Sharecroppers

The shareholders agreement provides the core of the labor pool.  Each shareholder agrees in writing to contribute so many hours per month.  I've suggested 10 hours per month as being a reasonable expectation.  With only this resource from a pool of 200 people we have the equivalent of 12 full time employees at our disposal.  There is much we can do, but as we develop projects the need for labor will increase.  

There will be some people willing and able to contribute more time.  We can also include provisions which make it possible for the shareholders to put in no time.  Unless we make provisions for people to contribute more effort and be rewarded for it we have the same problem as the current corporate world: investors not working being rewarded at the expense of the worker.  If Jack and John both own an equal share of the company, they get an equal share of the profits.  If Jack puts in twice the work, balance and equity are lost and the door is open to petty bickering.  

Without an incentive in place it is unlikely their either John or Jack will contribute more than the minimum requirement unless they have very big hearts.  We'll be working with scores of other people.  Relying on goodwill would be cynical.  Our objective is to create opportunity, not take advantage of people.  
We could hire employees, but at the start we have a serious lack of funding.  We can barely afford to fill a select few key positions to meet regulatory requirements.  If hiring staff is the direction to take, we have a duty to the shareholders to hire experienced people from the available labor market which means not you or your kids.  Many of the shareholders would have the door of opportunity slammed in their face.  It is foreseeable that once passed over, they will throw their shares on the ground, walk away, and take their business elsewhere.  The cooperative can demutualize and the entire enterprise collapses.

If we are to build up this company starting with a tiny investment we have to look at using the sweat of our brows to do it.  This is a team effort.  Everyone involved has value and if we nurture the inherent ability within each other, there is nothing we can't do.  These people want opportunity, dignity and choice.  Give it to them.

Looking around for ways to make this plan work I came across a description of sharecroppers in the post Civil War era.  A farmer has land that needs to be worked, but emancipation left him with no crew.  Meanwhile, here's a bunch of refugees, freed slaves, and people who are unemployed because Sherman burnt the place to the ground.  Go to work on the farm, get a share of the crop, everyone wins.  I started this plan with only a farm in mind.  Sharecropping was the right term and the right means of making it work, so I've been stuck on using the term.

Limiting the focus of this enterprise to a farm did not fully utilize crop production without a kitchen in place.  It would be a shame to grow several tons of tomatoes and have them rot because they did not sell.  With a kitchen, we can make tomato sauce, adding value to our product, and store it on a shelf until it sells.  The sharecroppers can work in the kitchen as well as the farm...or in the store or in the tool shop or whereever else we are doing our thing.  

Should the cook who makes the tomato sauce get a bonus for adding value?  Absolutely not.  This would imply the folks in the field doing the growing and harvesting have less value.  For the most part, the skills we will be using to operate the enterprise are pretty simple.  My skills and abilities are different from yours: I'm good at cooking, you are good at cleaning.  To do the whole job, we need each other.  This enterprise will have all sorts of jobs that need to do, all of which are needed to make the enterprise work.  We'll need people who can make an effective sales presentation to a local restuarant as well as people to scrub saucepans.  

There will be times when one will need to swallow one's pride to get the job done.  I've worked in restaurants in every capacity for many years and in every single one of the Mom and Pop shops I've seen the owner scrubbing pots and mopping floors.  If you are going to be part of the team, you've got to be willing to pitch in on every job.  If you have the attitude that some jobs are beneath you or that you are better than someone else, you won't be treating others with dignity.  You WILL be taking a turn cleaning the bathroom.  Not only will you not complain, you'll be Glad to do it.  If we have a bathroom to clean it means we're doing it right.  If we are doing it right, we are creating opportunity for each other and that's something to be proud of.

I digress, let me get back on track with the sharecropper modus operandi.

What if we removed that time requirement from the shareholders and make it voluntary.  This would remove all our labor.  If we want people to pitch in, we're gonna have to pay them.  If they don't work, nothing gets done, the company makes no money.  The money we make is dependent on contributing time.  The shareholders have pitched in their hard earned money and deserve a return on that investment.  The people are putting in their time, they deserve a reward. 

Here's the deal:
The company will pay out at least 80% of the profits to the sharecroppers.  The remaining 20% will be used for further development, improvements, expansion, creation of new opportunities with whatever leftover being paid out as dividends to the shareholders.  The hours contributed will determine the portion of payout to the sharecroppers.   Total hours by all sharecroppers are added up.  This is divided into the sharecropper payment (80% of company profits).  The result is the amount paid out for each hour worked.  Each sharecropper would receive a check for that rate multiplied by the hours they have contributed.

To put this into hypothetical numbers, let's say the enterprise earns a profit of $100,000 and the sharecroppers have contributed a total of 10,000 hours.  The company keeps 20%, $20,000.  The company pays the sharecroppers the balance of $80,000.  In this example, each sharecropper would be paid $8.00 for every hour worked.

This sharecropping notion changes the dynamics of the way this company operates.

Dynamic: The Co-op has the guaranteed income to pay the bills.
Immediately this removes stress and anxiety.  The company has a greatly reduced chance of failing.  With that reduced risk, we become more attractive to potential investors.  This applies to the Co-op as well as the Land Company.  
The bills are paid.  Anything we do improves our situation. 

Dynamic:  The shareholders have an opportunity to make a return on their investment and have a direct impact on the growth of that return.  While they can choose to distribute all of that profit amongst themselves, reinvesting it into further development improves our abilities and potential.  
They have an incentive to participate as sharecroppers, but it is not a requirement.  Anyone (US citizens) can be a shareholder.  
The impact here is if the first co-op shows a signifcant performance.  When the return on investment for a non-participating shareholder reaches a particular threshhold, this idea would be duplicated far and wide.  There would be unscrupulous copy cats (clarification article needed here).

Dynamic: The sharecroppers have the incentive to contribute as much time as they wish.
Unemployed and underemployed sharecroppers would be able to contribute a great deal of time.  It may be necessary to impose limits.  The kitchen can only fit so many people.  The store only needs so much attention.  The farm can absorb a huge amount of time.  The Work Crew project can absorb some time.
Unlimited hours invites abuse.  People would be able to clock in then hide in the barn.  We will hold ourselves accountable for the time we put in.  The sharecropper in technical terms is an independent contractor, working under the terms of a contract agreement.  Abuse of the terms is a J-Board offense subject to penalty up to and including cancellation of that contract and permanent removal from the approved vendors list. 

Dynamic:  The Buyers Group has few practical limits.  
The Store and Buyers Group can handle a pretty massive volume.  As volume increases the labor demand does not increase in direc proportion.  Our rate of profit per unit time is inceased.  If you want a raise, it is in your interest to promote the company, the store, and the buyers group to evveryone you meet.  It is also in your interest to uphold the reputation, customer service and public appeal of the company.

Dynamic:  We all earn at the same rate.
The guy scrubbing the floors makes the same as the guy selling pies.  Nobody is on the bottom of the totem pole.  There is no pecking order.  
This can be used as a dangling carrot.  Keeping the group continually updated on our progress is an incentive to perform efficiently and contribute more time.  Here's the kicker:  It is an incentive to lift people up, build up their confidence and abilities to become more competent and effective.
I could work more efficiently than you, but if I teach you to work more efficiently, you'll do so when I'm not around and you'll be able to share what you've learned with others.  Teaching and training become key factors in every aspect of the operation.

Dynamic:  A sharecropper is not required to buy a share of the company.  This one needs some thought to understand the implications.  
Without making any investment in the land company or the co-op company, someone off the streets can simply show up, pitch in, and earn a share of the profits.  Yup, that's what this means alright.  
Initailly, we'll temper this with practicality and self-preservation.  It's our company, we come first.  We'll develop a staffing schedule and fill it with shareholders before we offer open enrollment for new sharecroppers.  If we don't have enough work for ourselves, it makes no sense to bring in nonowner-sharecroppers. 
We will experience attrition.  People come and go in their lives.  New job, marriage, seperation, deaths, births, college, retirement...all sorts of reasons for people to wander away from us.  The Plan needs to account for this.  The ability to replace an exiting sharecropper with a new one keeps the Co-op from becoming extinct.
If we are doing it right we'll be able to earn much better than a minimum wage job.  For some of us, this is more than we are making now.  When it becomes more reliable, some folks will want to replace their current job with the sharecropping role.  The better the company does, the more of us will make the jump.  Our potential labor crew includes everyone in the family.  It is foreseeable that if the enterprise is highly successful some people would want to duplicate the success in a nearby town.  It would be possible to be a shareholder and sharecropper in several duplicate or similar enterprises.

Dynamic:  We become a de facto incubator.
The sharecroppers have the legal designation "Independent Contractor".  This means everyone is self employed.  Each sharecropper would receive a 1099-Misc form from the company at the end of the year.  This is a total of all income payout to the individual sharecropper.  The sharecropper fee is a tax deductible business expense.  The sharecroppers will need to fill out a Schedule F along with their 1040 Tax Return.   The sharecroppers become eligible for agricultural loans after showing a profit for 3 years.  

 

 

Cooperative Enterprise, Plan Outline