Thursday, April 24, 2014

Are We Running A Loss, Or Not?

Does it matter? Well, aside from the obvious answer – duh. It matters on a more complex level.

You see, senior management within Weaver Street Market Co-operative perennially argue against those of us requesting that we actually behave like a socially-minded co-op by saying, well, we need to be a good business first.

In other words, we are told to trust them to make good business decisions, so that we then have the space to ‘play’ at being a good co-op.

Which is all fine and dandy provided (1) They are making good business decisions, and (2) We do then get to ‘play’ at being a good co-op.

But what if all the evidence suggests they are making bad business decisions, leading to us running a loss or a tight profit, leaving us no space to be a good co-op?

I would say that requires that we demand they be accountable to us (the workers and owners), so that we can ensure that they make better decisions.

Which is essentially what I try to do. By banging on the table. And making noise. Er … cf. this co-op blog.

Now, I shouldn’t have to be banging on the table (quite so much), since (A) The Board of Directors exists to hold management accountable (um … but the Board, in my opinion, isn’t doing its job), and (B) There is a co-op policy that demands that management include employees in all major decision-making (which they haven’t been doing).

All of which neatly brings me to today’s employee Market Messenger, which is twice as big as usual, in order to communicate a lot of news.

Bottom line: we’re running a tighter profit than last year; (because) senior management have been making bad decisions; they are, however, starting to include us in decision-making (cf. noise, maybe?); and we have an opportunity to start changing Board membership.

So. A mixed bag. Let’s get to the nitty-gritty:

PAGE ONE – Sigh. The WSM corporate office management team try to blind-side us with a whole page telling us we’ve made better sales figures in the past three weeks than we’ve ever made before.

Double sigh. Without mentioning the price increases of the past year. And without highlighting the fact that sales figures count for nothing, without reference to profit margin. We can sell a gazillion pineapples, at a loss, and go out of business (cf. Panzanella).

I'm not being idly tendentious. Over the past month senior management have been running a somewhat controversial deep-discount program called WOW, which by their own admission has "sacrifice(d) most of the profit."

So, we move onto …

PAGE TWO – Where we are informed (in the Third Quarter financials) that our profit to date is roughly $50,000. Last year, it was running at $220,000. So, down on last year. And not because we workers haven’t been busting ass!

Excuses are made that Carrboro store sales were down due to the store closing for the store Refit. Without mentioning the fact that the store did not fully close. Nor the fact that a lot of folks went to the other stores instead. Nor the fact that a lot of customers simply didn’t like the way the Refit ended up looking (cf. did we use acknowledged outside experts; or (treble sigh) did we rely on the ‘inhouse’ experts, again?).

What is also not set out is the budget for the Carrboro Refit. The fact that the Refit overran schedule and budget. How this contributed to the lower overall profit figure. And the fact that all this is about spending, not sales. And that makes it the responsibility of senior management.

Here is where it gets murky. And to be honest, the senior management of WSM are pretty good at murk. Quadruple sigh.

They get all happy-clappy about sales. But the figures themselves say quite clearly that we are way off budget on margin. No doubt because we’ve been running those ridiculous discounts (more on that a little later). Which I say we probably have been running in order to raise cash. To cover the fact that senior management made a bit of a Horlicks (English expression!) of the Refit. And don’t want to admit it.

And it doesn’t end there. Because there are still two major aspects of the Refit which senior management completely overlooked, which they themselves have now finally admitted, and which could cost in the hundreds of thousands of dollars. I don't know for sure. They don't tell us that much.

That part of the Refit has been postponed until the next financial year, so as not to cause a loss in the current financial year. Which is why I ask the question, are we actually running a loss, or not?

Still with me? If not. Don’t blame me. Blame the murk.

So. Quick recap before we move on. WSM employees doing a brilliant job producing lovely food and selling the bejesus out of it. Yay for us!

Senior management doing a pretty crap job of wisely spending the money we sweat to earn.

They’re trying to cover that up. One of them (no names) bluntly told me in the past few weeks that there had been no overrun on the Carrboro Refit, and that the overrun had had no deleterious effect on our overall finances. Hmm.

[And I hasten to add, as I have done before, that I fully support the Carrboro Refit; long overdue; I just wish senior WSM management would stop thinking they are experts at capital projects, and then screwing them up.]

Who knows where this will leave us at the end of the 2014 financial year. What I do know is that I may well ask some pointed questions at the Annual Meeting this year. Which is a good thing. Senior management forget that the Annual Meeting is a part of the governance process, and not just a meet ‘n greet.

The other good news is this: if we remain on course to make the end-of-year profit senior management are predicting (some $500,000 – last year we made $830,000), then (good news) co-op policy demands that workers be involved in the decision as to what should be done with that profit. A fact which I will be bringing to the attention of our General Manager, in another of the e-mails he loves receiving from me.

In the meantime, some kudos to senior management for at least sharing some financial news. Even if it only followed my bellowing at them for a while.

And even if it does confirm what I have been wondering aloud since Christmas. Namely, that the Carrboro Refit ran into problems; those problems have been seriously impacting our financial picture; senior management didn't want to admit the problems or the impact; so, they have been taking steps to 'rectify' the impact, without consulting owners and workers; and that 'rectification' (deep-discount sales?), while producing immediate cash (record sales in the last three weeks - $300,000 up on same three week period last year), may be having an even more deleterious effect upon our overall profit ("sacrifice most of profit").

PAGE THREE and FOUR – I’m going quickly to skip ahead. These two pages set out at enormous length what we have been doing with our new WOW Weekend Special Discount Sales, introduced just this past month.

Now, I know I wrote a couple of e-mails to our Merchandising Manager, James Watts. Along the lines of, what the heck is this all about? But I’m sure other folks had questions too. So, I don’t think I’m the sole reason for all this information.

But. Please note. We ARE getting all this information, for which I and others had been asking. AND. Get this. They (senior management) are finally asking us formally what we think. We are (finally) being included in at least some of the decision-making process. So, kudos to senior management again. Although, I think I am allowed to take a teeny-weeny bit of the credit.

I’m not going to comment at length on what James has set out. I’m only going to say this: I don’t care what he says; it’s screwing up margins; our figures prove that; it’s affecting our profit; there still seems to be no simple rhyme or reason; the marketing logic offered is nonsense; it just seems to be a glorified and misguided exercise to get a hold of cash. But I’ll leave you to make those comments …

… which you are able to provide, ‘cos they have actually asked us for our opinion!!

Which is the very essence of accountability. Putting senior management to the trouble of explaining what they are doing. So we can see nonsense for what it is. Bad decisions for what they are. And we can be involved in the process of designing a better future for ourselves, both as a business, and as a co-op.

But, but, none of this is about creating space to discuss how we can be a better co-op. Aha! Back to PAGE TWO …

… where the Market Messenger announces the annual call for Candidates to run for the WSM Board of Directors.

It is my opinion that the primary responsibility of the Board is to ensure that workers and owners are involved in the decision-making process that designs the character of our co-op, and sets business and co-operative goals for our future.

For one reason or another, I think the current Board is failing in that responsibility.

I have attended Board Meetings on and off for nine years now. Increasingly, the Board has allowed itself to be marginalized into becoming and acting as nothing more than a benign advisory committee.

When, in fact, it should be vigorously monitoring WSM senior management, to ensure it is complying with co-op policy and making good business decisions.

I already have my Candidate Packet. And one way or another I will do all that I can to ensure that there is at least one Candidate for worker-owner Board Director who truly represents workers in our co-op, and who has the best chance of gaining victory against the Candidate management have perennially recruited themselves every year since 2007.

In the meantime, if you are not already a worker-owner, become one now, by contacting Brenda Camp (Owner Services Co-ordinator) at

It costs only $3.85 a paycheck. You will build up dollars for your annual dividend (probably not until next year now). And. You will get to vote in the Board Election this year (August-September), and help to choose a worker-owner Board Director who will advocate vigorously for worker and owner rights, and who will work to create the space where all of us can discuss how we can be a stronger business and a better co-op.

[As always, WSM Employee Policy demands that I make it clear that these are my personal views. I will just add that, if you've got as far as reading this caveat, you deserve a drink or three ... !!]