Who Moved My Auditor?

[What follows is a copy of a fairly self-explanatory e-mail to Jacob Myers, Board Chair of Weaver Street Market, who is standing for re-election as a Worker-Owner Director in 2008]

Dear Jacob,

I write this e-mail with the greatest of respect to all of its recipients, not least you; but also with a heavy dose of reluctance and sadness.

I have attended almost every Board meeting this past year, along with engaging in the work of the WSM Elections Task Force at the beginning of this year.

I have closely followed every step of the implementation of the capital building projects associated with Expansion. I have listened to what we have been told, and have read what has been written. And I've done a good deal of commenting of my own!

I have two further specific questions in this e-mail. I apologize for the lateness in asking them. Bluntly, that is because I have had to work out the premises all on my own.

The information that has allowed me finally to make the necessary deductions has been withheld or presented in a less than full manner. I'm sorry to have to say that. But it is true.

I am writing this e-mail, even at this late stage, to give you and the General Manager the opportunity, in your remarks to the Annual Meeting, to address the answers to these two questions; to the various previous questions I have asked about debt, the Auditor's Report and the expenditure on the capital building projects; and to address the summary points I raise at the end of this e-mail.

[For those of you reading this e-mail, who have not seen the Auditor's Report, he puts the co-op's long-term liabilities at $9.3 million (not the $7 million our Annual Report states); and he has the debt repayments ballooning from $170,000 this year, to $700,000 in 2012, and $1.5 million in 2013 - which our Annual Report doesn't mention at all...I have asked, without success, for the Auditor's Report to be available at the Annual Meeting.]

If you do not so address these issues, then reluctantly I reserve the right to raise them myself, in the form of questions to you two at that Meeting, and at the various Candidate Forums.

Transparency and accountability are the touchstones of our co-operative integrity. Those running this co-op simply can not ignore the unsustainable debt that has been created for this co-op; the unsustainable repayment amounts; the manner in which we arrived at this situation; and the sensible steps now needed to take us forward.

My two questions:

1) Why was the roughly $400,000 which the GM has attributed to 'one-off' expenses associated with the Expansion building projects paid out of the Operating Expenditure Account rather than by the monies raised and borrowed specifically for the purpose of the Expansion building projects?

In other words, why was any part of capital expenditure covered by monies available properly for the use of operating expenditure? Was there no more capital money available?

This rather strange allocation of operational monies was the sole cause of the Worker-Owner Dividend being wiped out. It is an issue that has never been addressed by you, by the Board or by senior management. And that is why it has taken me so long to work out.

It is also the reason the Board is now finding itself distracted into talking about filling the hole by changing the Consumer-Owner Discount, rather than properly filling that hole by addressing the overly high level of debt that has been incurred by overruns on the Expansion building projects.

2) Why was the Worker-Owner Dividend not paid out of the central Worker-Owner Account, in which is retained all of the 'excess' monies vested by Worker-Owner contributions each year?

Since you have already established that you can use operating money for capital purposes, why did you not use that Worker-Owner capital to pay the Worker-Owner 'operating' Dividend?

And why was none of this explained to the Board, and to Worker-Owners?

The facts are these: the Expansion building projects were advanced as concepts to address pressing problems. Hillsborough wanted its own Weaver Street. And we all wanted better quality food; more of it; and better facilities and more space for our food production workers.

I have re-checked the original game plan for consultation on these concepts. At no point was it ever planned to ask Owners what they wanted or would allow. I think we can now all agree that was a mistake.

You have not answered my questions about what formal studies, analyses, comparisons and the like were undertaken to gauge the true need for the Expansion projects as conceptualized, their cost, and so on. I have to assume there were none.

In other words, we pretty much backed into this whole deal on the basis of our own feelings.

When implementation finally got underway, the projects fell behind schedule; there were problems with equipment, among other things; and eventually, we ran over budget.

At that point, instead of asking Worker-Owners and Consumer-Owners for their permission, we over-borrowed, and when we were no longer able to do that, we simply dipped into operational funds - again without asking Worker-Owners, whose Dividend we were about to wipe out.

And now, to make even more room for this over-extension and over-indebtedness, we are beginning a process of trying to change the Consumer-Owner Discount.

I say 'we.' I'm the one being disingenuous now. Absolutely none of this was done with my support. I either didn't know, wasn't told, wasn't asked, or vehemently objected - at Board meetings; in person; or on my blog and in e-mails.

Back to the Consumer-Owner Discount. Sure, there are co-ops around the country who are addressing the issue of increased competition by changing the Consumer-Owner Discount to a Consumer-Owner Dividend.

But, that is in response to unavoidable competition coming from outside, not from over-extension and over-indebtedness coming from within.

And it is part of a two-part approach to increase Consumer-Owner loyalty. What goes hand-in-hand with the change in return on investment is the notion that Owners be allowed much more say in the running of their co-ops.

The premise is: if your return is now to be dependent on the co-op's performance, then you, the Owners, must be allowed much more say in the performance of the co-op.

I've been pushing for the last point for the past three years. I've written two strategy documents and a blog on the subject. But that's the part you, the Board and senior management have not been addressing so far.

Will you address it at the Annual Meeting? Indeed, will you finally come clean on all of these points at the Annual Meeting. Will you, the Board and senior management finally practice the transparency and accountability we tell our Owners (not least all over our purple trays!) is an integral part of our approach to 'Co-op Ownership'?

What we need to do now, in my opinion, is:

A) Review our "Ownership Culture," so as to ensure that no further important decisions are made in our co-op without the meaningful input of Owners.

B) Re-structure our debt, so that the financial sustainability of our co-op is no longer endangered - and to do so in a way that retains the benefits of Expansion, and to do so in a manner that does not further alienate our Worker- and Consumer-Owners.

See you at the Annual Meeting and the Candidate Forums.

"The Weave": Escuchar A Co-op/A Listening Co-op

[This is the formal Candidate Information I submitted, in Spanish and English, to Weaver Street Market, for the 2008 Election for a Worker-Owner Board Director.

C'mon, you gotta love the photo...it was International Talk Like a Pirate Day...honest!!]

Hola, soy Geoff. Soy el Inglés-americano chavo, que trabaja en Southern Village, en el hot bar.

He estado con el “Weave” hace tres años. Al principio, era sólo para pagar las cuentas. Pero todavía estoy aquí porque he llegado a amar a nuestra co-op, y ahora quiero dar algo a cambio.

Durante mi tiempo aquí, he hecho un montón de escuchar a nuestros trabajadores de la co-op, los propietarios y los consumidores. Lo principal que he aprendido es que es posible que cada uno de nosotros tenemos ideas diferentes en que nuestras co-op debe ir, y cómo. Y eso está bien. De hecho, es buenisimo.

Lo que da el “Weave” su especial singularidad y fuerza es la fuerza individual y la singularidad de cada una voz diferente dentro de nuestra co-op. Cada uno de nosotros usando nuestro poder para participar en decidir lo que hacemos y cómo lo hacemos juntos.

El Junta de Administración existe para proteger ese poder. Para proteger los intereses de nuestros co-op's propietarios, los consumidores y los trabajadores. Sin embargo, la Junta sólo puede hacer ese trabajo correctamente si hay directores que comprende cómo nuestra Junta se supone que trabajar.

Yo sé cómo hacer juntas de trabajo. Hace diez años, dejé el mundo corporativo de perseguir mis intereses creativos. Pero antes de eso, yo era un abogado y consultor de comercializaciòn y gestión con exitò. Yo serví en la Junta de Administración de varias empresas con un volumen de negocios que van de $ 3 millones a 30 millones de dólares.

Hice mi vida soluciónando problemas para las empresas que estaban teniendo problemas. Esto significaba mediando controversias, abriendo canales de comunicación y la creando estrategias basadas en el valores que promito a las Juntas de las empresas a comprender que las personas son el centro de beneficio.

Yo sé cómo conseguir los encargados de prestar atención. Desde mis primeros años veinte, he sido un defensor político, organizador de la comunidad y últimamente, un presentador de radio. Aquellos de ustedes que me conocen entenderán cuando digo no estoy tímido a la hora de levantarme y hablar por los demás.

Tengo una experiencia probada de trabajo de consenso para conseguir resultados significativos para la gente que represento. Lo hice a principios de este año, cuando fui en el Comitè de Elecciones del Weaver St. Market. Y estoy haciendo lo ahora, por el Comité para el Desarrollo de WCOM 103,5 LPFM, la radio comunitaria de Carrboro y Chapel Hill.

Durante estos ultimòs años, he elaborado algunas ideas acerca de cómo creo que podemos hacer el “Weave” una mejor co-op y uns empresa mas fuerte. Comparto estos pensamientos en mi blog (weaverstreetgeoff.blogspot.com), en mi página de Facebook, y en MySpace.

Sin embargo, esta eleciòn de la Junta no se trata de mí. Es acerca de usted, y lo que quiere hacer para que su co-op que realmente escucha, es una que realmente refleje los valores y las aspiraciones que tiene para ello. Usted tiene el poder con esta elección para hacer su co-operativa lo que usted quiere que sea.

*******

Hi, I’m Geoff. I’m the English-American guy, who works in the Southern Village Weaver Street Market, on the Hot Bar.

I have been with The Weave for three years now. At first, it was just to pay the bills. But I’m still here because I have come to love our co-op, and now I want to give something back.

During my time here, I’ve done a lot of listening to our co-op’s workers, owners and consumers. The main thing I’ve learned is that we may each of us have different ideas on where our co-op should be heading, and how. And that’s ok. In fact, it’s great.

What gives The Weave its special strength and uniqueness is the individual strength and uniqueness of each different voice within our co-op. Each of us exercising our power to participate in deciding what we do and how we do it, together.

The Board of Directors exists to protect that power. To protect the interests of our co-op’s owners, consumers and workers. But the Board can only do that job properly if it has Directors who fully understand how our Board is supposed to work.

I know how to make Boards work. Ten years ago, I left the corporate world to pursue my creative interests. But before that, I was a successful lawyer and marketing and management consultant. I served on the Board of several companies with turnovers ranging from $3 million to $30 million.

I made my living troubleshooting for companies that were having problems. This meant mediating disputes, opening channels of communication and creating value-based strategies that encouraged the Boards of those companies to understand that people are the core value of profit.

I know how to get those in charge to pay attention. Since my early twenties, I’ve been a political advocate, a community organizer and lately, a radio broadcaster. Those of you who know me will understand when I say I’m not shy about standing up and speaking out for others.

I have proven experience working by consensus to achieve meaningful results for the people I represent. I did it earlier this year, when I served on the Weaver Street Elections Task Force. And I’m doing it now, on the Development Committee of WCOM 103.5 LPFM, Carrboro and Chapel Hill’s Community Radio.

Over the past couple of years, I have put together some ideas about how I think we can make The Weave a better co-op and a stronger business. I share these thoughts on my blog (weaverstreetgeoff.blogspot.com), on my Facebook page, and on MySpace.

But this Board Election is not about me. It’s about you, and what you want to do to make your co-op one that truly listens; one that truly reflects the values and aspirations that you have for it. You have the power with this Election to make your co-op whatever it is you want it to be.

Palin' Out The Weave

[Most of us saw the 'amusing' debate between Sarah Palin and Joe Biden.

A lot of us have perused the 'less-than-amusing' Financial Statement in the Weaver Street Market Co-operative Annual Report.

There are those of us who thought one or two things were missing from the much-anticipated Vice Presidential debate.

There is definitely something missing from the WSM Financial Statement.

This is the first year in which WSM's management-prepared Financial Statement was Audited by an outside, independent Auditor.

The problem is the Annual Report doesn't contain the Auditor's official figures. It contains the pre-Audit management figures.

I don't know why.

What I do know is that the Auditor's figures paint a grimmer and more accurate picture about WSM's level of debt ($10 million, not $7 million) and the size of the debt repayments (rising to $1.5 million in 2012). I'd hate to think that was the reason.

In fact, the thought is something so removed from what I believe to be appropriate in a co-operative that I decided that I needed to blow off some steam with really bad satire.

And so, I have combined the two events - the debate and the Annual Report - in a little skit, where Sarah Palin is apparently commenting on WSM's Annual Report. Forgive me.

You can, of course, just skip the bad impersonation of Tina Fey, and go straight to the serious italicized points at the end of the post.

There I suggest some action you might want to take, like attending the WSM Annual Meeting and/or voting in the 2008 Board Elections.

In the meantime, here's Sarah...]

"Well, it's been a great year, you betcha'...what?...it hasn't? You made a loss of $400,000? Oh. Would that be the same thing as a Deficit? Right...can ya' sell it to the Chinese?

Anyways, your future is secure...what?...it isn't? Why not? You've mortgaged your future for $10 million? Was that them darned predator lenders again? Can ya' get a bail-out?

Well, it can't be all that bad. What are the repayments? $1.5 million in 2012?! Dang! That sounds like the salary of one of them fancy Wall Street critters.

So, where did all this debt come from? A 'Food House.' Would that be like one of my pork-barrel earmarks? Does it have a swimming pool? No! What good is pork-barrel if it don't give you a swimming pool and a sauna?

Who allowed all this tomfoolery? The 'Board'? Sounds like my John-John needs to do some cleaning-house here as well as in Washington!

Ok. So, what's the plan to get y'all out of here? You're going to charge your customers more by taking away their Discount? Isn't that like stabbing the hand that's feeding your sled-dogs?

Darn tootin,' sounds like these boys on the 'Board' are about as ready to solve this riddle as I am to be President...!

Now wait a second. Just hold onto to yer six-pack. Got me a shout-out comin' on. How come these figures in this here Annual Report don't match what you're telling me?

What's that? You're looking at an 'Audio Report'? What's that? Is it like one of them Audio Books that Todd listens to on his sled? No? Then, what did you say...? An A-U-D-I-T-O-R'S Report...?

Is that like a stamp of approval for Weaver's figures? Oh. Right. And the Auditor's figures are the correct figures, and they're different to Weaver's figures? Ok. I gotcha.

But if the Auditor's figures are the 'real' figures, then why aren't they the ones in the Annual Report? I mean, if I did that in Alaska, I'd be investigated. Oh. That's right. I am being investigated...

So, help me. If you're all out of money, how are you gonna pay for the refurbishment of the Carrboro store?

Wait a minute...do you even have enough money to pay me? No?! Shoot. I'm outta here. I say: never again. I'm off to your Wine Show...!!

*******

Ok. Ouch! But now, let's get to the serious points:

There are two sets of figures floating around, both purporting to detail WSM's loss for 2008, our overall indebtedness, and the repayment terms.

First, there is the Financial Statement in the Annual Report (which is what is available in all the stores). This is the Statement that was produced internally by WSM management, prior to the Audit. And then, there is the independently-produced Auditor's Report and Accounts.

The Auditor's Report and Accounts necessarily present a starker picture of WSM's overall financial state than the General Manager's Statement in the Annual Report, because the Auditor's Report and Accounts have to satisfy not only the Owners, but also, and perhaps more importantly, those financial institutions lending us the $10 million (not $7 million).

I could explain at length what is in the Auditor's Report. How it differs from the GM's Financial Statement in the Annual Report. And what it means for the future of our co-op. But I have a better idea.

Why not find out for yourself?

But before I turn to how, you might be asking yourselves why the difference in the figures even matters.

Simple: you can't fashion the right response to a problem if you're in the dark about the precise nature and extent of the problem.

Ok. So, how can you find out for yourself? Try one or all of the following:

1) Ask for your own copy of the Auditor's Report and Accounts. You should be able to get a copy by writing to board@weaverstreetmarket.coop.

Remember, the Audit is performed on behalf of the Owners of WSM - not its management, nor its Board. Every single Owner is entitled, by law, to see a full copy of the Auditor's Report and Accounts.

A further point: the Auditor's Report and Accounts are, in fact, in 'Draft' form only - until they are approved by vote at the Annual Meeting of Owners, on October 19.

2) Ask questions. As a Worker-Owner, I wrote a letter to Jacob Myers, Board Chair, asking certain questions of the Auditor.

At first glance, it appears that some of those questions (the ones relating to company organization and debt) may have been answered. I deduce this from the manner in which the Auditor drafted his Report and Accounts.

Others of my questions haven't been answered. Those would be the ones asking if the millions that were spent on the Food House were spent in the best possible way. No reason why those questions couldn't also be asked by other people. Or similar questions.

Again, your questions can be directed, in the first instance to the board@ e-mail address mentioned above.

3) Go to the WSM Annual Owners' Meeting on October 19, between 5.00pm and 7.00pm, in the Carrboro Century Center. Details are on WSM's web-site, or can be obtained from the same board@ e-mail address above.

At the meeting, ask existing Board Directors and candidates in this year's Board Election what sort of comprehensive plan the Board is putting together to deal with The Weave's indebtedness - as requested by WSM's Auditor.

Again, remember this, the Annual Meeting is part of the formal Governance Structure of Weaver Street. As an Owner, you may ask any questions you like of the Board and its General Manager. And you may pass any number of motions - all of which are binding on the Board.

4) Whatever else you may or may not do, please vote in the 2008 Board Elections. One Consumer-Owner Director and one Worker-Owner Director will be elected this year.

If you like where Weaver Street is heading, then support your Board, and vote for the incumbents.

If not. If you think we can be a better co-op and a stronger business with a different Board, then maybe vote for something different?

Maybe even 'something completely different'...getting back to my Monty Python theme.

Or. Don't do any of this. It's your choice. It's your co-op. And it's a free world. That's what's great about democracy.

One final point, and I don't apologize for the fact that I'm repeating it 'ad nauseam': I remain ridiculously optimistic about the future of our co-op.

We have all of the elements - physical, financial and human (in the form of 12,000 eager Consumer-Owners and 200 ready-and-willing Workers) - to be able to pull through all of this.

However, a co-op built on debt is not a co-op built to last. You can't describe that sort of approach as 'sustainable.'

As the Auditor has 'suggested,' we need to fashion a sensible and comprehensive plan, to take us back to financial security and stability.

That requires fully engaged - and fully informed - Owners. And the right Board. It's all up to you. It's all in your hands.

Are We Transparent Enough?

The decision-making in a co-operative - and the preceding discussions - ought to be totally transparent. Are they in The Weave?

At recent Weaver Street Board meetings, it has not always been easy to follow a lot of the discussion because so many of the documents before the Board have not been available to we visiting owners.

I have written to Jacob Myers, Worker-Owner Director candidate and the Board Chair these past three years, to ask if all such documents could be made available to visitors in the future.

As a consequence, we got to see many of the financial reports at the September Board meeting. We were not, however, 'allowed' to take away with us copies of the Draft Audited Accounts.

This is a little peculiar because anyone who understands the function of an outside Auditor will know that the Audited Accounts are produced for the Owners, not management nor the Board. The Accounts are Audited to comfort Owners that their investment is safe.

In other words, the Audited Accounts are the property of the Ownership, and we should be allowed to have as many copies as we like - to do with as we like.

Moving right along, the Board have decided sensibly (in my opinion) to move much of their administrative business to a new Google group/Forum, in between meetings, so as to free up time in meetings themselves to address the concerns of Owners and Workers.

The problem is that the Google group is not (at the moment) open to Owners and Workers to see what the Board is discussing among themselves - and on our behalf.

Now, I take the view that all deliberations of the Board should be held in public, unless there is good legal reason. I really don't think that 'convenience' is a compelling legal reason. Do you?

Two matters on the Board Agenda were recently moved into private session for allegedly legal reasons: discussions with the Auditor, and real estate matters.

I served on a City Council back in England. I made it clear, from Day One, that if we went into private session (which they tried to do a lot), and I found that the only reason we were in private session was that it might be embarrassing to have the discussion in public, then I would suggest we report on the discussions in open Minutes.

Private sessions almost completely disappeared. I would like to see the same practice instituted with WSM Board meetings.

As I have already mentioned, an outside Auditor is commissioned each year to produce an independent analysis of the financial dealings of our co-operative.

The ensuing Auditor's Report and Audited Accounts are produced for the benefit of Owners and Workers. Not for senior management. Nor for the Board. But for Owners and Workers. To let them know their investment is safe.

I can think of no deliberations involving the Auditor that should be hidden from Owners and Workers. And I have 30 years experience of 'good business practice' (the excuse proffered at the Board meeting in question for having the discussions both about the Auditor and about real estate dealings in private session.

As to holding discussions about real estate dealings in private session, a lot of us have questions about what is going on with Weaver Street and its real estate dealings. Indeed, there are those who wonder what a co-operative is doing having real estate dealings in the first place.

I am hoping that, after this forthcoming Board Election, the new Board will take a good, hard look at these WSM real estate dealings, wondering whether they should exist or not, and wondering if they really should be private or not.

Now, there is some good news here. Those of us who served on the WSM Elections Task Force earlier this year spent time examining what we could do to make it easier for Owners and Workers to know what was going on in their co-operative, and to be able to have a say about it.

The common verdict was that an online Forum for Owners and Workers, where the Board and senior management are under strong encouragement to respond, would be a great idea.

Two committed Consumer-Owners, Jamie Bort and his wife, Sarah Kahn, have invested a lot of their time setting up a trial Forum. I have helped a bit with the protocols for using it, and the suggested protocols for senior management and the Board to respond.

We are hoping that the Board will recommend that WSM formally adopt the Forum, so that we can then complete the two-step process whereby a user is first verified against the Owner/Worker database, and then, quite separately, is able to sign up and post with complete anonymity - if they so choose.

It is not a difficult process. Most online Forums use something similar. But we realize it is important that some people (particularly Workers) have absolute confidence that they can be free to say whatever they want without recrimination.

Equally, Weaver Street will want to know that everyone participating is a bona fide Owner or Worker, even though they will not know who GoogleFries is!

Clearly WSM already likes the idea of Forums, because it has set one up for Board use. So, there should be no reason why WSM will not agree to let the 'Bort Forum' be an official communication vehicle for use by WSM Owners and Workers.

All of our thanks should go to Jamie and Sarah. They are the very definition of engaged Owners - even if they do cycle an awful lot! Geez, I need a nap every time I see them!

Who's Moving My Weaver Discount?

[What follows is an e-mail I sent to Jacob Myers, Weaver Street Board Chair these past three years, after the September Board Meeting]

"Dear Jacob and Weaver Street Board,

I have no strong feelings either way about the Consumer-Owner Discount. After all, I'm a Worker-Owner.

I do, however, have strong feelings about the manner in which its potential removal is being discussed by the Board of WSM. This affects all of us in our co-operative.

I am worried that the Board may consider the return to Consumer-Owners through the Discount as being the cause of the gaping hole in WSM's finances. This simply is not the case.

That hole is caused by the fact that we find ourselves over-extended (by Expansion and the Food House) going into a potentially severe recession. And the fact that the over-extension has an associated debt of some $10 million (with annual repayments of increasing size, leading to repayments of some $700,000 in 2011 and $1.5 million in 2012).

As the Auditor clearly explained at the September Board meeting (clearly, to anyone who understands the manner in which Auditors address Boards), the Board now has the task in 2009 of coming up with a comprehensive plan to address The Weave's over-extension and over-indebtedness.

Removal of the Discount may well form a part of such a plan. But it is not a substitute for that plan.

The Board is aware that, under the John Carver Policy Governance Model, to which WSM subscribes, the Board is supposed to be accountable to Owners, not to the management of WSM.

It is commendable that management have suggested ways to the Board of keeping WSM on financial track, but it is the Board's responsibility to run those plans by Owners before moving ahead with them.

That much should have been learned from the last couple of years.

Management came to the Board with the plans for Expansion and the Food House. Fine. What was not fine was that the Board then approved those plans without seeking the permission of Owners.

Management approached the Board with requests to borrow $10 million, using Owners' assets and equity as collateral. Ok. Up to the point the Board decided to approve the requests without first seeking Owners' permission.

This year, management asked the Board to remove the Policy requiring a 1% profit, so that management had room to maneuver with its plans for the Food House.

The 1% profit requirement was what protected the Worker-Owner Dividend. Worker-Owners should have been asked. They were not. As a result, we lost our Dividend.

And now, instead of coming up with a comprehensive plan to address over-extension and over-indebtedness, management have come up with the idea of removing the Consumer-Owner Discount.

I hope that, on this occasion, the Board will agree to move ahead only after it has the full permission of Consumer-Owners.

Why not make a start at the Annual Owners' Meeting on October 19? Why not put down a motion (someone; anyone) along these lines:

'That the Consumer-Owner Discount will not be changed unless approved by a Referendum of all of the Consumer-Owners.'

If you can achieve a demonstrable plurality of those present to proceed without a Referendum, then you pretty much have a green light to make the decision on your own. Otherwise, John Carver should apply. Or. You abandon John Carver - but again, you should only do so with the consent of your Owners...

Frankly, I think it very unlikely that you will get the agreement of your Consumer-Owners to mess with their Discount, and replace it with a Dividend.

I'm guessing they'll see this year something like this: our butcher disappeared; our meat turned brown; we made a wopping great loss; and now you want us to pay more for everything; and agree to get a Dividend instead - would that be the same one you just didn't pay to Worker-Owners...?

If you try to proceed with changing the Consumer-Owner Discount without the permission of Consumer-Owners, it is reasonable to assume that this will lead to an exodus of Consumer-Owners.

Aside from having a potentially severe effect upon sales, and therefore the profit margin (which would be counter-productive), it would also leave the General Manager possibly having to report at the end of the 2009 Financial Year that he is now in non-compliance with the Board Policy requiring that he not do anything that has the effect of reducing Consumer-Owner numbers.

If you are intent on attempting to improve the financial numbers, then I believe you will only receive the support of the majority of Consumer-Owners if you present them with a more attractive alternative to their Discount.

The opportunity presents itself. Nationwide, the co-operative grocery movement is learning to cope with increasing competition, the recession (and, I guess, in our case, the over-extension and over-indebtedness caused by Expansion and the Food House) by working to increase the loyalty of their Owners.

This is done with 'Ownership Culture,' whereby Owners are weaned away from the view of their co-op as an organic Sam's Club, into more of a traditional co-op culture, by involving them more in the decision-making of their co-op - much along the lines the WSM Elections Task Force was talking about at the beginning of this year.

Consumer-Owners might be much more likely to support the tough decisions needed to regularize WSM's finances (including, perhaps, the replacement of their Discount by a Dividend) if they felt that they were meaningfully involved in the important decision-making process.

We are where we are. I remain ridiculously optimistic that we can move forward positively from where we are.

But we can only do it by honestly recognizing we have a problem (over-extension and over-indebtedness), and then working collaboratively and creatively to address the over-extension and over-indebtedness in realistic ways, and ways that retain, as much as possible, the benefits of Expansion and the Food House, in whatever form the finances finally allow.

What we can not do is pretend the problem is something else, and then fashion a solution which does not begin to address the real problem, and ends up only aggravating the problem and making it worse."

*******

In the interests of balance, I link here with an article about a grocery co-operative which has quite successfully introduced 'Ownership Culture,' and as part of the move, replaced a discount with a form of dividend.

The important point to notice is that there is a clear sense in this article that owners were and are fully included in the important decision-making in their co-operative - as an important 'quid pro quo' in this co-operative's interpretation of 'Ownership Culture.'

More Board Spam?

[What follows is an expansion on remarks I offered during the Owner Input section to the Board of Weaver Street Market Co-operative at the beginning of their September meeting when they were due to consider their 2008 end-of-year financial reports.

They are fighting words. I was in a fighting mood. Our Board, the Chair of which (Jacob Myers) is a Worker-Owner Candidate this year, had just cost me and my fellow Worker-Owners a couple of thousand dollars each in dividend.]

"The primary responsibility of any Board of Directors is to protect owners' investment from speculation and fiscal jeopardy.

One of the primary measures of success or failure of that duty of care is payment or non-payment of a dividend.

In light of the non-payment by Weaver Street of a dividend to its Worker-Owners, the people upon whom the continued success of WSM truly depends, I wonder if this evening the Board will take the view that it has succeeded or failed in its financial stewardship this past financial year?

This is not a rhetorical question. It is directly the Board's fault that the dividend was not paid.

Earlier this year, the Board - at the request of the General Manager, with the active support of the Board Chair, and without serious objection from any other Board member - this Board took the decision to do away with the Board Policy requiring that there be a 1% profit at the end of each trading year.

It was that Policy requirement which protected our dividend. And its removal was the direct cause of our dividend being wiped out.

I have carefully examined all of the financial documents before the Board this evening. I can find no clear explanation as to why there was no profit in 2008.

The only reference I can find is one small paragraph which talks about $408,000 for so-called 'one-off' start-up costs for the Food House.

I was a management consultant for a good few years before I left the corporate world in the Nineties, to pursue my creative interests. I can't ever recall coming across a situation where start-up costs for new buildings were not a part of capital rather than operating costs.

The only further narrative explanation of these 'start-up' costs is the word "personnel"...??

What also disturbs me is the rather strange addendum offered that these costs will be offset by "future revenues"...

Um. The Food House doesn't have any significant revenues of its own. It's primary customer is...itself. Us.

The fact is that the Food House will be a continuing huge extra cost, on top of what was there before it. Whatever these 'start-up' costs were or were not, they are not "one-off." There will be continuing large extra operating costs of some sort associated with the Food House.

And these costs, along with all of the costs associated with the debt which financed the Food House, will most probably be a drag on profits for years to come - not least in view of the fact that sales will continue to be depressed by what appears to be the coming severe recession.

Denial of these facts serves no-one's interests.

Neither does distraction instead of action, by way of remedy.

I remain the ridiculously-eternal optimist. There is no limit to my belief in the ability of The Weave to pull through anything. But we will only be able to do it if we are totally honest with ourselves, and open to whatever needs to be done to make things different, and make them right.

Which brings me to the smoke-and-mirrors distraction that is offered as a solution to restore the profit in 2009.

The financial reports before you raise the notion that the profit was wiped out in 2008 because of the money [called a 'surplus'] we returned to Consumer-Owners on their point-of-sale discount. [I set out the relevant paragraph of the financial monitoring report in question at the end of this post.]

Hogwash.

The reason we made a loss in 2008 is that we are over-extended and over-indebted going into what is already promising to be a severe recession.

The answer is to deal in a calm, determined and creative fashion with that over-extension and over-indebtedness. Not to frighten away Consumer-Owners by rattling chains at their measly 5% discount.

Besides, after the fiasco with 'consultation' before Expansion and the Food House, don't you think it might be a little short-sighted even to consider introducing a change to the Consumer-Owner discount without first seeking the permission of Consumer-Owners?

The Board was defeated the last time it tried to change the discount. Why do you think you will be any more successful this time?

No. This is a distraction, when what we need is action. This is simply 'more of the same,' when what we need is 'something completely different.'

I would be grateful if this evening I could hear the Board take full responsibility for its non-payment of a dividend to its Worker-Owners.

There is a huge, ongoing price to pay for our gamble on Expansion and the Food House - and we Worker-Owners are the only ones paying that price.

I would be grateful if this evening I could hear our Board setting out meaningful steps to start the process of restoring The Weave to profitability, and giving us back our dividend in 2009."

*******

[This is the excerpt from the WSM Monitoring Report, where the General Manager raises his thoughts about changing the Consumer-Owner Discount]

MONITORING REPORT
POLICY 2-11: OWNER INVESTMENT AND RETURN
SEPTEMBER 2008

I hereby present my monitoring report on your [the Board's] Executive Limitations policy “Owner Investment and Return” according to the schedule set out. I certify that the information
contained in this report is true...

With respect to owner investment and return, the General Manager shall not cause or allow conditions, procedures or decisions which:

POLICY PROVISION #11:

Allow the distribution of surplus to materially deviate from:

b. Long term financial policy

GENERAL MANAGER’S INTERPRETATION [NEW SINCE LAST REPORT]:

I interpret “long-term financial policy” to mean achieving a balance among: 1) providing a fair return to owners; 2) keeping the co-op competitive and entrepreneurial; and 3) creating a financial buffer to protect against fiscal jeopardy.

DATA:

There are two important questions about the consumer owner discount that relate to achieving our long-term financial policy:

1) given the increasingly competitive environment, does the discount fulfill its role as a motivating factor for consumer owners to shop at WSM vs. the competition?; and

2) does guaranteeing a consumer owner return approaching $500,000 per year achieve one of the three goals of longterm financial policy at the expense of the others?

For the first 20 years of our existence, the discount has not jeopardized our long-term financial situation. The discount has been a sufficient motivating factor for sustained sales increases, or at lease [sic] it has been correlated with strong sales increases.

And we have been able to pay out the discount while simultaneously investing in the future, improving our financial stability, and paying a fair return to worker owners. But it’s not clear that we will be able to continue to balance all of these competing needs in the future.

There are three new factors to consider:

1) With so many other places to shop, its clear that owners are starting to make more shopping trips elsewhere in spite of the discount;

2) As our traditional market niche erodes, we need to make bigger investments to remain competitive and entrepreneurial;

3) As conditions in the grocery industry become more volatile, we need to have a bigger buffer in order to remain profitable, protect against fiscal jeopardy, and pay a dividend to worker owners.

It’s difficult to predict for certain at what point the current discount system moves from a potential concern to a factor likely to jeopardize our long-term financial condition.

However, my confidence that we can continue to pay out a discount that now amount [sic] to half a million dollars per year and meet the other needs of our longterm financial policy on a consistent basis is lower than in past years.

I am therefore reporting that we are out-of-compliance with this provision.

One way to amend the system would be to change the consumer return from a fixed amount to a variable amount based on our actual profitability by converting to a patronage refund system like we have for worker owners [i.e. a dividend].

Another way to amend the system would be to change the discount from a small amount on a regular basis to a larger amount on an occasional basis. Such a discount would be more likely to pay for itself out of increased sales.

Three years ago a proposal to change from a discount to a patronage refund system received strong negative feedback from consumer owners, and we made the decision to withdraw the proposal.

The short-term cost in owner dissatisfaction outweighed the potential long-term gain in financial sustainability.

Most cooperatives have made a transition from a discount to a refund during a financial downturn when it was obvious that the co-op couldn’t afford to pay the discount any longer, and we were not in such a situation at the time.

I report out-of-compliance with this policy provision without a clear plan to bring us within compliance. I request that the Board schedule some time to discuss how the Board and GM can become aligned on our respective roles in addressing this situation.

WCOM and WSM: Save Our Station

There is now a hole at the heart of the finances of Weaver Street Market Co-operative. This much will become clear when its Audited Annual Report is published at the beginning of October.

It has been caused by the Food House and Expansion. The long-term debt of WSM has risen dramatically over the past year to just under $10 million (on an annual turnover of $21 million). The scheduled annual repayments balloon from some $170,000 this year to $700,000 in 2011 and $1.5 million in 2012.

The Accounts will show a loss of some $400,000 this year. As a consequence, the Worker-Owner Dividend was not paid.

At the September Board Meeting, WSM's Auditor 'suggested' to the Board that they formulate a comprehensive plan to deal with the debt. It would be much easier to put together such a plan if the Board had an Audit Committee.

My concern is that, in the absence of a plan and an Audit Committee, the Board may overreact to the situation, and end up doing more more harm than good, as it thrashes around trying to find anything and everything it can to lessen the debt burden, rather than adopting a measured approach.

I mean no disrespect with that last comment. Suddenly to be faced with a report of $10 million in debt can make even the strongest of people quake just a little - if it's something for which they are not used to taking responsibility.

Before I left the corporate world to pursue my creative interests, I was what in England used to be called a 'company doctor.' I made my living as a lawyer helping companies to get out of tight spots. That's one of the primary reasons I'm standing for the Board this year as a Worker-Owner candidate. I want to help. Anyways, my first advice to my clients was always: don't panic.

Weaver Street is inherently strong. We have $14 million in real assets. We have a product with which people love to associate - even if there have been a few glitches with some of the food this past year. We have 12,000 Consumer-Owners and 200 Workers who are committed to The Weave, not just as a grocery store, but as a living social statement which they love.

We will pull through. If I didn't believe that, I wouldn't be standing for the Board. But it will require an honest appraisal of where we are. A comprehensive plan about where we want to go. The full support of our Ownership. And a freedom from knee-jerk, fear-driven, short-sighted stop-gaps - which simply amount to trying to fix a broken leg with band-aids.

To be honest, one of the latter has been WSM's immediate reaction to shut off support to WCOM 103.5 LPFM, Carrboro and Chapel Hill's Community Radio Station.

WCOM was formed by WSM in 2004. Since then, WSM has been the lifeline for WCOM (either directly, or through its associated 501 (c) (3) non-profit, Public Gallery of Carrboro (PGC)), providing it with free station space in the Community Realty building on Greensboro Street, and underpinning its finances.

In a recent letter from the General Manager of WSM to WCOM (a copy of which is set out at the end of this post), notice was given that the support was to be discontinued.

My concern is not that WSM is attempting to regularize its finances. It is the abruptness and insensitivity involved. We in WSM face tough decisions in the next year. The measure of our standing as a leading community support organization will be the manner in which we affect our community with those tough decisions.

Before I turn to anything else, and putting on my hat as a member of WCOM's Development Committee, let me say that WCOM needs an immediate injection of cash and general fund-raising assistance to finance the move to a new location, and to fill the new hole in its own finances.

You don't need to be rich or to be an expert in fund-raising (but if any of you are, so much the better). All you need is a bit of spare cash or (if you want to help the fund-raising effort) two hands, a brain, a voice and a desire to see genuine locally-based public radio continue in our community.

Go to http://www.communityradio.coop/ and follow the links to Donations and/or Volunteering, and let the folks know you're ready to jump in and help. Or you can contact me directly at: geoffgilson@hotmail.com.

In the meantime, I've started to do what I can by writing a letter to the Board of WSM, which letter I set out below (Jacob [Myers] is a Worker-Owner Director, who has been WSM's Board Chair these past three years):

"Dear Jacob,

I attach a letter that apparently was sent by Ruffin in his dual capacity as General Manager of WSM and President of Public Gallery of Carrboro.

You will know that, quite separately, I have asked for WSM's Auditors (among other matters I believe to be crucial to understanding and then acting upon the critical state of the co-op's financial security) to provide all owners of WSM with an organizational chart showing all owners what is the relationship between WSM and what appear to be all of its attendant companies.

In the meantime, what I am led to believe is that the majority, if not all, of the funding for PGC has come from WSM. Indeed, the web-site of WSM openly proclaims that it was WSM (not PGC) that was responsible for the creation and early upkeep of WCOM 103.5 - our local Community Radio Station.

You and the Board will know of my concern at the level of debt in WSM. I am not surprised if the response, whether it is to me, the Auditors, or whoever, is to take steps to start reducing that debt. Including, if necessary, the sale of the property on Greensboro St., and the desire to see WCOM eventually become self-funding.

However, I think it important that WSM reduce its debt and its costs in a way that is commensurate with its Mission Statement, Board Policies, and its standing as a community co-operative. In other words, in a way that is creative, and not destructive.

The letter to WCOM has caused some consternation among supporters of our Community Radio Station. It is akin to foreclosure and cutting off a banking credit line - all at the same time.

In the circumstances, as and when the Board reviews the decisions being made by Operations to reduce the debt and cut costs within WSM - which ought to be when it considers the Annual Accounts for 2008 - I would be grateful if the Board could have before them this letter, and if it would then address its contents.

First, I am not sure that Ruffin should be making decisions unilaterally about reducing WSM's debt. And certainly not decisions which have such impact on WSM's standing in the community.

I would have thought that any decisions to reduce the debt should be taken by the Board. As were the original decisions to incur that debt.

If the Board has changed its Policy, such that the General Manager is allowed to incur debt and reduce it unilaterally, then I would, with the greatest of respect to all parties, strongly suggest that the events of the past year (not least the non-payment of our Dividend) would persuade the Board to re-visit that Policy.

The Board is responsible to all owners for the financial health of the co-operative. It is the Board which must answer to the owners for the risk to their investment. Not the General Manager. The Board should have primary decision-making responsibility for the major risk to investment, being debt.

Secondly, I would appreciate the Board considering ways to process the sale of the property in Greensboro St., and the attempts to encourage WCOM to be self-funding, that are more sensitive.

What about some sort of Lend-Lease arrangement with a potential buyer of the property? For a limited time? Say, a year?

What about WSM using its many contacts actively to help WSM find a new home? I was at the Steering Committee of WCOM when Ruffin's letter was discussed. No-one from WSM or PGC was present, to offer assistance to WCOM in facing the new reality which had just been imposed upon them.

What about WSM offering WCOM an immediate interest-free loan, to be repaid in no less than five years? WCOM is struggling to raise funds. not least because it has not had its own formal Board these past four years. PGC was their active Board - until this past week.

WCOM will need immediate funds to secure at least a temporary new home, and finance the move of equipment.

The measure of progress in a progressive institution is not necessarily the end destination. It is almost always the nature of the journey itself. And the friends we manage to retain when we have to make otherwise difficult decisions.

Let's not lose our co-operative sensibilities, as we pay the price for our own Expansion. Let's not let down our community, as we struggle to make the necessary tough decisions this next year. Please."

*******

[The letter from Ruffin to WCOM:]

"Hi Audrey [Chair of WCOM's Steering Committee of Volunteers],

Thanks for being in touch. Here is what I know about the status of the studio at its current location and my ideas for the future.

Regarding Weaver Street Market providing studio space for WCOM:

Weaver Street Market purchased the corner building five years ago to prevent it from being developed into a CVS Pharmacy and to meet its need for office and meeting space. The part of the building that WSM wasn’t using was rented to Community Realty and provided free to WCOM. (WSM has also provided free electrical to WCOM.) The arrangement with Community Realty and WCOM was made with the understanding that 1) their use of the building was temporary and at some point WSM would do something else with the property; and 2) WSM was not interested in putting a lot of money into a building that didn’t have a future by doing things like replacing the roof.

WSM no longer needs the space in the building because it now has office space elsewhere. As WSM considers next steps for the property, the future of WCOM remains an important consideration. Regardless of whether WSM rents or sells the building, WSM is committed to arranging for WCOM to stay for a period of time in order to facilitate a move to a new location. In summary, while there are no specific plans for the corner property, WSM is starting to consider next steps now that it no longer needs space in the building, and I will let you know once WSM’s plans become more concrete.

Regarding the Public Gallery of Carrboro’s support for WCOM:

The Public Gallery of Carrboro’s Board raised the money to launch WCOM and most of the money to finance its first two years of operation (about $70,000). That was a one-time effort to get the station going, and the Board has said that it doesn’t have the time or the energy to continue to play an ongoing fundraising role, although board members continue to pay the costs associated with taking website contributions (about $600/year). The Board had hoped that the idea of locating the studio in the Arts Center might come to fruition, but the Arts Center’s expansion into a larger space still seems to be several years off. In summary, at this point the Board has turned the running of WCOM over to the Steering Committee. While the Board will help however it can to find a new studio location, at this point it does not know of any obvious candidates for a more permanent home for the WCOM studio.

Achieving financial self-sufficiency will ensure a secure home for WCOM’s studio:

While WCOM appears to be nearer to a point where it is financially self-sufficient it did not meet its budgeted fundraising goal last year and may not raise enough money again this year to meet all of the expenses in the budget. To ensure that it has a secure future, WCOM needs to be able to pay studio rent and studio electrical along with the rest of its expenses. I think everyone realizes that raising money and making the station financially self-sufficient is important. Chris Frank uses the leaking roof to draw attention to the uncertain financial future and to build a sense of urgency for achieving financial self-sufficiency. Chris is right that the only sure way to have a more permanent home for the studio is to be in a position to be able to pay for it.

Thanks for all of your efforts on behalf of WCOM,

Ruffin"

The Economics of Spam

Not everyone was born an accountant. Not everyone necessarily understands the complexities of a $21 million turnover co-operative – which is what The Weave now is.

So maybe our Board should ask for help from people who do understand?

When, in the past, I have advised companies with a turnover similar in size to Weaver Street, it has been the normal practice of those companies to have a special committee of the Board called an Audit Committee.

This Committee is usually made up of Directors (those who are not directly employed by the company in question), and by an equal number of experts, with specific knowledge of the company’s specialty and/or corporate finance.

The primary job of the Audit Committee is to oversee the Annual Audit. As opposed to WSM, where the Audit is overseen by the General Manager.

Audit Committees can also meet all through the year, and advise the Board on complicated financial issues that are presented to the Board by management.

A case in point.

Earlier this year, management suggested to the Board that they do away with the Board Policy requiring that there be a 1% profit each year.

How was the Board to know that removing this Policy would ‘move’ our Dividend – which is paid out of profit? An Audit Committee of financial experts could have warned the Board of this.

******

I set out below a copy of the e-mail I sent to Jacob Myers, the Worker-Owner Director who has been Board Chair these past three years, asking questions of WSM's new Auditing firm.

These are the sort of questions your Board should have been asking over the last few years, and which an Audit Committee of experts probably would know to ask.

If they had been asked as we went along, we might not now find ourselves over-extended and over-indebted going into what promises to be a severe recession.

Look. I know this is not as much fun as Monty Python quips, or as interesting as the Wine Shows, but this is exactly the sort of dry, complicated, tedious crap you expect your Directors to be able to take care of competently, when we are a $21 million turnover co-op.

So that you can focus on the fun stuff, while tentatively hoping that your Board knows what it's doing, and is taking care of your business. Ok?:

"Dear Jacob,

The WSM Audit is underway. As I understand it, the Auditors will be presenting their report to the September Board meeting. As an owner, I would be grateful if the Auditors could address in writing the following. I think it follows that I would wish that copies of their report, and their response to my concerns, be available to owners attending the September Board meeting:

1) Is the Audit of just Weaver Street Market, Inc.? Or is it of the whole entity we know as 'Weaver Street Market' ('WSM'), including all of the associated companies, corporations, organizations, non-profits, et al ('associations')?

2) Could the Auditors please prepare and present a full organizational chart of all of the 'associations,' showing the full picture of assets and liabilities, and flow of monies between the 'associations' (if any), with specific and separate mention of all real estate holdings?

I understand there are certain LLC's which bear names such as 'Carrboro' and 'Hillsborough.' There is also Public Gallery of Carrboro, which I understand receives monies directly or indirectly from WSM.

3) Concerns may well be raised at the Annual Owners' Meeting as to whether or not the monies spent by WSM and its associations on Expansion and the Food House could have been better spent. Clearly, that is a matter on which the auditors should be able to give owners comfort.

Would the Auditors please make available any and all written comparative studies that were produced before Expansion began, which helped WSM managers and the WSM Board decide that the Expansion course chosen (including the Food House) was the most beneficial to owners, with respect to the risk to their financial investment?

Will the Auditors state that, in their opinion, WSM managers and the WSM Board undertook a sufficiently comprehensive comparative analysis of the alternatives before deciding up on the course chosen? That is, was Expansion and the Food House the best way of spending our money?

Will the Auditors state categorically whether or not, in their opinion, WSM and its associations are on target with their financial forecasts for the cost of Expansion and the Food House. If we are over budget, by how much?

4) Will the Auditors please state definitively what they regard as being the total current debt of WSM and its associations, and what they regard as being the debt to equity ratio of WSM and its associations?

Are the Auditors legally required to offer assurances in any Audit statement that the appropriate processes were followed by WSM and its associations in creating such a level of debt, against collateral (equity) which is the property of the owners, in respect particularly of obtaining the owners' permission beforehand to collateralize their property?

5) Will the Auditors please define what they understand by the expression 'equity,' and specifically explain how each category of 'equity' presented by WSM and its associations is 'equity' within the Auditors' definition?

Can something be 'equity' if we have to return interest upon it, or if it is recallable? Specifically, are loans arising from the Community Investment Initiative, and the like, equity or loans?

6) Will the Auditors please explain clearly what is their recommendation for the debt of WSM and its associations in 2009? Should it be reduced, be allowed to stay the same, or can more be borrowed - and with what qualifications?

Jacob, I would be grateful if the Auditors responses to these concerns could also be made available in writing at the Annual Owners' Meeting."

Something Completely Different

So. My line is that we need a different Board which will do things differently. And that if we did things differently, we could be a better co-op and a stronger business.

Fine so far. But what do I say to anyone who asks: can the Board actually make a difference; and how exactly would I suggest they do things differently?

Actually, even before we go there, I’ve been asked more than once, just what makes me think I understand the complexities of all of this (and it is complex), and why do I believe that I'm qualified to offer any solutions?

Good question. The blunt answer - and forgive me for blowing my own horn - is that I know how to make Boards work. I used to make my living at it.

Ten years ago, I left the corporate world to pursue my creative interests. But before that, I was a successful lawyer and marketing and management consultant. I served on the Board of several companies with turnovers ranging from $3 million to $30 million.

I made my living troubleshooting for companies that were having problems. This meant mediating disputes, opening channels of communication and creating value-based strategies that encouraged the Boards of those companies to understand that people are the core value of profit.

What I am offering you is the opportunity to have on your Board someone who really knows how to make your Board work for you – properly, as it should in a co-op.

Right. So, back to those first two questions – can the Board make any difference, and what can it do differently to make that difference?

Hopefully Jacob and The Weave will agree to some Candidate Forums, and I can explain in detail. Something I will also be doing on this blog, over the next two months.

In the meantime, here’s a brief, two-step summary:

1) Yes, The Board can make a difference. It’s a question of truly understanding the Policy Governance model we use. And I’m not sure that everyone on our Board does.

It goes like this: the Board is supposed regularly to ask owners and workers, on an ongoing basis, what they want for their co-op. The Board should then fashion what they are told into a Mission Statement (what) and Policies (how).

The Mission Statement and the Policies set the direction for ‘Operations’ (us, and our managers). The Board is supposed then to check to make sure ‘Ops’ is doing what workers and owners have said they want, by monitoring ‘Ops’ every month at its Board meetings.

It’s supposed to be that simple.

Now, I’ve been present at almost every Board meeting in the past year. The fact is that our Board, with Jacob as its Chair, has been getting it the other way round.

They ask ‘Ops’ (and I mean just the senior managers) what they want, and then tell owners and workers what’s good for them.

I want to turn it back around. Jacob, on the other hand, wants to keep it the way it is.

Now, I want to be clear. I say kudos to Jacob for sticking to his guns, and not backing down.

I may disagree with him on this point. But he is taking an honorable stand by defending what has happened during the period he has been Chair these past three years.

I think he's wrong. But I admire his integrity.

2) What would I ask the Board to do differently – and specifically?

a) Regularize the finances. Cut the debt – in a manner that does not hurt workers or consumers. And that does not hurt our efforts in the community. To give us back our dividend, and un-mortgage our future.

I talk about not hurting our community. Here's an example:

We will almost certainly have to sell the property on Greenboro Street - where orientations were held.

But let's do it in a way that does not put the future of WCOM 103.5 (our community radio station) in jeopardy - since WCOM also uses that building.

Many of us actively support WCOM. WSM helped to create it. I serve on its Development Committee. With a little thought, we can be creative about the tough decisions that have now to be made. Not destructive.

In the meantime, I’m going to suggest there be a one-off incentive bonus for all workers at the end of 2009, based on improved production during the year.

All we workers are already being asked to do a lot more to pay for the decisions that others have made.

Is it too much to ask that, in return, we receive a temporary incentive for all that extra work, and one that will entirely pay for itself?

b) Monitor ‘Ops’ (i.e. management) better. Make ‘Ops’ more accountable to the Board. So that we can avoid some of the more-avoidable big, bad decisions.

Suggest ways for ‘Ops’ to be more inclusive of worker-input (our ‘in-house experts’). Do more real listening. Be more responsive. So that we can avoid some of the more avoidable small, bad decisions.

[I explain in more detail in a strategy document I presented to the WSM Board in 2007 - "Informal Intimacy".]

c) Do a better job of asking workers and owners what we want. Not least about the last remaining piece of the Expansion jigsaw puzzle – the refurbishment of the Carrboro store.

Let us feel that, in future, we have real control over our future – a future which, at the moment, is being created by a small handful of people, often in secret.

Someone recently used the expression ‘dark-of-night decisions, made without any public input.’ I think that’s a description that’s appropriate –and it’s not only wrong; it’s unproductive.

Workers and owners are far more likely to support and implement smoothly big decisions which they already own.

So, create vehicles to allow the Board to know exactly what owners and workers really want. And then, make sure the Board pays attention.

‘Yeah, very nice, we’ll let you know’ is not co-operative democracy. Not according to the Policy Governance model to which our Board claims it subscribes.

It’s just ‘feedback.’ The Wal-Mart way. Also known as ‘filing under ‘D’ for Dustbin.’

Revive the Worker-Owner Discussion Program. Re-jig the Open Forums. Have The Weave adopt the Online Forum that Jamie Bort (a Consumer-Owner) will be completing shortly – with a little help from me.

And most important of all – let us vote on things from time to time. Like whether we want to pawn our co-op for $6 million…

[Again, I expand on these thoughts in a proposals document I submitted as a member of the WSM Elections Task Force, earlier in 2008.]

That’s a start. And now I wish I could think of a really cute Monty Python quote.

Nope. Sorry. Guess some things are more serious than that. Oh well. Next time, maybe.

In the meantime, this Board Election is about you – not me, and not Jacob. It’s about what you want your co-op to be. How you want it to reflect the values and aspirations you have for it.

I'm standing because I love The Weave, I'm troubled about where we are, I think I can help us get safely to the other side, and I want to help. But that's not the point. It's still all about you.

I’ve spent as much time as I can trying to contact as many of you as possible, so that you can tell me about the hopes you have for our co-op.

I haven’t got to all of you. I’ll keep trying. But, you see me around. Feel free to chat to me, anytime. Or write to me on Facebook, MySpace or at: geoffgilson@hotmail.com.

And when you talk with me, I promise I’ll truly listen. We should all strive to be a genuinely ‘Listening Co-op,’ and that should start with our Board, and your Worker-Owner Board Directors.

Now please remember, you have to be a Worker-Owner to vote. You really can shape the future of your co-op. But you can only do it by being an owner and voting. To find out how, ask Linda in Marketing, Deborah in HR or write to: board@weaverstreetmarket.coop.

You can become an owner anytime up to October 25, and still vote in this year's Board Election. Whoever you vote for, please use the opportunity you have to create your own future. Good luck to us all!

More of the Spam?

Nominations for the Board of Directors of The Weave are now closed, and the Worker-Owner Director contest is a two-person race - between ‘more of the same’ and ‘something completely different.’

Jacob Myers is Kitchen Specialist in Carrboro, has been the Board Chair for the past three years, and is the newly-announced, second Worker-Owner Candidate.

I served with Jacob earlier this year on the WSM Elections Task Force. I’ll be honest. I like Jacob.

But I’ve got to admit, I kind of feel like we’re in a Monty Python skit – bless us all. I mean why on earth would we want ‘more of the same’?

This would be the same ‘same’ that just took away our dividend; mortgaged our future with a $6 million debt; and left us wondering if our money was spent the best way, and why we were never asked, in the first place, if we wanted it to be spent at all, or how. Right?

Then I’m thinking, why am I asking these questions of thin air – that really would be a Monty Python sketch, wouldn’t it? Why not ask Jacob himself?

So, I’m writing to Jacob to ask him to take part in Candidate Forums around the units, to give all of you the opportunity to ask him why he defends where we are. And to be fair, to ask me how I believe things could be different.

Or we could just compare silly walks…

Make sense?

*******

Now, we all know that Spam is a form of processed meat. Which is kind of appropriate to us, at the moment, if you think about it. And, of course, it’s also the subject of a fabled song from Monty Python.

In addition, the dictionary defines ‘spam’ as being something received which was unsolicited and for which permission was not given. Hmm. Sounds about right, doesn’t it?

So, yes, I’m probably going to be cute over the next few months, and do the Monty Python theme to death, and go on talking about ‘more of the spam,’ and ‘something completely different.’

I mean, if you can’t ‘always look on the bright side of life,’ then what’s it all for…?

So. Good luck to us all. And with that thought…now for something completely different…!!

Letter from Carrboro Store

[What follows is the letter presented to the September Board Meeting, by Lori Washington, a Worker-Owner Director, on behalf of a group of her fellow workers in the Carrboro WSM store:]

This is in no way meant to be an attack, but those of us who care about this company wanted to be sure you were aware of how we feel and how things really are. Most of this letter reflects, but is not limited to, the perspective of the Customer Service Department.

The Carrboro store should have had more support for the changes we have had to deal with. The Customer Service Department alone lost three leaders and one strong cashier to the HB store and were holding down the fort with no fewer than five new people. So far we have only been allowed to fill one of the leader positions.

Customer Service had to switch from cashier accountability to lane accountability and all we had in the way of support were some very unclear written instructions.

Many feel that the Carrboro store is being put on the back burner. Equipment is not working and no satisfactory solution is being given. Many of the machines that the front end uses on a regular basis do not work or do not work consistently. We have told the appropriate people about the situation but not much has been done.

We shouldn’t have to wait for new machines until the store is remodeled, especially since we’ve heard no concrete date for when that is going to happen.

It feels like the focus is more on how pretty the store looks and less on how it actually works. It’s nice to have things look good, but it shouldn’t come at the expense of the ability to do our jobs.

Employee morale is down. Customers complain to us (sometimes abusively, at great length and while other customers are waiting) about changes that we had no hand in making and don’t always agree with ourselves. We do our best to listen and be sympathetic, but we are starting to become numb.

I’m sure that every department is fielding complaints, but the Customer Service department is getting the brunt of it. One customer said she stopped shopping here for two solid weeks because every time she came in she heard a customer yelling at a cashier.

Customers are telling us that they are buying less and less here because there is no one to talk to about their meat, and that the meat that is here doesn’t look fresh, isn’t what they’re looking for or is packaged in an environmentally unfriendly way. They feel that they may as well shop at a regular grocery store if this is all we have to offer.

Many feel that the store is becoming more and more impersonal, losing its uniqueness and its community feel – essentially, it’s Weaver Street Market-ness.

Baked goods and prepared foods are not getting here on time from the Food House and foods that people are coming for are still not being prepared. The still-abundant flies and the unfortunate timing of the price increases are not helping the situation any.

Customers don’t feel listened to. The ‘We Respond to You’ customer comments and questions often go unanswered – leaving customers feeling that no one really cares.

Some say they are thinking about refunding their owner share.

No Dividend @ The Weave

IT IS NOW OFFICIAL. Weaver Street Market made a loss in 2008, and it will not pay a dividend this year.

In any ‘conventional’ corporation, the Board would immediately accept responsibility, with all of the natural consequences that would normally entail.

It is a sad reflection on our current Board, which is supposed to be the rock-solid guardian of owner interests, that it will probably not even notice or comment – without monumental prodding.

Question: Why are we here?

Answer: We are massively over-extended going into what looks like a severe recession.

The project that was supposed to safeguard profits for years to come (Expansion and the Food House) is behind-schedule and over-budget.

And the problems the Food House has had with its food production have severely exacerbated the fall in sales already caused by the recession and competition from the likes of Trader Joe’s and Fresh Market.

Let me be clear. The fault does not lie with senior management. The fault lies with our Board.

Senior management came up with a plan (Expansion and the Food House) to meet what they believed to be the challenges facing WSM going into the second decade of the 21st Century.

That’s their job. And I give Ruffin full credit. He stood up at the Southern Village Employees’ Meeting last night, and accepted his share of the blame – without trying to pass the buck for one second.

I had asked him what he felt he had learned in the past year. It was clear the answer was painful for him. Weaver Street is his life’s work. But, he did not flinch. He said that he wished he could have anticipated better, and communicated more.

But Ruffin should not be standing up there, taking all this responsibility on his own. This is the Board’s fault. They are the ones who have a duty to owners. They are the ones who should have held management accountable to the owners. And they are the ones who have failed in those duties.

The Board should have ensured that, when presented with management’s plan for Expansion and the Food House, the proper comparative studies, economic analyses and budget forecasts were produced, against which to test management projections. I have now asked WSM’s Auditors to check whether in fact this was done. I suspect it was not.

The Board should not have blindly accepted the plans of management. The Board is accountable to owners, not to management. The Board should have asked owners if they wanted Expansion and the Food House. They did not.

The Board should have sought the permission of owners to allow management to borrow $6 million to fund their plans – a debt which will hang an annual interest payment of some $300,000 around the necks of Worker-Owners for years to come.

That interest payment is the same size as last year’s profit. It is the reason this year’s operating profit has been wiped out. It is the reason no dividend is being paid to Worker-Owners this year.

The Board did not seek permission for the $6 million debt. It simply signed the bank notes. Without raising so much as an eyebrow. Even though I asked the Board to question the debt.

When it became apparent the Food House was running into trouble, the Board only responded when I and other owners turned up at their August meeting, and begged them to intervene.

There is a way forward. There always is. It won’t be easy. There will be tough decisions to make this coming year.

But it needs a different Board to make those decisions. It needs a Board that truly understands its responsibilities to its owners. That understands that it is answerable to those owners, and not to management.

And it needs a Board that understands corporate finance in a $20 million turnover co-operative. It needs a Board that either knows how to read a financial statement, or that has the self-awareness to admit that it needs experts to help it.

We are where we are. But we do not have to stay here.

I remain optimistic. The Weave is not just a grocery store. It is a family. We will rally round. We have 200 workers and 12,000 Consumer-Owners, just waiting to pitch in and pull us through – and that includes me.

But we need the right Board if we are to return The Weave to financial security and stability. If we are to become a better co-op and a stronger business.

We owe that much to our workers, our consumers and our owners. And we owe that much to ourselves.