A Worker/Owner Program

The most important assets with which Weaver Street Market Co-operative is blessed are its Workers and its Owners (both Consumer and Worker).

As we begin the process of coming up with a comprehensive plan or program (as suggested by our Auditor) to address our Food House-created debt of $10 million, it will be essential for us to find creative ways in which fully to enroll those 'assets' in fashioning and then implementing that program.

Such a people-driven program might well look something like this:

1) Balance the Books

Leaving aside all the jargon about debt-equity ratio and balloon, interest-only loans, the bottom line is that WSM needs to reduce its debt over the next year or two by about $4 million.

To be blunt, anyone telling you differently simply doesn't understand the implications of over-indebtedness. If you want to know where denial leads, take a good long look at Wall Street and the Stock Market.

Such a reduction in debt will not be accomplished by tinkering with minor property or asset sales. Nor by freezing hiring. Nor by messing with the Consumer-Owner discount.

It will necessitate fundamental re-structuring.

One shouldn't try to achieve that overnight. I would suggest the Board make the first task of a new Audit Committee to come up with options over the next 6 months, and report back to a Special General Meeting of Owners, say, in about April 2009.

In fact, the Annual Meeting of WSM Owners supported that very suggestion when I put it to a vote at the Meeting on October 19.

Thet Audit Committee should have an equal number of Board members, Owners and experts from our local community.

Next, the Board should use its Retreat in January 2009 to brainstorm with management ways of eliminating the $400,000 loss we suffered in 2008.

For sure, we need to find savings on expenditure. But to try to do so (as we are at the moment) by reducing staff numbers is neither people-driven, nor is it productive.

Like it or not, we are in the middle of an Expansion project. Unless you want the project to fail - and produce even more grief - you have to see the Expansion through. That means you can't be contracting staff while you're expanding the workload.

All that does is over-work staff, cause further disenchantment, and complicate the implementation of the supposed benefits of the Food House - such as the new vaccuum-packaged meat offerings. This is Business 101.

We are in the first stages of what is likely to be a severe recession. Sales will not pick up simply because we wish it.Our Workers will be at the cutting edge of any sales improvement. And the Board just wiped out our Worker-Owner Dividend.

As much as we Workers all love The Weave, there ain't too many of us who are going to work harder and smile more often, for less money.

I'm not sure that any sensibly cautious businessman would blindly guarantee that a Worker-Owner Dividend will be paid in 2009. Plus, we need all Workers on board with this program, not just Worker-Owners.

I would, therefore, suggest that, as a one-off incentive, we offer all Workers some form of performance-generated bonus at the end of 2009.

Weaver Street used to operate such a bonus. It was called a 'gainshare.' So, the logistics are doable. And 'doable' is what we're about at the moment.

All of this is necessary if we want to regularize our co-op's finances and have any hope of restoring the Worker-Owner Dividend in the foreseeable future.

Now, there are many Workers who were dubious about becoming Worker-Owners, even before the Dividend was wiped out.

Their concerns need to be addressed. The continuing financial health of the co-op depends in large part on encouraging we Workers to become Worker-Owners.

The co-op gains an important source of capital. And Workers gain a voice in the running of their co-op - and a few extra dollars in their pocket, from time to time.

The problem is that many Workers aren't sure what happens to the money they contribute under the Worker-Owner Scheme.

The solution to overcoming Workers' concerns is simple: have the co-op's the Auditor conduct a separate audit of Worker-Owner contributions, and attach his findings to his next Annual Report.

The co-op's own Financial Department could then produce a Statement for each Worker-Owner, to be appended to their Annual Dividend Statement, setting out exactly how much that Worker-Owner has in their own personal central Worker-Owner account - together with a much simpler explanation of how that amount has been calculated.

One final point: never again should the money that is held in each Worker-Owner's central account, along with any 'pooled' Worker-Owner money, ever be used by management or the Board, without the express permission (and that means a vote) of a majority of the Worker-Owners in the co-op.

2) Balance the Board

Management and staff are hired to run the various activities of our co-op. They are accountable, through the General Manager, to the Board. The Board is then accountable to Owners.

That is the equation which is supposed to make our grocery co-op Owner-driven. It is based upon the John Carver Policy Governance Model, to which our co-op subscribes.

By turning the equation the other way round, we see how the equation is supposed to work in practice.

The Board listens to what Owners want. The Board then fashions Policies that set the parameters for management and staff. The Board follows up by monitoring management to ensure they are abiding by the Owner-driven Policies.

Unfortunately, an imbalance has developed within our co-op. As a consequence, the Board has become management-driven, not Owner-driven. The Board listens to management, rather than listening to Owners. And that is why we are where we are at the moment.

The balance now needs to be restored if any comprehensive, people-driven 'rescue' program is going to succeed.

Balance can be restored by first restoring the influence of Owners over management on our Board, and secondly, by creating vehicles that allow more regular input from Owners to the Board (which I deal with in (3)).

The single most effective measure for restoring the influence of Owners on the Board is to institute a Policy change which says that only elected Owner-Directors may vote on Board matters.

I welocme as much expert input to the Board as possible, whether it comes from management, outside experts, wherever. But, if our co-op is truly to be Owner-driven, then only elected Owners should vote on the Board.

We have over 200 Workers in our co-op. Some 100 of them are Worker-Owners. We have only one class of Worker-Ownership. Which means that the General Manager and the dishwasher vote for the same Worker-Owner Directors on the Board.

As utopian as this arrangement may seem, reality suggests that in a mature, $21 million turnover corporation, the dishwasher and the General Manager are not going to have the same agenda. It's time for them to have separate representation.

Remember, management already have their own 'vote' in the decision-making process. They have their own management meetings. Plus, they have their General Manager sitting on the Board.

I think that, with Expansion, we will be looking at enlarging membership of the Board, in any event. What I would suggest is perhaps one elected Management-Owner Director (plus the General Manager = 2) and two elected Worker-Owner Directors.

What's more, I think that, in a co-operative, all Workers should be able to vote for their representatives. Worker-Ownership costs $500. You shouldn't have to pay to vote.

There is nothing radical in these suggestions. They are merely what is required to bring the functioning of our Board back in line with the John Carver Policy Governance model.

Indeed, there is general recognition in the national grocery co-operative movement that more needs to be done to involve Owners in co-operative affairs, in order to maintain their loyalty - and their spending dollars! - to help offset the challenges posed by increased competition and the recession.

This approach is finding expression in concepts which carry the name "Ownership Culture" and "Economic Linkage." But they are essentially just John Carver updated.

3) Balance the Input

For input to be meaningful - as it should be in a co-operative - that input needs to be two-way.

That means that The Weave should have vehicles which allow for a conversation between those making the decisons and those affected by them, whether Worker or Owner, before the important decisons are made, and demonstrably taking into account the input offered.

There used to be a regular Worker-Owner Discussion Program. That should be revived. And one should be created for Consumer-Owners.

An Online Forum is being designed by two Consumer-Owners, Jamie Bort and Sarah Kahn. That forum should be adopted by WSM, and management and the Board 'encouraged' to take part and respond.

Within the business-side of the co-op itself, it might be helpful to have more Department meetings, where Workers actually get to make decisions alongside their management.

Again, this is not all that radical. We're not talking socialism here. We're talking about encouraging Workers to have more incentive to implement decisons, by involving them more in the making of those decisions.

And we should find creative ways to restore the series of Worker Open Forums. Perhaps by allowing Workers to choose the subjects and select the managers who will attend and respond, and maybe by including Workers as facilitators of those Forums?

Weaver Street Market has had its fair share of high points and low spots in its 20 year history. Only time will tell how we come to view where we are at the moment.

I remain the eternal optimist. I believe we will pull through, and we'll end up looking back on this moment in our history as one of the most inspiring of the next 20 years.

But, for that to happen, we need to face up to where we are, we need to find bold and creative solutions to the challenges facing us, we need to encourage new faces to step forward to help, and we need to enroll all of our existing 'faces' in the next steps that will make The Weave a better co-op and a stronger business.