Cooperative Success: Three Forms of Democracy in Cooperatives
There are three ways workers in cooperatives tend to govern themselves democratically. They may opt to take bits and pieces from one structure or another, combining aspects of different structures to form a hybrid. However, generally, the modes of governance are:
Hierarchical
Typical of large organisations, hierarchically structured cooperatives appoint representatives for democratic purposes. This is a form of representative democracy. This method allows members of large cooperatives to express their interests and views efficiently, without the challenge of a complicated voting process.
The voting process of a hierarchical cooperative is typically as follows: “worker-members elect the board-representative workers; the board hires the manager; and the manager supervises the worker-members and non-member employees.”¹ While the Chief Executive Officer (CEO) or General Manager (GM) usually exercises significant authority within the organisation, the overall balance of power differs significantly from that of conventional firms.
In hierarchically structured worker cooperatives, individual power may be diluted depending on the position the individual holds within the cooperative. Members often have limited decision-making power beyond electing the board and ratifying major decisions at annual or special meetings.² While this helps maintain the overall effectiveness of the board of directors and membership oversight — since political factions may compromise efficiency in larger organisations³ — critics argue that it represents a departure from core cooperative values.
This model faces challenges because managerial power can become concentrated, requiring both informal and formal mechanisms, such as active labour unions, to balance this power dynamic. Labour unions often act as a collective voice to support worker interests and have historically partnered with cooperatives to counterbalance management authority. Such union-cooperative alliances serve as a political and practical antidote to managerial overreach.
In large cooperatives, the dilution of individual decision-making power and the presence of political factions can complicate effective democratic governance. These complexities highlight that representative governance, while efficient, can sometimes undermine the ideal of equal member influence.
A widely cited real-world example of a hierarchical cooperative is the Mondragon Corporation in Spain. It features a multi-tiered governance structure, including a General Assembly of worker-members, a governing council, and executive leadership. Although hierarchical in structure, Mondragon integrates worker representation and cooperative values at every level.
Collective
Practical in smaller cooperatives, the collective approach ensures that every individual member’s vote carries the same weight — not only in formal governance, as in all worker cooperatives, but also in day-to-day decision-making processes, which are shared equally among all members.
Workers participate in a non-hierarchical, egalitarian model of collective governance. Instead of appointing members to a board of directors or group of managers, and concentrating power among a select few, collectives include every member in the decision-making process. No decision can be made unless all members of the cooperative agree with the proposal. Such a model is built upon consensus, meaning that decisions are not made by majority vote but through a process of inclusive deliberation.
Some models of collective governance allow for consensus to be reached even in the presence of dissent from one or two individual members. These modified approaches are referred to as “consensus -1” or “consensus -2,” respectively. The collective model represents egalitarian democracy, sitting at the other end of the continuum from hierarchy.⁴
Typically, worker cooperatives that operate under the collective form of governance are quite small, with around thirty members or fewer. This is due to the logistical difficulty of achieving consensus within large groups. Significantly, members of the collective participate in the daily administration of the enterprise, determining things such as working conditions, pay rates, and benefits.⁵
In many collective cooperatives, members form sub-groups or committees to manage specific functions and tasks, ensuring that governance is participatory through a division of labour. This structure supports high levels of member engagement and accountability but can become impractical as the cooperative grows larger.
In cases where consensus breaks down or becomes unproductive, collectives may adopt rotating facilitation roles, mediation protocols, or fallback voting procedures to maintain decision-making capacity while still honoring egalitarian principles.
Examples of collective governance include Red Emma’s in Baltimore and The Cheeseboard Collective in Berkeley. These organisations function without traditional management structures, relying instead on full consensus and shared administrative responsibility.
Sociocratic
Originally coined by Auguste Comte in the 1850s to describe a society governed by scientific and moral experts, the concept of sociocracy was significantly reinterpreted by Gerard Endenburg in the 1980s as a practical method of participatory and democratic governance. It is a hybrid of hierarchical and consensus-based decision-making models. This model has been applied to the cooperative context by practitioners seeking alternatives to traditional hierarchical organisational structures. It refers to a system of governance in which “those who associate together govern together.”⁶
In the “sociocracy circle method,”⁷ work is divided into “domains,” with each domain representing an area of responsibility and decision-making authority within the business. Each domain is governed by a circle, a semi-autonomous group responsible for making decisions and coordinating work within that domain. Decisions within circles are made by consent (not consensus), meaning a proposal is adopted when no member has an objection to it.
Circles are typically organised in a nested structure, where broader circles delegate authority to more specific circles. For example, within the marketing domain there might be a marketing circle responsible for overall marketing strategy. This circle might delegate specific responsibilities to sub-circles, such as a social media circle, and that circle might in turn delegate more specialised responsibilities to circles focused on different social media platforms, such as LinkedIn and Facebook. Simply put, a functional hierarchy exists in sociocracy.
One widespread term that is often used in the literature is “circular hierarchy,”⁸ where interconnected circles govern through mutual accountability. Each circle has a top-down and a bottom-up relationship with another circle at the same time, which is referred to as “double-linking.” The top-down link is the leader (appointed by the higher circle) who oversees operations in the circle and carries information from the wider organisation into the circle. The bottom-up link is the delegate (elected by the sub-circle) who brings the voice of the circle to the wider organisation by attending the parent circle.⁹
Circles attempt to make as many individual decisions as possible at the smallest level each day to maximise efficiency and effectiveness within the organisation. Those who believe in sociocracy’s effectiveness believe that the authority in decision making should belong to those who directly do the day-to-day work associated with that decision.¹⁰
The legal structure of sociocratic cooperatives often requires a board of directors composed entirely of members, ensuring that all formal governance aligns with the cooperative’s membership decisions. Importantly, sociocracy separates the hierarchy of work (task specialisation) from the hierarchy of decision-making power, which remains distributed equally across circles.
Sociocracy is increasingly popular among tech-oriented or distributed cooperatives such as Loomio (New Zealand) and Outlandish (United Kingdom). These cooperatives rely on digital tools and dynamic governance to facilitate decisions across teams.
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¹ John A. McNamara, “Humanism and Democracy in Worker Cooperatives,” in Humanistic Governance in Democratic Organizations: The Cooperative Difference, ed. Sonja Novković, Karen Miner, and Cian McMahon (Cham: Palgrave Macmillan, 2023), 121–142.
² U.S. Federation of Worker Cooperatives, Co-op Clinic Mini-Guide: Structure and Decision-Making (Philadelphia: U.S. Federation of Worker Cooperatives, 2021), https://www.usworker.coop/wp-content/uploads/2021/10/Co-op-Clinic-Mini-Guide-Structure-and-Decision-Making-EN.pdf.
³ McNamara, “Humanism and Democracy,” 126.
⁴ McNamara, “Humanism and Democracy,” 129-30.
⁵ McNamara, “Humanism and Democracy,” 129.
⁶ Ted Rau, “Circles in Sociocracy: An Effective Organizational Structure,” Sociocracy for All, December 2019, https://www.sociocracyforall.org/organizational-circle-structure-in-sociocracy/.
⁷ McNamara, “Humanism and Democracy,” 130.
⁸ Sociocracy For All, “Circular hierarchy,” image, Sociocracy For All, accessed June 27, 2025, https://www.sociocracyforall.org/circular-hierarchy/.
⁹ Rau, “Circles in Sociocracy.”
¹⁰ Rau, “Circles in Sociocracy.”