Saturday, June 4, 2011

Will New WSM Finance Manager Impact Employee Action Plans?

Weaver Street Market Co-operative is about to hire a new Finance Manager, weeks before the end of a controversial Financial Year. Is this a reflection of the state of WSM's finances? And is that the reason for the WSM corporate office attempting to finalize Employee Actions Plans before the end of the Financial Year (June 2011)?

I have today written to the WSM General Manager (I thought I had left this behind - sigh), to ask him these questions, and to ask for assurance that Employee Action Plans will be agreed consensually (without a veto from the center), and that they will be allowed to address steps to improve the financial state of WSM.

We are all equal in this co-op. We may assign ourselves different titles. But those pertain only to the jobs we have been asked to perform. They do not confer a primacy of authority, nor a supremacy of viewpoint, on any individual or small group of stakeholders, such that it interferes with that co-operative equality.

It is my belief that we find ourselves in less than happy financial circumstances today, with our employees expressing overwhelming unhappiness with the senior management of our co-op, precisely because we have drifted away from that essential co-operative principle of equality.

I believe happier times lie ahead if we use the opportunity of these Employee Action Plans consensually to agree a way forward, to which we all subscribe and in which we are all invested - equally.

My letter to the General Manager, Ruffin Slater:

Dear Ruffin,

I am a little disturbed to see that we are now looking for a new Finance Manager. I'm wondering if this is, in any way, a reflection of the state of the finances of WSM, as we approach the end of the Financial Year, and whether the latter or the former will have any impact on the formulation of the Employee Action Plans?

It may well be that this has nothing to do with policy, and is simply a personal matter. In which case, it is none of my business. And I wish Tim well. But, if it is a reflection of or could have impact upon the state of WSM's finances, then this is a concern for all employees, and I would suggest that we need to know, before we begin discussion of the Employee Action Plans (EAP's).

I'm bound to say I have noticed that there is something of an all-fired rush to get the EAP's concluded before the end of the Financial Year. I'm hoping this is merely a co-incidence, and has nothing to do with what might be announced as the final results for the Financial Year, and any consequential action that may need to taken.

I, for one, regard the state of WSM's finances as an important context for discussing the EAP's, not least because those EAP's may have to address that financial state, and/or be affected by it. I do not think it would be appropriate to regard the two as separate. I would be unhappy to conclude discussion about the EAP's, only then, at our Unit Meetings in September, to be presented, without discussion, with a whole new barrage of financial objectives, which do not mesh with the new EAP's.

It could be said I am getting this all out of context and out of proportion. But let's just look at this past Financial Year, as it comes to a close.

Amid great fanfare, but next to no consultation, the WSM Admin. Office Management (AOM) presented to each Unit at the end of last year a draconian target of increasing sales this Financial Year by 15%. Next to no reason was given. I had to begin a Dispute Resolution Process to find myself having a meeting with you, to get some sort of information about why the need for a 15% sales increase. I also met with Tim. And by the way, I am still waiting to see a copy of the official Audited Accounts For WSM for the last Financial Year.

I was attempting at our meeting to provide positive feedback, almost none of which has been acted upon. Like, for example, devoting one edition of the Market Messenger, not to telling us workers what you wanted out of us, but rather what we would get in return, for providing what you wanted out of us. Never happened. And this sort of non-communication and non-interaction may well explain the rather dismal feedback to the WSM Employee Survey.

As a consequence of that positive approach, I did not attempt to pick holes in the rationale which you advanced. Which, essentially, was that we needed to increase sales by 15%, to raise $3.75 million, so that all of those extra sales could disappear into the cost of making those extra sales, solely to increase profit by a paltry $150,000.

As I say, I wanted to provide positive input at that meeting. So, I did not spend time making the obvious point that this rationale was nonsense, and that it was clear to me, and most of the shopfloor workers to whom I had spoken, that the extra money was primarily to start paying off the overall WSM debt of $8 million. On the basis that you have said this debt will be paid back in 5 years, that means that (including annual bank interest), the amount to be paid this Financial Year would be about $2 million.

Frankly, the disposition of that $3.75 million makes a lot more sense when it breaks down (roughly) into: $2 million for debt; $1.5 million for cost of extra sales; the remainder = extra profit.

I have made and continue to make the point that, whatever the financial rationale for the 15% sales increase, it was an unrealistic target (and you don't set unrealistic targets in sound businesses), and it would impose yet further unwarranted, unexplained and unnecessary burden on the workforce. Both predictions have proven true.

During the Grand Presentations to the Units last Fall, detailed plans were submitted as to how the co-op was going to be turned upside down in a no-holds-barred effort to achieve the 15% sales increase target.

Category Management in the Food House. Revamped Merchandising efforts. Marketing up the wazoo.

However, within months of the Unit Meetings, our Head of Merchandising, the lady tasked with both the Merchandising efforts and the Category Management project, left to start a restaurant. Later in the year, the Executive Chef and Kitchen Manager in the Food House also departed (after only just over a year with us). And now, the Finance Manager (who has also been with us for only just over a year), the guy who must have been overseeing all of this effort, is on his way out.

This can not all be co-incidence. So, no. I do not think I am over-reacting. Especially, when I review the consequences.

Food quality and service has gone down, not up, this past year. Not the fault of the shopfloor/Food House 'floor' workers. We all work as hard as we can. The fault of a lack of proper direction. And how could there be proper direction, with all the musical chairs taking place with the senior management responsible for implementing the efforts to achieve that 15% sales increase?

So, as we approach the last few weeks of this Financial Year, notwithstanding the sterling efforts of all the shopfloor workers throughout WSM, Q1 and Q2 saw sales increases of only 9%. And since then, it has got worse. Q3 = 8%. And Q4 is heading for 7%.

This will leave us about $2 million shy of the sales target, on a projected annual turnover for this Financial Year of some $28 million. Ironically, and possibly unhappily, almost the same amount we need to be finding to keep the banks at bay.

Clearly, there will be consequence. And it will be consequence that I trust will be explained fully and addressed during the formulation and discussion of EAP's.

Meanwhile, and not surprisingly, the overwhelming message from the Employee Survey is that employees are reasonably happy with what is happening in their Departments and Units, but are not happy at all with what is coming from the center.

They are not happy with decisions that have placed and continue to place upon them an intolerable financial burden, for reasons that are not properly explained, as a result of deciion-making in which they are not involved, and which leaves us overworked, overstressed, underpaid, and without the proper resources to provide to our customers the service with which we wish to provide them.

If the EAP's are to be a meaningful consequence of the process which the center volunteered, then they must address the state of our finances, how to improve them, how to create the space to find the resources then to deal with the lack of inclusion, lack of communication, lack of staff, lack of return, and lack of proper equipment. And finally, they have to deal with the distrust of employees with the center.

A distrust that was underlined by the response of the Admin. Office staff itself in the Survey -- a resounding vote of no confidence in the ability of Admin. Office management to provide future direction for the co-op on its own.

Hardly surprising, bearing in mind the disaster that has been the centrally-misdirected effort to increase sales by 15% this past year - and quite leaving aside the other central mishaps of the past few years. The bottom line is that the co-op as a whole no longer has confidence in the center to give direction on its own.

I have set out elsewhere that I believe the response in the EAP's should be to streamline the Admin. Office functions; devolve authority to the Departments and Units; and make what remains of decision-making in the Admin. Office more inclusive of the co-op's workers and better explained.

Of course, that can only happen if the appropriate management and Admin. Office personnel are present at those EAP discussion meetings. I was concerned that there was little (if any) management or Admin. Office personnel involvement in the discussion of the Survey's results. I trust that will not be the case during the discussion of EAP's.

We face a dire financial situation. It needs explaining to us, as we formulate the EAP's. Otherwise, those EAP's will be redundant before the ink is dry. That explaining needs to be done by the appropriate personnel. It's called accountability. And then, consequential action (the EAP's) need to be agreed consensually.

The state of our finances, the lack of confidence demonstrated by the Admin. Office employees in their own management, and the distrust expressed by employees throughout our co-op in the center is nothing if not eloquent testament to the failure of centralized and isolated decision-making, and a clarion call for more inclusion and consensuality in making decisions in the future - beginning with the EAP's.

There is no-one in this co-op, no one individual nor a small minority, who may operate a veto on the EAP's. We are all equal. We are seeing now, at the end of this Financial Year, in the results of the Employee Survey, what are the consequences of our having moved away from that notion of equality these past few years. It is time to move back to co-operative values and principles.

The reason for finding a new Finance Manager may not be something that needs to be explained to me or other employees. But what we should be able to expect is a full explanation of whether or not it is a reflection of the state of our finances, and what consequence that state will have on planning. In particular, we should expect to have that full explanation before formulating the EAP's, and we should expect that those EAP's will creatively address the state of our finances and the unhappiness of our employees.

Otherwise, we will merely be repeating the mistakes that brought us here. And we will be demonstrating the truth of what the Admin. Office employees themselves stated in the Survey: WSM does not encourage new ideas, nor does it support constant improvement. I trust this will not be the case.

All the best,