The Partnership

The Board


5.1 I wanted to attend a Partnership management meeting and was directed with other interested visitors and partners to an observation alcove off the boardroom. Except for our alcove the room is typical of medium-sized enterprise: it’s formal, there is a special place for the chairman, and it serves as a training and conference room. The board of seven partners filed in on time: the chairman, the chaplain, the factory manager, the nurse, the economist, the engineer and the politician. We were asked to be quiet and not interrupt.

5.2 The chairman opened the meeting in prayer: “God, be with us as we assemble in your name to do your will. Bless and multiply this small part of your Kingdom here on Earth. Forgive our errors. Help your people to withstand the pressures applied in the business world, for yours is the Kingdom we strive toward. Amen.”

5.3 “The first item on the agenda is what to do about our farm,” said the chairman. “From the last meeting, you will recall that the farm is producing far in excess of what we need, the cannery in the factory here is taking up more and more space, the farm manager wants us to install cold storage capacity above that possessed by the partners individually, and a splinter group has developed wanting autonomy for the farm and its management. Immediate questions arising are therefore: how can we assist this splinter group? What form of organisation should this group take? Are there any contributions?”

5.4 The economist advised: “Perhaps it is time to incorporate the farm as a separate conventional company, then after it has been firmly established we could convert it to a co-operative similar to ours. This would give maximum incentive to the farm people: the chance of unlimited profits; the ability to employ labour conventionally and to direct and order rather than convince by rational discussion; enhanced personal power and influence.”

5.5 “I don’t think this would be wise,” countered the chaplain. “Once people get a taste of power and privilege, they are not likely to want to give it up by converting to a partnership. They’ll be weak to start with but we can support them and give them the initial strength when they need it. I’m for setting up another partnership similar to this one where the stronger care for the weaker; where weaker, poorer people participate to a far greater extent than they would if they were in a conventional company; where everyone has a secure income irrespective of their relative strengths.”

5.6 “We’re more experienced in the co-operative form,” said the factory manager, “and that’s good reason for using it again.”

5.7 “Yes, but growth is so slow under the co-operative form of organisation,” moaned the economist, “and while we’re stumbling around developing our farm and discussing options at great length, the whole job could be done using the company form.”

5.8 “There is no choice,” said the nurse. “The type of person who is successful in setting up and operating conventional companies is selfish, ambitious and materialistic: their main goal is personal reward. We know the partners in the splinter group and they’re not like this: they are concerned for the environment, they are not aggressive and they care for their weaker people. Therefore I propose we set up a partnership for them.”

5.9 “Perhaps it would be appropriate now if I outlined the main differences in principle between the conventional proprietary limited company and our extended partnership or co-operative form - this may assist in making this vital decision,” said the chairman.

5.10 There was a general consensus that the chairman’s suggestion was a good one, so he proceeded. “For a start, the conventional for-profit company relies on the guiding principle of hiring people, paying them less than they produce, and keeping the difference. The Partnership has no hirelings and cannot behave like this. No matter how altruistic an owner of an enterprise is that operates under the employee system, the temptation is always there to minimise the amount paid out, and maximise the difference that is kept - in this respect this system is inherently exploitative and unstable.

5.11 “Ownership attitudes are markedly different in both type and distribution in the two industrial forms. In the company form, the owner does all the owning, and any latent ownership attitudes possessed by the hirelings are not manifest. At best ownership attitudes are shared between comparatively few people who own the capital plant and buildings, and they have always found it difficult to understand why the hirelings do not care for their property as they do. In The Partnership ownership is distributed uniformly and ownership attitudes are apparent among all the partners, but in general no one exhibits such extreme ownership attitudes as the owners of a for-profit company. Thus the ownership attitudes in a partnership lie somewhere between the intense ownership attitudes exhibited by the owners of a company and the insignificant ownership attitudes exhibited by its hirelings.”

5.12 “The distribution of the benefits of a technical advance is another marked area of difference. In the proprietary limited company form, a technical advance that allows the same production in less time gives the owners three options: they can hire the same number of people and increase production - if they can sell the increased production profitably, they can hire the same number of people and reduce the hours per week that they work each person, or they can maintain the same working hours per worker and the same production and reduce the total number of working hours by sacking some people. The Partnership does not have this last option. When it comes to the distribution of the increase in income due to a technical advance, the owners of a conventional company get the most, whereas our partners share equitably via the equal distribution of surplus. Hirelings’ earnings are usually kept secret between hirelings and this covers any unjust distribution even if this is not the prime motive for secrecy. In a partnership, each partner knows what the other partners receive. In both industrial forms there may be a direct contribution by the organisation to the individual responsible for a technical advance.”

5.13 “Security of life-style is another area of significant difference between the two industrial forms. In the conventional form there is relatively little security since the employer has the right to hire and fire at will, but in The Partnership it is much more difficult to get rid of people as it involves the transfer of valuable property, a decision at board level, and the certain knowledge that once a person is expelled, it will be difficult for that person to find another job. Partnerships generally have a very low turnover of partners in the manufacturing sector which leads to a much more stable life-style than in the conventional form. This increased security is a significant factor in changing the behaviour of partners over ten or fifteen years to a pattern typified by a greater degree of openness, an increased willingness to share and co-operate, and a more caring attitude toward others. Can you see the similarity to the fruit of good tree and the fruit of a bad tree that Jesus referred to?”

5.14 “Control is an area of vast difference. In the conventional company, control is jealously retained by the owners, and any inroad into this realm is fiercely fought. Control in our partnership is democratic in that the partners elect the board and the board consists of partners.”

5.15 “Lastly,” concluded the chairman, “success is dependent on a relatively few people in a conventional company, whereas in a partnership success is due more to a cohesive group working in concert who pool the risks and the rewards.”

5.16 “I think perhaps you have missed the aspect of creativity,” added the chaplain. “Creativity is the life-blood of an enterprise. A proprietary company depends on the creativity of a few owners and by its very nature suppresses the latent creativity of most of the people in it. In a partnership the creative spark in each individual partner is fostered, encouraged and rewarded.”

5.17 “Yes, I agree,” conceded the chairman. “To sum up I would say that the difference between The Partnership and a conventional company is largely that there is a greater degree of distribution in The Partnership - almost everything is more evenly distributed: money, control, risk, responsibility, authority, ownership, capital contribution, creative input.”

5.18 “There is another important difference,” said the chaplain. “The Partnership is co-operative in nature, the conventional firm is competitive. It is obvious to me how the intense competitive nature of private for-profit industry effects people who have nothing but their labour to sell to a single employer on a full-time basis - I often see the stress, the anxiety, and the other side-effects of intense competitive living over twenty or thirty years - people develop everything from asthma to ulcers. The co-operative nature of The Partnership is I believe one of the significant factors in producing a generally healthier population inside The Partnership than in the general population. Outside each person is an island - they learn to distrust their neighbours, and eventually exhibit a lack of care and concern. The Partnership has developed genuine teamwork based on common interests and real property in common which has enhanced mutual trust.”

5.19 “There are other subtle differences that as partners we often take for granted and cease to recognise,” said the chaplain. “Because a person will work for say 30 $/hour, there is no justification for paying only 30 $/hour if that person is producing say 100 $/hour. Outside practice is pay that person only 30 $/hour, but in The Partnership this problem does not exist since the method of payment is different. Each partner owns a part of the enterprise and is paid accordingly.

5.20 “Consider also the long-term effects of the partners’ mutual ownership of the means of production. There are no absentee owners here reaping profits without commensurate work input. Our means of production serve us, and we have established a healthy balance between machine and manual work. Our decisions to buy capital plant are based on wider motives than profit - for example, when we bought our mechanised factory floor cleaning system and integrated it with a new factory floor layout, the motives were mixed. This decision saved our labour, but there was a slight increase in costs according to our accountant’s long-run life costing. The system was bought to increase the dignity of the work, and partners who have to do the work paid for this, whereas absentee owners would not. There is no question that it is more economic to have a person with a broom, and there is also no question that the partners decided to mechanise in order to improve the dignity of the job, reduce its chore-type nature, and create a more pleasant, rewarding experience where the desired results are achieved much more quickly and easily. The underlying principle is that partners are prepared to pay for social benefits, whereas absentee owners would only do so if they were forced by law or out of some such motive as charity, which could destroy the potential social gain. In time, partners tend to exhibit a qualitative difference in behaviour to their employee and employer counterparts - the difference in capital plant purchasing behaviour is just one example. Outside, the filthy jobs are always done by the lowest in the society, and it makes them stay low. When the partners have to do a filthy job they mobilise engineers and equipment to get the job done in what is to them the best balance between labour-power and machine-power. Invariably machines and technology serve the partners, whereas outside it is too often the reverse.”

5.21 The nurse returned to the agenda: “Why should we diverge from established successful practice? The farm is not a new or weak business. The reason we are discussing it now is because it has become very successful. It is producing more than we can consume. There are many small businesses that are far weaker. We have had a number of splinter groups in the past and we have always accommodated them by helping them form an autonomous partnership of their own. In the hundred and fifty years of our history not one single splinter group formed a conventional company. In any event, the argument is academic since we don’t have a group interested in running a proprietary company. We should use the partnership form.”

5.22 There was general agreement that the nurse was right, and the chairman was already studying the material for the next item.

5.23 “The next item,” said the chairman, “is applications for partnership. We have one partner on probation whose six month probationary period is up, and we now have to decide whether to admit him to partnership or not. We have an application for partnership from one of our contractors who has sufficient capital, if the tooling he has developed for Partnership production is taken into account. Unfortunately he is not a Christian.”

5.24 “Let’s deal with the easiest application first,” said the factory manager. “I’ve worked with the partner on probation: he is a committed Christian and a willing worker, but he does need specialist training in order to bring his output up to his potential. If there are no adverse comments, I recommend we confirm his application.”

5.25 “Have you had a chance to form a thorough picture of the physical and mental health of the man?” asked the chairman.

5.26 “Yes, I have,” replied the medic. “As with most outsiders his mental state was not as good as it could have been when he joined us, but the rehabilitative nature of our environment has had visible beneficial effects already, and it is reasonably safe to say that he is satisfactory in this regard. On the physical side, he has been a mass production worker and has developed a peculiar fault in his left hand due to repetitive work. If we are careful with the type of work we put him on - and I realise he will still be working on a production line with us - then I believe we will have no problem with his physical state either.”

5.27 “Thank you,” said the chairman. “I take it then that the partner on probation has acceptable health. Has anyone met his family? Will they accept his new commitment, or will they try to prevent him from identifying with our goals?”

5.28 “He brought his wife and young child into the office one day,” said the engineer, “and I would say that he did this to give them a chance to see what he was getting into. They use some Partnership products, and wanted more information on the Christian and philosophical foundations of The Partnership. My impression was that they were all very excited about the prospects of becoming involved on a long-term basis with us, and I don’t think there would be any family hindrance.”

5.29 “If there are no other comments,” summed-up the chairman, “I propose to ask the man in and to formally offer him a partnership. I’m sure that there is no need to remind you of the gravity of this decision: if we make a mistake and the man is not compatible with this organisation, then it will be a long and costly error to correct - we will have to buy back his share at its then market price, we will have to call for a number of confirming reports and to cede him every right under the Rules prior to expulsion if he declines to resign, there will be legal expenses and some emotional upset.”

5.30 None of the partners on the board had anything else to add, except the economist who commented: “We need the man. No one wants to do the boring production-line work that he is destined for. I know that he’s below average intellectually, and that he can possibly achieve his potential on the line, and that is exactly why we need him.”

5.31 The chairman rang the workshop and asked the partner on probation to come to the boardroom so that he could be formally offered a partnership. “Are there any comments on the contractor?” asked the chairman.

5.32 “Yes,” said the chaplain, “he is devoutly religious, but is not Christian. I doubt if we can accept him.”

5.33 “How is his work?” the chairman asked the factory manager.

5.34 “All I can judge by is the quality and quantity of his products and the relationship I’ve developed with him during the course of business for some eight years,” replied the factory manager. “He’s one of our component makers and has always tried to honour his commitments. He’s been one of our best contractors, and I think that over the years his goals have merged with The Partnership’s - one thing is plain though and that is he not likely to become a Christian. He will probably remain an advocate for his religion.”

5.35 There was a knock at the door, and the nurse who was closest opened it. She welcomed in the partner on probation with a warm smile that was returned. The chairman said: “Please sit down,” and motioned him to a chair. “Have you read the Rules thoroughly during your probationary period and do you want to join us as a partner?” asked the chairman.

5.36 “Yes, I have read the Rules and those that I couldn’t quite understand were explained to me by some of the partners. I think the Rules are very fair and I believe that I can live with them. I want to be a partner.”

5.37 “Then it is my pleasure to inform you that you have been admitted into partnership as from this time.”

5.38 “Henceforth,” continued the chairman, “you are entitled to the full privileges of being a partner: you have full access to The Partnership’s books, and if you need help understanding the figures it will be made available to you. You will be expected to know and follow our financial ups and downs; if you need legal help you can use The Partnership’s solicitor; you are entitled to purchase one standard Partnership car and have it maintained by The Partnership; you can buy from our store at considerable saving; you are free to request the skills of any of the partners, so it is in your interest to get to know all the partners and their special talents. Remember that these rights are reciprocal to other partners in accordance with the Rules. All the benefits, and all the responsibilities, of your partnership will become apparent to you after some years of practising your Christian faith in harmony and partnership with us. Congratulations!”

5.39 The new partner was obviously pleased as he left the room to a round of applause.

5.40 “I know the contractor personally,” said the factory manager. “We have often shared views on the best way of making various things. He has always been interested in his work, courteous and polite. You wouldn’t pick him as a non-Christian by his actions. He’s got a lot of skill too, and I have benefited by our conversations. I suggest that if there are no serious objections other than the fact that he is not Christian, we allow him in on the standard six-month probation period.” A majority of the board considered this to be a reasonable course and the chairman said, “I shall therefore inform the contractor that his application for partnership has been successful, and that at the end of his probation period he must sign The Partnership Agreement and with a clear conscience be willing to co-operate with us in our Christian work.”

5.41 The dynamics of this small group was interesting. It was fascinating to see the ease with which leadership swung in this small Christian group unhindered by pride, status, and self-interest. Normally when a chairman sums up it is an indication that discussion is at an end and it is somewhat of a challenge to his leadership to add pertinent new data to the discussion as the chaplain did. But no-one cared at all for the normal, and they were interested to have a more complete and balanced understanding of the differences between co-operative and conventional enterprise than the chairman could provide, so leadership swung unhindered to the chaplain. One of the secrets of success has been learned by this Christian group: leadership must swing to the most competent person in the area requiring leadership, so as to optimise the use of individual skills for the benefit of the group.

5.42 The next item had to do with the making of a component for another manufacturer. The economist opened: “The economics are clear: we have been offered a good price to make a component; we have surplus productive capacity that could be employed; there is a good profit in accepting this order.”

5.43 The chairman said: “This would contravene The Partnership’s policy of confining ourselves to manufacturing finished products for direct sale to end-users, and not selling components to other manufacturers or selling services. Some of the reasons for this policy are: we are never beholden to anyone in the market place except the end-user; since we always design, build and sell only our own products, every design is our capital to build on and up.” The existing policy was reaffirmed.

5.44 “We should consider now some of the fundamental principles and consequent policies of The Partnership for the benefit of our guests, and ourselves,” said the chairman.

5.45 “Everyone is invited to the chaplain’s sermon,” commenced the chairman. “He will be presenting his input-output model of the developing person who needs to be treated and to treat justly. This necessity for justice has led to the acceptance of the principle that each partner receives the full produce of their labour, nothing more and nothing less. Over the decades it has been found very difficult to strictly adhere to this deceptively simple principle. When you consider what it means in practice, if not even the smallest fraction of one percent of a partner’s produce can be appropriated it is clear that attempts must be made to reduce to the minimum, and preferably to zero, all kinds of expenses including rent on premises used to produce income, the payment of interest, rates and taxes of many kinds. If we are serious about adopting this principle, even the surplus of The Partnership should be held down to near zero with commensurate increases in individual drawings since its in this latter component that individual differences are rewarded. A corollary is that no partner takes from others that which has not been earned so that the right to the full produce of other partners’ labour is accorded to them also. When seen from this perspective this principle, in common with all basic principles, becomes a goal that we strive toward. We have learned to husband capital as farmers husband sheep. We have a continuing campaign to apply and maintain whatever pressure we can to reduce the ever increasing array of taxes to the absolute minimum. Every effort is made to ensure that authorities earn the money that is paid to them and we exercise our civic rights to ensure their accountability and responsibility. This principle is the basis of Rule 2(4)(c) that requires payments to be in accordance with the quality and quantity of work done. When doing business we insist on giving and receiving value for money and have found that this requires us not to give or get something for nothing. Whenever the something for nothing principle is involved, it has been our experience that nothing comes free and that a weakness somewhere is being exploited to the detriment of someone. When you think of it, the principle of giving full value for money, or put another way, of ensuring that a partner gets the full produce of his labour, leaves no room for any manipulation during the exchange process and is the basis of Rule 58 which requires cash trading with credit neither being given or received, since the payment of interest is generally not acceptable. Another application of this principle is in the banning of the employer/employee relationship under Rule 2(4)(c) since the usual intent is to pay less than the labour produces and to appropriate the difference.”

5.46 “The second fundamental principle follows from the need of a person to be in a state of continual development: the industrial environment should be adequate for each person to achieve their potential and should provide the necessary conditions for individual growth.

5.47 The chaplain commented: “This principle is of particular interest to me, and I will be expanding on it in my sermon at the end of the day. The Partnership is an organisation that has been designed; it didn’t just happen by accident or evolve in some sort of ad hoc manner, and it has been designed to release the creativity, altruism, and inventiveness of its partners - it is a vehicle for positive and beneficial social action not only for the partners, but also for all people in its sphere of influence. The principle of each partner receiving the full produce of their labour is basic to achieving the first step toward industrial justice and is reflected in Figure 1 - there have to be Rules to ensure a fair distribution of labour, rewards and responsibility. Our clothes pegs are not in themselves important although they are excellent pegs - their importance lies in their being part of the necessary vehicle to take people to higher social goals.”

5.48 “An aspect of freedom,” continued the chaplain, “is continual widening of choices so that individual development in any direction is not impeded. For example, the invention by a partner of a device that increases productivity gives The Partnership the options of increasing production or reducing hours of work or devoting the capacity released to Christian work. Inventiveness and creativity are factors in the quality of work done, and since the produce of these factors is extremely difficult to assess, accurate records are kept of contributions and due payment is made progressively and retrospectively as the fruits of the inventiveness and creativity are reaped.”

5.49 The chairman added: “It should be said that an adequate industrial environment calls for a dignified working existence to be available to each partner - dignity implies responsibility and a measure of self-control and internal motivation - a lack of coercion to work. Basic to the design of The Partnership is the closing off of the bad options that people would take if left free to do so, and the channelling of effort into more productive avenues.”

5.50 “Yes,” concluded the chaplain, “the founding partners knew that people have both altruistic, co-operative and selfish, competitive tendencies: they emphasised, enhanced and developed the Christian, altruistic, co-operative and gentler aspects for us when they designed and built The Partnership.”

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From The Partnership, by Graeme Doel.

Converted to HTML by Simon Grant, 2003.