Saturday, August 2, 2014

When Is A Profit Not A Profit?

Sometimes, it's not easy to discern a victory as a victory. Even a partial one. You have to look really hard. But this week's WSM employee Market Messenger publishes the financial figures for the end of Financial Year 2014, and sort of invites feedback from workers as to what should be done about the worker-owner dividend.

Now, those of you paying attention will know that I've been running a mini-campaign to get the senior management of Weaver Street Market Co-operative to comply with co-op policy, and include employees in the making of important decisions, not least with respect to setting the size of the worker-owner dividend.

To be fair, asking we workers for some feedback is not exactly including us in the making of the important decisions. But it's a start. And for that, we should be grateful. Pause. Now. Let's move on to actually being involved in the decision-making, in order fully to comply with co-op policy.

Yup. A letter to the WSM General Manager:

"Hey Ruffin,

Thank you for putting a box into the WSM employee Market Messenger inviting workers to offer feedback on what the Board should decide about the worker-owner dividend. It is more than we have been offered in the past. So, thank you.

I note that, since our chat earlier this year, you have more than once included sections in the MM allowing workers to offer feedback. This is a start in complying with the WSM co-op policy which demands that employees be involved in the major decisions in our co-op which affect them. But I'm wondering, now that this small step has been achieved, is it really including workers in decision-making merely to ask for their feedback, sometimes after a decision has been taken?

Let's look at one of the most important decisions in which workers are supposed to be involved. One so important that it is specifically mentioned in that co-op policy. Namely, the setting of the size of the worker-owner dividend.

In this week's MM, you pretty much limit involvement to asking workers if we want to stick with the existing Board Policy about apportioning 50% of something you call profit to the worker-owner dividend. But co-op policy does not limit involvement merely to that aspect of setting the size of the worker-owner dividend. And I think you know that.

What is much more important is workers being involved in the decisions that determine the size of the pot from which that 50% is taken. Those are the decisions which truly define the notion of setting the size of the worker-owner dividend.

Now, you might come back, and use narrative which, with respect, has crept into financial presentations within WSM in the past few years, namely that there are financial decisions which are 'standard' and 'normal.' Not really decisions at all. Now, I think you know that is not really the case.

There are certain set financial figures, what we sell, what that cost, rent, bank interest, agreed salaries, and the like. But after that, decisions are made about what to do with the money that remains. What I call profit, whatever technical description you may give it. And those decisions do not operate by default. They are considered. They change. There are options. And, according to co-op policy, we workers should be involved in choosing which options.

Decisions like, how much do we set aside for capital projects, how much for salary increases, and ultimately, how much do we want to have left from which to take 50% for the worker-owner dividend?

These are important decisions. I mean, compare the figures in the MM with what happened last year. Sales of some $33 million this year. Last year, $32 million. Cost of goods for last year some $20 million. For this year, $19 million. Which is weird. Because our 'profit,' instead of going from last year's $826,909, to something in the order of $1.5 million to $2 million, actually decreased to $512, 022.

Wow. What happened to $1.5 million?

Actually, what happened was not a 'normal' or 'standard' default process. What happened was that someone made decisions. Those decisions had the effect of reducing the pot available for the dividends. And therefore, were hugely instrumental in setting the size of the worker-owner dividend. And workers were not involved in those decisions. In breach of co-op policy.

In fact, when one looks more closely, it is obvious that those decisions were not made after the end of this past financial year, but were made during the setting of the budget a year ago.

In other words, if you are to be in compliance with co-op policy, you need to include workers in the decisions that determine what will be done with all of the money after the set costs have been extracted from the earnings (what I call 'profit'), and you need to include workers during the budget-setting process.

Now, I grant, that assertion is arguable. And that is also the point. Co-op policy not only demands that workers be involved in major decisions that affect them, it also requires that we be involved in designing the process that ensures that workers are included in that decision-making. In other words, if my point is arguable, then it needs to be argued, and we workers should be involved in that 'argument.'

I understand that the co-op wide process which determined which decisions should include workers was held in 2007. Before the Great Recession skewed everything and everybody. I understand that, as a consequence of the Recession, we never got around to discussing the structures and processes that would be necessary to implement the policy in question properly and meaningfully. But, the Recession is now behind us. Maybe it is now time to have that co-op wide discussion?

My focus is on big co-op wide decisions. But a couple of work-mates have pointed out to me that the policy is not just limited to co-op wide decisions.

For example.

I had a work-mate say to me the other day, Geoff, if this policy means anything, then the huge decision just made to change a major strategy in our department, should have been made by the workers in the department. Um. Yes. But Ruffin, we have department meetings once in a blue moon. So, how can these decisions be made in compliance with co-op policy?

For example.

You presented at length to a recent Board Meeting how stores will have to start making tough decisions about whether we go on carrying products where we cannot compete with other stores. Big decisions. How can store employees be involved in those decisions, as co-op policy demands, if we have only one store meeting a year, and that meeting is given over mostly to managers making presentations?

In other words, there needs to be a fairly wide-ranging discussion in our co-op about how we now implement this policy in a way that works all the time and covers decisions that affect the co-op, the units and each department.

I think a good place to start such a discussion would be at the forthcoming unit meetings. So, I am now formally asking you to place on the agenda of my store meeting this year (it is up to other units what they want to do) an item where you will present your thoughts on instituting a process this next year, the purpose of which will be to allow workers to determine what structures and processes need to be put in place to give meaningful effect to the co-op policy which requires that all workers be involved in decisions which affect their departments, units and the co-op, in line with the consultation document produced in 2007. I would also be grateful if that item allowed a meaningful amount of time for discussion of your presentation afterwards.

It really is time that as a co-op we were properly and meaningfully in compliance with what is probably the single most important co-op policy affecting employees: their right to help design the future of our co-op. A co-op you keep telling the world we half own.

All the best,