Sunday, January 10, 2010

Who Moved My Worker-Owner Money?

[Ruffin Slater, GM of Weaver Street Market Co-operative, has just written to me to tell me that he and the Board have decided to suspend loans to Worker-Owners against their W/O Capital/Dividend Accounts, the monies which belong to those Worker-Owners and are held for them in trust by WSM. This was my response.]

"Hey Ruffin,

Thank you for your response to my query as to why a decision had been taken to suspend loans to Worker-Owners using as collateral their Worker-Owner Vested Capital/Dividend Accounts, and also for forwarding my initial comments to the Board. Since you have done that, I thought I would take a moment to offer this further viewpoint.

I have no doubt that you (and the Board) make decisions (including this one) that are within the remit of the structure that you have so carefully put together these past few years. My concern is, as it has been these past three years, whether that structure and the decisions which flow are in the best interests of our co-operative, its members and its workers, and whether they are, to that end, consonant with our Ends, Carver, co-operative values and Fairbairn.

I mention the latter only because the Board have attached his document to the December 2009 Minutes, I am assuming because you and the Board believe our co-operative should operate according to his thesis.

I'm sure you know that document backwards, but let me remind you what it says about structure and relationships:

The key to a co-operative is the relationships that it cultivates and embodies. The most important of these may be the relationships between the co-operative and its members; however, relationships among the members, and among or between employees and other stakeholder groups, may also be important. Of course, any business depends on relationships with its customers, employees, investors, and so on. The difference in a co-operative is the closeness and multidimensionality of the relationships with members: part of the governance structure as well as the focus of operations...The relationship with members is what creates the co-operative difference: it is a source of distinctive possibilities. They are customers as well as owners. A co-operative is defined by, and draws strength from, its relationships.

Over the past few years, you and the Board have created a structure which essentially cuts out members and workers from the decision-making process. How exactly does this foster the relationships which Fairbairn says truly define us as a co-operative?

No worker or member may propose a motion at an Annual Meeting. No votes are taken. A Special Meeting of members can only be called with 30% of 13,000 members agreeing. A quorum must be 40% of 13,000.

No member may put an item for discussion on a Board agenda. Queries are met with technical brush offs. The only way to be a part of any decision-making process is to stand for the Board. Upon election, one discovers that three out of seven of the Board are appointed, and the Board Chair is unelected.

Executive sessions are the norm. Decisions are taken outside of Board meetings, and are not Minuted. Not one of the documents referred to in the Minutes is attached. And request for such documentation is now met with refusal.

The Board has abrogated to itself the right to make and change the By-laws. I have been involved in the governance of organizations (non-profit, for profit and governmental) since I was 16. In all that time, I have never come across an organization with members that does not insist that the right to make and change By-laws resides with the membership. It's like saying that the President has the discretion to change the US Constitution on his own.

By-laws protect members. They define the relationship between members and the Board, and they ensure the accountability of the Board to the membership (and in our case, also to its workers). You and the Board have created a situation where the Board is now only accountable to itself. How does this square with the co-operative value which states that the source of all authority in our co-op is its members?

In this latter regard, I would remind you that every store newsletter proudly proclaims to potential members that we abide by all those ICA-defined co-operative values. And that proclamation is itself used as the basis for inviting folks to become new members of our co-op.

The Board, having made itself itself the uncontestable source of all authority in our co-op, then devised a whole set of complicated Board Policies which essentially hands that authority over to you and the corporate office, lock, stock and barrel.

Lest you suggest that Fairbairn's reference to agency means that the Board can declare that it is the sole agency that can most efficiently determine what is in the best interests of the co-op, its members and its workers, let me remind you of the exchange I had with Brett Fairbairn before we began our work with the WSM Elections Task Force. I quote some of his remarks concerning Board Elections:

Naturally elections come into all this, since they connect the members to the board. But a director election is usually about people and competencies, and may not be a great forum for discussions of strategic directions. I think looking for ways to stage discussions, participation, and input apart from director elections is a good thing for all co-ops to do. I often wonder whether what most members really want is (a) to have "someone" do the director's job competently for them (not necessarily a burning desire to participate on this front) but (b) for the co-op to "listen" to their ideas and concerns when they have them.

Brett was very clear that the election of the Board is not the be all and end all of members' and workers' exercise of their authority. It is only the beginning. Election serves to choose those people who are then tasked as agents with the remit to foster ongoing relationships with members and workers by maintaining a continuing conversation with them to determine what are their needs and interests. There is precious little by way of ongoing conversation in our co-op.

More than that, you and the Board have engaged in these past few years in a radical re-structuring of our co-op. Expansion. Revised By-laws. Discounts to Dividends. Where was the Board's mandate to undertake these dramatic changes? Where does the mandate exist to continue with the changes discussed in the November and December Minutes?

You do not get that mandate from CDS. Nor from NCGA. And, Brett is very clear, you do not get it from election alone. Particularly when not one Board candidate sought a mandate for such radical change in any election address that I saw. That mandate comes from the public and recordable support of members and workers; support which should be sought before the decisions are made.

Why bother to seek that support? Is it really necessary for a co-op and its Board regularly to be appraised of the needs of its members and workers? ICA defines a co-operative thus:

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

How can the Board know what are the needs and aspirations of its members and workers unless it asks them, on a regular basis? And 'asking' is not a Suggestions Box, a feedback form or an occasional customer survey. It is a forum of discussion, where members and workers may engage with those making decisions on their behalf. And it is allowing those members and workers to vote. That is what is meant by members being the source of all authority. Your new By-laws to the contrary contain an extraordinary provision that expressly states that owners may only vote in elections.

With your workforce especially, all of the pathways that used to exist for workers to show their support for the co-op and share what are their needs and aspirations have now been shut down. No Worker-Owner program. No forums. We have not had a Full Meeting of the Co-op's Employees in two years, and the last store meetings were held in May of last year.

Again, the only chance workers have for contributing to the relationship that should exist between them and their co-op is to stand for the Board. To do that, you first have to part with $500. Upon standing, you discover that the electorate includes managers (who already had their chance to contribute in their manager meetings or in corporate office discussions), and that a process that is dominated by corporate office influence may now be subject to further questionable practices in determining the outcome.

And while we're on this subject, let me share my amusement upon reading that the Board have now determined (if they did not control enough already) that they feel they should ensure the "suitability" of Board candidates going forward. I would love you some time to share with me precisely whom they thought was unsuitable before now.

Is it any wonder that workers do not trust the processes that are supposed to govern and manage them, only with their consent? Their money was given to you in trust. You and the Board have decided in dark places and behind combination locks to dispose of their money without reference to them. There may be structure in that process; but no relationship.

Your workers have given magnificently in this past year. It is those workers on the sales floor and in the production departments who are the ones who have truly saved this co-op. A Christmas Party, while nice, is nowhere near enough recompense. What they deserve is your trust, and that of the Board.

They deserve that you trust them enough also to know what is best for their co-op. They deserve your trust in enrolling them in decision-making. And they deserve that you allow them to trust you to make decisions that involve them, that are open and that serve their needs, not some fanciful vision or dream of brand development or expansion.

You and the Board have made decisions regarding money that was given to you by members and workers on trust. They didn't read the small print. There is no reason why they should. They trusted you to act in their best interests and in accordance with co-operative values of openness and honesty. Yet, you made those decisions without reference to them, to determine what were their needs and interests.

While the structure you have created allows you to do that, it is not right, it is not in keeping with co-operative values, and it serves only to destroy the relationship between members, workers and the co-op which Fairbairn stresses is the essence of co-operation.

Your workers want the co-op to succeed every bit as much as you do. They have stoically accepted that they receive no dividend, no pay raise and that their hours have been cut, as they work harder for less. They (and I) need to find whatever ways they can to survive in order to help the co-op to survive. Taking out loans against our money in our Worker-Owner accounts is a part of that survival process. The co-op needs to serve our needs, so that we may serve the co-op's needs. That is the essence of co-operation. It is a verb: to co-operate.

And let's clear up one point. The original $500 is capital. The other money in our Worker-Owner accounts is the accumulation of retained dividends. That is our money. You hold it on trust in our accounts. It is not capital. You have no right to use it. And you certainly have no co-operative right to use it without reference to its owners.

Brett again:

Why do members invest capital, time, and loyalty in their relationship with a co-operative? Because they trust that doing so will be in their own interest as well as the interest of other members...Co-operatives earn this trust when members perceive them to be dedicated to serving the members’ needs, not the needs of the organization or of any other group.

Members support co-ops because they trust that doing so will be in their own interest as well as the interest of other members...The discussion of linkage, above, related to why and how the co-op is devoted to meeting member needs. The second part of trust, however, is that the co-op must not only promote member well-being: it must also be ... seen clearly, repeatedly, and over time to be making members better off.

You and the Board have an opportunity this year to renew the relationship between the co-op, its members and its workers, along the lines suggested by Fairbairn, so that we may be fully ready to join in the celebration of 2012 being the UN International Year of Co-operatives.

I hope that you will not miss this opportunity. In particular, I hope you begin the process of renewing the relationship by allowing members and workers to be the primary source of that renewal, and not some outside consultant, nor you, the Board and the corporate office acting essentially alone.

In the meantime, I would be grateful if you would let me know just as soon as you have decided that I may take out a loan against my Worker-Owner Account.

All the best,