other for making the organisation a success and
ensuring its future.
Every day we come into work with a smile on our faces. It’s our own business. We’re
not being told ‘it has to be done this way, or that way’…It’s just great doing things the
way we want to.

For further information:


To discuss this case study or to hear more about OPM’s research into shared ownership
models, contact Sarah McDonnell, OPM Senior Researcher, on 020 7239 7804 or
smcdonnell@opm.co.uk
For other case studies and research outputs visit OPM’s blog: opmblog.co.uk

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