Smaller Structures with the Same Core

Part One─Designing Small Scale Commons Governance

This commentary is the first part of a two-part guide on how small commons corporations can streamline boards and roles while preserving worker power and surplus stewardship.

A commons corporation at full scale is often pictured with a seven member board, multiple standing committees and a roster of specialized officers. That picture can be intimidating for anyone trying to build a smaller organization. A start up service firm with a single subsidiary and a handful of employees simply cannot populate that entire chart and still run the business.

Yet the basic commitments of the framework do not shrink just because the headcount is modest. The commons corporation still holds enterprise surplus as a commons and manages it according to defined allocation rules. There are no private returns for managers or outside stakeholders. There are no investors whose capital accounts sit behind the structure. The corporation does not carry a conventional public purpose mandate. Its reason for existing is to steward surplus inside a closed group and deploy that surplus in ways that lift the material position of workers over time, while strengthening the set of enterprises that make up the commons entity.

A subsidiary in this setting is any legal entity that is wholly owned by the commons corporation and that operates in the market. Control without full ownership is not enough. The clarity of one hundred percent ownership is what allows the parent to set the retained surplus covenant group wide and to require that surplus flow back into the commons rather than out to private claimants.

When the structure is scaled down, the central question is not how to preserve every title and committee. The real question is how to preserve the underlying functions. The board still has to act as fiduciary steward of the retained surplus covenant. Subsidiaries still have to pursue their own highest legally constrained net profit so that there is something to steward. Workers still need credible voice and the power to block asset stripping. Independent judgment still has to sit somewhere outside daily management. Each simplification has to be tested against these functions. If a proposal makes life easier but weakens those core features, it is not an acceptable compromise.

Core Functions That Must Survive Simplification

Even in a very small CCE, several elements are nonnegotiable.

First, the retained surplus covenant must remain explicit and real. Surplus belongs inside the commons structure. It is allocated to wages, benefits, education, reserves and carefully controlled acquisitions, not to private pockets. Management cannot quietly convert surplus into discretionary performance pay that functions as a disguised residual claim. Suppliers and lenders are paid fair prices and interest, but they are not invited into an equity like upside.

Second, the separation between the parent and each subsidiary must be more than an accounting exercise. The subsidiary measures and reports its own pre allocation net profit and aims at the highest net profit it can achieve within its legal and contractual constraints. The commons corporation receives those results, looks across the group, and then applies the allocation rules that embody the retained surplus covenant. Even if the same people sit in multiple rooms, the roles have to be distinct.

Third, worker protection and voice have to fit the scale of the organization without becoming symbolic. Workers are not capital investors, yet they are the primary intended beneficiaries of the commons structure. That status appears in wages and benefits but also in governance rights such as veto power over alienation of personnel and productive property. In a small entity, these rights can be exercised through meetings of all eligible workers, worker councils or elected worker directors, but they cannot be reduced to a suggestion box.

Fourth, independent oversight is essential even when the budget is small. The absence of private investors and the lack of a public purpose mandate can tempt insiders to treat the commons corporation as a private club. At least one director should be genuinely independent, with no employment or vendor relationship to the group and with enough experience to read financial statements, ask difficult questions and stand firm when insiders push against the edges of the retained surplus covenant.

Finally, nested governance still matters. The idea that each subsidiary has its own board and internal structure, scaled to its size, but aligned with the parent’s commitments, is central to a polycentric design. For a micro CCE this can mean a three member subsidiary board rather than a larger body, but the subsidiary board should not disappear. Workers should be able to see that the same logic applies from the parent through to each operating company.

Smaller Boards with the Same Stewardship

Once the core functions are clear, simplifying the board is less mysterious. The big model assumes something like seven directors, which allows for a wide mix of perspectives and multiple committees. A small commons corporation might only be able to sustain three or five.

A three-member board can still carry the structure if the seats are defined intelligently. One seat belongs to a worker director, elected by eligible employees across the CCE group. One belongs to an independent director with financial or legal competence and no economic relationship to the group. One belongs to an at large director who understands the sector and respects the retained surplus covenant.

A five member board allows a richer mix. Two worker directors, two independent directors and one at large director is a workable pattern. The governing documents can require that any change to the retained surplus covenant or to worker veto rights must be approved by a supermajority that includes at least one worker director and one independent director.

In either configuration the board still acts as steward. It approves surplus allocation policies, reviews subsidiary performance, evaluates whether the organization is honoring its commitments to workers, and intervenes when management drifts. What changes is not the nature of its responsibilities but the number of people across whom those responsibilities are spread.

Officer Structures for Small CCEs

The full model often uses a roster of specialized officers who focus on acquisitions, benefits, education and reserves. In a smaller setting that kind of chart is unrealistic. What matters is that those functions are assigned and visible, not that each one has a capitalized title in the Articles.

A lean officer structure at the commons corporation level can work with three statutory positions and a couple of functional designations. The statutory positions are a presiding officer, a secretary and a treasurer. The presiding officer chairs board meetings and signs major documents. The secretary maintains records, including minutes, policies and worker participation processes. The treasurer supervises consolidated reporting and ensures that surplus allocation decisions are implemented accurately.

Functional designations can then be created through bylaws or board resolutions rather than in the Articles. The board can appoint an acquisitions lead and a benefits and education lead. In a very small CCE these roles might be filled by the same people who hold statutory offices. The presiding officer might also act as acquisitions lead. The treasurer might also act as benefits and education lead. What matters is that the board knows who is responsible for each function and that workers can see those responsibilities in action.

Subsidiary officer structures can be even simpler. A general manager and a bookkeeper or controller may be all that is needed. The subsidiary management focuses on operations and employment relations, while the parent retains authority over surplus transfers and major structural decisions.

Committees and Fund Stewardship in a Lean Environment

When a commons corporation is small, maintaining a dense web of committees is more likely to create fatigue than to provide oversight. Yet the work of watching over funds and allocations is central.

A single Budget and Allocation Committee is usually enough. This committee reviews subsidiary financials, looks at consolidated surplus, and makes recommendations to the board on how to apply the allocation rules. It monitors any temporary variance from baseline allocation percentages and insists on clear findings that explain why such variance is necessary and when the structure expects to return to normal.

The composition of this committee should reflect the broader board. One independent director, one worker representative and one at large or officer representative provide a useful mix. In a three member board, the entire board can sit as the Budget and Allocation Committee, possibly joined by an additional worker representative who is not a director. The point is to have a regular, disciplined forum where surplus is discussed as a shared resource, not as a management perk.

Subsidiary Governance at Reduced Scale

The same logic applies to subsidiary boards. A smaller CCE does not abandon subsidiary governance. Instead it uses a compact board that reflects key voices.

One pattern is to have one worker director from the subsidiary, one representative of the commons corporation and one at large industry knowledgeable director. Overlap between the parent and subsidiary boards is acceptable in a small group, but there should still be at least one director who serves only at the parent level and at least one who serves only at the subsidiary level. That minimal separation helps preserve corporate distinctness, which can matter for liability and regulatory reasons.

Meetings can be scheduled back-to-back so that directors are not endlessly convening. The important discipline is to maintain separate agendas and minutes for the commons corporation and for each subsidiary, reinforcing the nested structure rather than blending everything into one amorphous meeting.

Worker Voice and Veto in Micro Settings

Worker voice is easiest to realize in a small organization, since the number of people is modest and they can often gather in one room. The worker veto over alienation of personnel and productive property can therefore rely heavily on all worker assemblies.

Any proposed sale of major assets, closure of a line of business or significant reduction in workforce can be made contingent on a process that includes worker notice, explanation and an opportunity to veto under defined thresholds. The commons corporation board and subsidiary boards can preserve management’s ability to run the day-to-day business while still reserving these core protections to the worker body.

Worker directors play a bridging role. They bring everyday concerns into the boardroom and they bring board level reasoning back out into the workforce. In a very small CCE, that two-way communication can be unusually rich. The aim is to build a culture in which workers understand the retained surplus covenant, can read basic financial summaries and can see directly how their work contributes to surplus that then returns to them through wages, benefits and secure employment.

Illustrative Micro CCE Configuration

Imagine a CCE that owns a single local service company with ten employees. The commons corporation board has three directors. One is a worker elected director. One is an independent professional with experience in finance and governance. One is an at large director who understands the industry and shares the commitment to retained surplus and worker centered allocation.

The commons corporation officers are a chair who also serves as acquisitions lead, a secretary who may be drawn from administrative staff and a part-time treasurer who handles the numbers. These roles are documented but not made into a complex hierarchy.

The subsidiary board has three members as well. Two are drawn from the commons corporation board and one is the general manager of the operating company. The same individuals may move between rooms, but they follow different agendas and sign different minutes, preserving the distinct identities of parent and subsidiary.

Workers meet at least once a year to receive an accessible explanation of the group’s financial position and to discuss how funds have been allocated. When a major structural decision is proposed, the worker body has a defined opportunity to exercise its veto power. In a group of ten, such meetings are straightforward but powerful.

This configuration respects the core commitments of the framework without requiring a large staff. It validates the idea that the commons architecture is not reserved to big organizations.