Weaver Street Workers' Woes Continue ...

Geoff Gilson's picture

As an active worker-owner with Weaver Street Market Co-operative these past six years, I have worked hard not only to help WSM be successful as a business, but also as a model for democratic co-operation. It is with regret that I have to report that WSM continues to fail on both counts. It is time now to begin an active, community-wide conversation about the future financial and co-operative direction of WSM, and I invite OrangePolitics to take part in that conversation.

Bottom line: WSM has a crippling long-term debt of $8 million, incurred undemocratically in order to pay for the dubious expansion project of 2007/2008. That debt is costing our co-op millions in capital and interest repayments each year. Hence, the need for the 15% sales increase in 2011. With similar efforts required in the next four years.

It is WSM workers who are having to make those repayments by working ever harder, for less. We get longer opening hours. Less shift hours. Insufficient staff support. Paltry pay raises. And no dividend (haven't seen one for the past three years).

Notwithstanding incredible sacrifices and enormous effort by all WSM workers, WSM has managed only to achieve a 9% increase in sales through the first two Quarters of this current Financial Year (not the 15% demanded). And here's the catch. If we don't get to 10%, we don't even make a profit (due to the exorbitant cost of servicing the WSM debt). Which is why the corporate office just issued what amounts to a dividend warning in the most recent issue of its employee Market Messenger.

Folks. It is time to realize that your community co-op is headed in the wrong financial direction. It is time for a change. It is time for a community-wide conversation about the future security of our community co-op; one that addresses the debt question, without continually making impossible and exploitative demands of WSM workers. 

It is not enough to leave it to the WSM Board of Directors and the corporate office. WSM is a democratic co-operative. We pride ourselves on being a community organization. The community deserves to be included in the conversation about the future. And that conversation needs to take place now. Before the banks determine our future for us.

Please respond here. Or better still, write to the Board at board@weaverstreetmarket.coop requesting a community-wide conversation about the future financial direction of our co-op.

In 2007, the Annual Meeting of WSM supported my call for the creation of a Board Committee of Owners to undertake an immediate review of the sustainability of WSM's finances and its long-term debt. The Board ignored the expressed wishes of its Annual Meeting, and did not form that Committee. Maybe it's time now?

For your information, you can find abridged versions of WSM's most recent Annual Reports here, and some more of my thoughts on the financial and democratic status of WSM here.

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17 Comments

Weaver Street Market

I was very excited when WSM announced it was coming to Hillsborough as shopping for groceries in this town is very depressing.  However, the store is a great disappointment and I am not surprised to learn of its financial and employee woes.  I now only shop there in emergencies (yes, it is possible to have a grocery emergency!). 

If anyone reads this who can change the direction of the store (from a shopper's perspective), here are the issues my friends and I have with the store as it is today:

1 - the meat/seafood selection is very sparse and shoppers who are willing to pay for expensive meat want a butcher - I usually drive to the Fresh Market in Chapel Hill (a long drive and a very un-green thing to have to do!) because they have great beef/poultry/seafood and knowledgeable butchers will will trim/tie/etc.  AND they're friendly - at WSM if you ask a 'meat' question - you're given the 'I can't believe people actually eat animal flesh' cold shoulder.  So, the Fresh Market and Southern Season get my meat/deli/cheese money.

2 - The quality of the produce is often not good - Wal-mart has a better organic selection for most things and carries items WSM does not.  Also the Lowe's in Mebane has better produce (they even have lemon grass which is sometimes not found anywhere in this whole county).

3. - They don't have any quality teas - again something every gourmet market should have.

4 - The everything bagels have about 10 seeds on them - more of a nothing bagel than an everything bagel

5 - While some of the employees are friendly and helpful, most are surly and sometimes downright rude.  Based on this, I'm not surprised at the comments of the employees - it's obvious they are not happy with their work environment.

That's it - I hope WSM can make some changes and become profitable and offer basic items that Hillsborough shoppers wants.  Cooks in this town need quality groceries and will support the store if it can deliver (well, not actually deliver, although that would be a great option!).

Geoff Gilson's picture

Consumer Woes ...

Sorry. Only just saw this. I really don't have anything to add. Save this. There is not one employee at WSM, from General Manager to the lowest Hot Bar grunt (me), who does not want WSM to be the very best co-op and business it can be for its consumers, owners and workers.The problem is that, at the moment, I do not necessarily agree with those making the decisions that they are making the right decisions. And it is those bad decisions which, I believe, are causing you to have the experiences you describe.My answer is that we behave more like a co-op. Which begins with the decisions NOT being made just by those making them at the moment. But rather in a more democratic fashion, and in a manner that reflects the very definition of co-operation. Namely, that the decisions are a genuine reflection of the common needs of our stakeholders (consumers, owners and workers).If we had regular opportunity for stakeholders consensually to share what are those common needs (and you have enunciated some which are not uncommon), then we would be providing what it is our stakeholders want and are prepared (as workers) to provide.Workers would be happy. Shoppers would be happy. We would be making a profit. Which would not be diverted into extraneous destinations (such as paying off $8 million in totally unnecessary debt). And owners would be receiving a dividend - something that has not happened for three years, and most likely will not be happening this year either.This all seems as simple and as obvious to me as the Pee Wee Herman Dance. It is also the very essence of successful co-operation elsewhere around the United States.It will not seem obvious to WSM so long as decisions are made in the privacy of a corporate office, shut off behind a combination lock in Hillsborough, where those decisions are based not on the actual common needs of the stakeholders, but rather on those common needs as perceived by a self-selected few.And for that, and my inability to persuade those self-selected few otherwise, I apologize. Humbly.Please do not give up on those many WSM workers who strive, against impossible odds, to be the best co-operators that they can. It is only with your continued custom that we can all survive to fight for a better co-op and a stronger business on the morrow.

Keep on subject please

This comment is nothing more than a subjective complaint about goods and services.  It has no revelance to the issues of governance that Geoff brings up.    My burger at Elmos was a little dry last week, will you please print that moderated commet? 

Geoff Gilson's picture

Anon-y, non-y, no ...

Blimey. Three Anons in a row. I love a debate. I love it even more when I know with whom I'm debating.The simple answer to the question, 'is WSM making money?' is: there is no simple answer. Sorry.What I will do is try to answer the questions I think are actually being asked here.First, is the Board Chair right, or am I? Answer: I don't know. And again, we are arguing apples and oranges. Which is why I suggested a debate. And the Board Chair has, for his own reasons, declined to answer that challenge. I remain available. Draw your own conclusions from that fact.Secondly, do we mean 'is WSM making money?,' or do we mean 'is WSM making a profit?' Of course, WSM is making money. We sell stuff every day.Now, is it making a profit? Well, again I hate to go all political on you. But any accountant will tell you that a profit is a decimal point. And a clever accountant can place that decimal point pretty much anywhere he or she likes.Take last year for example. Over the course of four months, WSM's alleged profit moved from break even to $300,000 to $750,000 to $400,000. But. At the end of the day. All of the profit was withheld, and no dividend was paid.So, it may well be that we are making a profit. I don't know. I ask for figures. I am not given them.The only true arbiter of profit is the Annual Audited Accounts produced by the co-op's official Auditor at the end of the financial year.I have asked for a copy of the official Audited Accounts for 2010 on more than three occasions, since September of last year. They have yet to be produced to me. Sigh. Draw your own conclusions.It may well be that the Board Chair is correct, and the decimal point for 2011 is currently being placed somewhere that shows a profit. I'd like to ask him that, in front of an audience, but ... cf. debate ... er, draw you own conclusions.Even if the Board Chair is correct, how can he be so chipper? How can he claim that a profit this year of $100,000 versus a profit last year of $300,000/$750,000/$400,000 (depending on the prevailing wind) is an improvement?And why, if it is such good news, did the employee Market Messenger issue a dividend warning?I mean, bear with me for a second longer. We are told we may have made an overall profit last year of $750,000 (none of which found its way into a dividend). We are told sales have improved by 9% this year (about $1.5 million).Take out cost of goods, that should be an improvement on last year's $750,000 profit of, say, a further $500,000 in profit. And yet. The Board Chair is not glowingly announcing a profit expectation for 2011 of $1.25 million. He's talking $100,000. And the Market Messenger is saying, most likely, no dividend.Where is all this profit going? Does this count as 'making money' or as 'losing money'? Geez, I'd like that debate! Anyone else feel the same?The point that arises from this is the third question I think you are asking. Not if WSM is making a profit, but whether or not its stakeholders (owners, consumers and workers) are making a 'profit.' I will return a little later as to why I put the word 'profit' in quote marks.Now, WSM's stakeholders are NOT making a financial profit.Consumer-owners have seen no dividend since the change from discount to dividend. It makes no difference whether the Board Chair quotes a WSM profit of $100,000 or $1.25 million, if none of it is making its way into the pockets of the owners.The workers are not making a financial profit. We have seen no dividend in three years. We got no pay raises two years ago. Many workers got only a 25 cent pay raise last year. We are going to achieve probably a 10% increase in sales this year. But there is no suggestion we will see 10% pay raises.Now. Why the word 'profit' in quote marks? Because we are not just about making a money profit. As our General Manager reports each year, we pride ourselves at WSM in having a Triple Bottom Line profit. In other words a social and environmental profit, as well as a financial profit.The first two are not supposed to be an afterthought. They are supposed to go hand-in-hand with the last type of profit.And social bottom line does not mean, as our GM states, how much money we pump back into the community. It means the social impact of our business activity on our stakeholders.And Anon 2. This means you are wrong - with respect. Anon 1 is perfectly correct to postulate his or her bad shopping experiences as a lack of social profit.The objectives of our social and environmental profit are to be found in our Mission Statement. Front and center is the requirement (Empowerment) that we offer our consumers a rewarding shopping experience, and our workers a fulfilling work experience.What I am told by my fellow workers is that their work experience is no longer fulfilling. We will know the truth of that when the Employee Survey, conducted a few weeks ago, is published in a month's time.I have invited the Board Chair also to publish the Survey's results. If he believes what he says, that WSM workers are happy, then he will have nothing to fear from those results. I'm betting those results will not be given to the media. Again, draw your own conclusions.But let's come back to the theme that I perceive to be behind the initial question. How can it be that the Board Chair says WSM is profitable and the workers are happy. And I say, whatever profit is being made is disappearing, and the workers are over-worked and underpaid?Simple. There is a great big gaping hole at the center of WSM's finances, and it is the $8 million debt.Workers are busting ass to make 15% sales increases here, go without pay raises there. Consumers are getting bad shopping experiences here, and failing to see dividends there. Accounts, whether audited or not, are seeing $750,000 profits here, diappearing into nothingness there. All for one simple reason.Every ounce of spare effort and spare resource that WSM can conjure up each year is being drained away to pay off the interest and capital on that $8 million debt.All I am saying is that I think it is time to start a conversation in our co-op and in our community as to whether there is a better way to use our resources and a better way to get rid of that debt.At the same time, making our consumers, owners and workers happier. Complying with our Mission Statement and fulfilling our Triple Bottom Line profit in its entirety.In other words, Anon 3, I'm wondering if the question you are really asking is not 'is WSM making money?,' but rather 'is WSM making co-operation?' To which my answer is, not at the moment. But some of us are trying to make it do so.Now, to be fair, I'm guessing WSM will eventually muddle through. We have committed consumers and committed workers - maybe too committed, and not questioning enough. Which, in my opinion, allows those select few making the decisions at the moment to take advantage.But, bearing in mind those select few have decided the best way to get rid of the $8 million debt is to pay it back over five years, at a cost each year (including interest) of about $2 million, I say that the 'muddle through' is going to continue to include an awful lot of bruising of the stakeholders - which is in breach of our Mission Statement.Not least the fact that, in breach of item one of the Mission Statement, almost all of that $2 million is being exported out of the community - something you don't hear the WSM corporate office telling you.I say that a review of the financial sustainability of WSM would probably conclude that there are better ways to proceed, which would involve less bruising of the stakeholders. But those ways might require bruising of some ego's in the corporate office.Given the choice, I'd rather bruise ego's than stakeholders. That's the way to show a co-operative profit.

I am not a shareholder,

I am not a shareholder, worker-owner, or shopper of WSM.Two quick points, however.  If what Geoff says is true, and that WSM management has made a conscious decision to pay off $8MM in debt in 5 years, then I ask "what's the problem?".  The lender (and I don't know who it is) PROBABLY didn't structure it has a 5 year, fully ammortized term.  Typically those deals are structured as 5 year balloons with 15-20 year ammotizations . . . the fact that the co-op has decided to take rate risk out of play, and accelerate their pay down (off) of debt service is, frankly, something to be lauded.Secondly, sorry that you don't feel like you've been treated fairly from a compensation standpoint.  I apologize if this comes across as overly sarcastic, but, HELLOOO??  Real world?  We're still in the midst of the largest economic crisis in this country in 70+ years.  MOST employees of every entity in the country saw no increase during several, not just one, of the last three-four years.  Additionally, I don't know what a typically WSM employee is paid, but a $.25 an hour increase on $10/hour paycheck is a 2.5% increase (that's some quick banker math skills at work).  Again, considering the climate, 2.5% is nothing to frown upon.Lastly, your logic that a 10% sales increase should automatically result in a 10% pay increase is faulty.  That 10% sales increase has to fund not just pay increase, but increase in cost of goods, delivery fees, utilities, property tax, employment cost (payroll taxes, workers comp, etc), all of which WSM undoubtedly saw during the previous years.

Geoff Gilson's picture

And we are not a shareholder company ...

Thank you, Chris, for your considered contribution. If WSM were simply a traditional and conventional capitalist grocery store (with shareholders), then your strictly capital-based arguments would be very sound.The whole point of WSM and its co-operative model is that it is supposed to be a part of a grouping in our society which adheres to an approach to capitalism that takes into account factors other than simply capital.Traditional capitalism is based on the supply and demand of the marketplace. Co-operation responds to the common needs of its stakeholders (not shareholders).Provided we are not losing money, then what is done with the resources available (be it capital, labor or surplus funds) should be decided by the stakeholders consensually, rather than what the marketplace or capitalist norm dictates.I am saying that the manner in which a select few of the stakeholders have decided to repay the debt, although possibly within the norms of traditional capitalism, is placing an intolerable burden on the workers and the owners, which the co-op is not allowed to do under its Mission Statement.So, what I want is something that one would not find in a traditional capitalist grocery store. I want a democratic conversation as to whether or not there are alternative ways of dealing with the debt, which are not so bruising to the owners, the consumers and the workers.And for all that you say about the economy and normal capitalist expectations, I still do not understand why it is unrealistic for workers to expect to receive a reward for the sales increase which is commensurate with that increase.

Geoff -- again, just for the

Geoff -- again, just for the sake of making sure that no one believes I have a hidden agenda, I have NO dog in this fight.I won't comment on how decisions have been or should be made at WSM, or any other co-op.  What I point out, however, I believe has relatively little to do with whether we're discussing a traditional for-profit entity, a co-op, an NFP, or personal finances.  Assuming that the above statements held true, and that my interpretation is correct, you and other worker-owners/stakeholders may very well be praising WSM's management for their forward-thinking plan to eliminate debt prior to a balloon and reset of the loan, to less-favorable terms in what is sure to be a less-favorable rate environment.  The accelerated repayment of debt is absolutely NOT "what the marketplace or capitalist norm dictates."  This is a strategic business decision that should be lauded.  Again, please note, I'm applauding the decision, not how the decision may have been made.As far as compensation, I'm sorry, but, again, your argument just doesn't make a lot of sense to me.  I'm sure that many of your counterparts would like to see a bigger increase, just as many other people in many different lines of work would like to see a bigger increase in their pay rate as well.  I'm sure that "owners" of WSM that don't work at WSM would love to see a raise in their pay as well.  However, the bottom line is the bottom line: If sales increased 10%, but every other cost went up as well (which, I can feel reasonably comfortable assuring you that they did in 2010: commodities, service charges, employment costs, insurance costs, overhead, etc..), then WSM's NET did not go up 10%.  To award 10% pay increases in that scenario is a) unrealistic, and b) fiscally irresponsible, regardless of what type of entity provides the employment.All of this to get to point: I don't know, nor have any basis, to critique whether you or others have been unfairly managed by WSM, nor whether WSM management and board is running a less-than-stellar co-op.  My point is that your arguments might gain more traction, with me at least, if you would take a step back, and remember that a co-op still must be fiscally responsible at the end of the day -- just like a governmental agency, big box retailer, mom-and-pop LLC, NFP, or big evil bank.  I perceive your financial arguments as out-of-touch with reality, which devalues your other arguments for me.  Just my two cents.

Geoff Gilson's picture

Two cents + 10% ...

Chris, I get the separation of fiscal argument from the how-we-got-there argument.Six years ago, my primary concern was simply to ensure that decisions were made inclusively and co-operatively, which they were not then, and are not now.Since then, I have become increasingly concerned also with what I perceive to be the fiscal rectitude of the decisions made - or rather the lack of fiscal rectitude.I hear all that you are saying. And it may well be that all of the decisions are the very best financial decisions that could have been made.When the review committee of owners that I have suggested, if ever it is set up, were to come back and say, best decisions ever, I would be the first to applaud.In the meantime, I have my doubts. I do not think that, if there had been inclusivity in the first place, the decision for a $20 million turnover co-op (as then it was) to incur debt of $10 million (as it was originally), repayable over 5, 6, 7 years, whatever, would ever have been made.The comment that, in all the awful circumstances we now find ourselves, a decision taken not inclusively now to repay that awful, undemocratic debt over five years is the best we can do, doesn't really wash too well with me. However well-intentioned it may be. There are other alternatives.As to the 10% pay point. Trust me. From the little I have been shown, it is clear to me that, even after any increase in costs, there would be money for pay raises commensurate with the sales increase - but for the awful undemocratic debt. I will stick with that point.I haven't yet become a mindless socialist. Merely an informed and observant progressive. Who before being a progressive was a successful management consultant, well versed in reading a set of accounts. Well enough that I know how to find the human touch along with some democracy in even the most hostile set of accounts. Were I to be shown the proper accounts!My last point, since I do not think we will agree, is that I would love that the review committee of owners that I have suggested be set up. Were it to be established, my first order of business would be to ask that the committee be allowed to conference call you in a couple of times!I do not think we come from the same base here. But I love a comment that is well argued, even if I don't agree with it.

There's really no way out of

There's really no way out of the hole at this point other than selling "shares" to bring in more capital.  Unfortunately, the way WSM is structured, the preferred shares don't have voting rights, so it's virtually impossible to sell them for any reasonable price because there's $0 dividends going to those owners.  Ruffin and friends dug themselves a big hole, and I doubt there's an easy way out of it.  If the WSM consumer/worker community were more active, then the old guard on the board would be voted out, and management would be replaced by fresher management, that perhaps wouldn't have such a personal stake in the game.   Geoff, what you fail to realize is that WSM is a Co-op in name only.  In reality, it's being run by Ruffin and friends who started it so many years ago.   As long as you try to cling to this idea that WSM is a real co-op, you're going to be disappointed.  In fact, I've seen private for-profit businesses in which the employees have more decision making power than you do at WSM.

Geoff Gilson's picture

Ever the Optimist ...

I hear you Anon (1, 2, 3 or 4?), but I remain the eternal optimist. We can still make WSM a better co-op and a stronger business.The one thing we certainly need is the continued custom of you, and all of the communities in Carrboro, Southern Village and Hillsborough. So, please keep shopping with us. And try to keep the faith ... ??

JeffH's picture

Was there really a profit in 2010?

If I read the 2010 WSM annual report correctly.  It looks like the only reason WSM made a profit last year is because they sold the property to CVS. Ruffin evn mentions this in his letter in the annual report.  (These properties are on Weaver St & Greensboro (where WCOM was) and 104 Center St)  I think the Chapel Hill news reported that the tax values of those properites were 1.35 million.  The "gain on disposal of assets" in the report is $411,449 which would account for most of the $473,272 profit reported in 2010.  In contrast, the gain on disposal of assests in 2009 was 16K.. which leads me to believe that 411K is mostly due to the sale of property to CVS.. but I'm no accountant.  As a neighbor to those proplerties now owned by CVS.. Its very unfortunate that WSM appeared to make very little effort to sell those properties to local interests rather than a national chain.

Geoff Gilson's picture

Q3 Results

The Third Quarter results for WSM are published. They are not the happiest reading. I will have a little whine. But it will be even-handed. Everyone gets a knock - including me. But mostly I want to make a plea to the WSM community. You. Specifically the 13,000 of you who are WSM consumer-owners. You need to be doing more. It's your co-op, too. Don't leave it to others to save it.But first, the figures and the whine - and the knock against me. Me? Yeah. Why do I keep trying to keep you folks informed of what is really happening with WSM, while the corporate office continue to paint a picture that is simply not true, and ends up being counter-productive?Oh. I think I just answered the point.  The WSM corporate office would say (have said) I am being disloyal and destructive. How can it be disloyal when we are a community co-op, and one of our values is transparency? And how can it be destructive when all I am doing is sharing the truth, and asking for help for that same community co-op?You can only truly ask for help when you genuinely admit there is a problem. I'm not interested in saving face. I'm interested in saving our co-op.Now, the figures and the whine. The sales increase for Q3 was as I forecast -- 8%. Which sounds good, until you set it against the goal for the year (established by the corporate office) of 15%.Leaving aside why the goal of 15% was established -- for which we have still not received a sensible answer -- what happens if we don't make it? And we won't. It would require that we increase sales each and every week in Q4 by 34%. In the past two weeks, we increased sales by 7% and then 5%. If not making the 15% goal is not important, then why was it established -- with huge deleterious effect on us workers; working harder and harder for less and less? The more disturbing news is that, after we workers bust butt for nine months to increase sales for reasons we do not know, realizing an increase we are told is $1.6 million for the year to date (yay for us, and our contribution to our community co-op!), we are told this will improve profit by only $15,000. And that a dividend is still not guaranteed.So, what was it all for? Do the corporate office -- do you -- have any idea of the dampening effect such news has on the spirit of the workforce in your co-op?Business 101. You do NOT set unattainable goals. Not explain them. Stand idly by why good workers see their efforts fail. And then offer them nothing but platitudes. You kill the drive. You kill sales. You kill the company.The Mission Statement of WSM promises workers a fulfilling work experience. Your co-op is in breach of that provision of the Mission Statement. This should bother you. The WSM corporate office, and the Board that rubber stamps it, have many questions to answer. Fortunately, we workers will have an opportunity to ask those questions.I am told that next week the results of the WSM Employee Survey will be published and shared with all workers. We have been promised the opportunity to digest those results in a meaningful way. We have been promised the opportunity to have meaningful discussions about the results. And we have been promised meaningful opportunity to be involved in the Action Plans we have been promised will be devised to correct the matters raised in the Employee Survey.If the WSM corporate office keep their promises, then, for the first time since I have been involved with WSM, workers will actually have a real voice in the direction of our co-op.And I suspect, if we are given the opportunity, it will be a substantial and effective voice. My anecdotal feedback from fellow workers is that the main points they made were: (1) They want more understanding of goals, how they are set, and why (cf. 15% sales increase, and the crippling debt of $8 million); and (2) They want worker-ownership (the cost of which is $500, compared to about $175 for consumer-ownership) to be cheaper, so that they can vote in Board Elections (yes, your workers have to pay to vote).If the WSM corporate office are serious about allowing changes to reflect the concerns of us workers, then we workers should shortly be able to create a situation where workers will be more involved in the big decision-making in the co-op we half-own. But don't leave it up to us. It is your co-op, too. There are 13,000 consumer-owners. About 100 of you turn up to Annual Meetings. About 500 of you voted in the last Board Elections. This is not involvement. You can not complain about your co-op when you do not participate. Try spending as much time on your co-op as you do on Facebook, and see what happens.Is it worth it? Sure. We may not be the perfect co-op. But we are still a co-op. We blazed a trail for organic food in the locality. We offer a platform for local farmers to sell their produce, in a consistent fashion, which helps those farmers plan ahead. Even now, WSM is helping a sister co-op open in Burlington. There is much about WSM of which we can be proud. There is much to support. And where it is not perfect, you should get involved, and change it!And the most important thing you should be doing at the moment? Shopping more at The Weave. If each consumer-owner spent $10 more in Q4. Not a week. Not a month. Just once. $10 more -- once. We would double the profit to date for this financial year.A co-op is like a love affair. It has it ups. It has its downs. It has happy moments. And troubled ones. And it has at least one of the partners always saying, we could be doing better! Most importantly, like a love affair, a co-op needs work. If you don't work at it, it dies. WSM is too good -- even now -- to let it die. It's up to you. It's your co-op, too ...  

Geoff Gilson's picture

More Borrowing By WSM ... ??

The Board of WSM are inviting feedback from owners on the WSM financial results for 2011, the financial priorities for 2012, and the manner in which the patronage dividend will (may?) be apportioned.The Board Chair's report on the state of WSM's finances for FY 2011 is a re-hash of all that has been covered in the previous comments in this thread. He claims WSM has returned to financial health. I truly wish that were true.The fact is, however, that our profit is lower than last year, and has been achieved by making exploitative demands of already hurting workers.Frankly, the most galling reference by the Board Chair is to an unrepresentative answer in the recent Employee Survey. That reference suggests that the employees of your community co-op are totally happy with their lot.The Board Chair (himself a worker-owner, who works in the WSM corporate office) is fully aware that the results of that Survey were a resounding vote of no confidence in the leadership of our co-op.For sure, we said we like working at WSM. Of course we do. Otherwise we wouldn’t be here. More to the point. We ARE here precisely because we do believe in the principles of co-operation.The Board Chair fails to reference the pages and pages and pages of very specific, detailed and comprehensive commentary, offered by a statistically significant proportion of the workforce, which commentary states quite baldly that we workers are hugely disappointed that our leadership has simply set aside any pretence of being a co-op, and of complying with the co-op’s Mission Statement that demands that employees enjoy a fulfilling work experience.We love working in our co-op. But we are very unhappy with the co-op’s leadership.The Board Chair knows that, and dishonestly chooses to mislead consumer-owners into thinking we workers are happy with everything.The fact is that the recent Employee Survey reported that workers feel overworked, overstressed, underpaid, understaffed, under-equipped and unhappy with the lack of communication from the WSM corporate office, and dissatisfied with the lack of inclusion in decision-making in a co-op they are told they half-own.But the package of information that the Board has released gets worse.You see, we employees are currently engaged in a process of abbreviated discussion about addressing the grievances we raised in response to the Employee Survey.That discussion is supposed to lead to a specific round of discussions on Employee Action Plans to address worker grievances.Indeed, I was approached by the corporate office, and specifically asked not to write publicly about that process while it was underway.The ostensible reason given was to encourage discussion, without employees feeling their remarks might be published. So, I agreed.We can now see that the real reason was to allow the WSM corporate office dishonestly to pretend to the outside world that all was well with our community co-op’s workforce.The point is that those grievances will require funds to address. We workers rightfully feel that, having made huge sacrifices over the past few years, in order to bring our co-op back to some sort of health, it was time finally to address our work conditions, to bring them back to what they were – or better, as a sort of reward.After all, we make the money that keeps the co-op afloat. Why should we not share in the product of our efforts?Yet, before our discussions on the Employee Action Plans are even begun, let alone concluded, we are told in the current Board missive that the Board and WSM corporate office have dreamed up a whole new 10-year Capital Plan, and it is THAT Capital Plan which will receive priority in funding.Enough.We workers were denied a dividend for three years. We were denied pay raises for two years. We have received paltry pay raises since then. All to help the co-op stave off bankruptcy.We have agreed to work longer hours. We agreed to bust butt this past year to try to increase sales by 15%. We are over-worked, over-stressed and under-compensated. We work harder now than we did several years ago, for less. All to help pay off a debt of $8 million, which was borrowed without the approval of owners or workers, to fund the last disastrous capital expansion plan.We have not yet paid off that debt. No doubt further exploitative demands will be made of us next year, since we did not achieve the 15% goal this year. Our own grievances and demand for better conditions are being shunted to one side.And all the while, the Board and WSM corporate office, in secret, are devising yet more capital plans? Which will require more borrowing? Which we workers will have to repay by working even harder?Again. Enough.My fellow workers and I will be doing what we can in our meetings to try to stop this nonsense. But we can not do it on our own. We need the support of consumer-owners when they provide the feedback the Board is currently requesting.But before we get to that suggested feedback, you may well be asking yourselves, how did all this happen without our knowing? Well, I could say because you good folks weren't paying attention. But that wouldn’t strictly speaking be fair.You see. The Board decided last year not to hold an Annual Meeting. But how, you might further ask, could they do that without a change in the By-Laws? Because the Board has given to itself the sole power to change the By-Laws, without a vote of owners. And how did this happen? Er, cf. paying attention ...Ok, so there is this Capital Plan. Which was developed undemocratically. How bad can it be? I don't know. The Board aren’t publishing it as part of their feedback exercise. They want you to agree to it blind.Hmm. But what is all this I say about new borrowing? Well, that’s where the Board’s plans for the patronage dividend come in.Consumer-owners will receive 20% of the dividend apportioned to them. The remaining 80% will be put into a capital fund (consumer-owners will never see it again). And we are told the capital fund will be used to make capital improvements.Well, you say, that makes sense. Well, it would, if it were true, and if the capital projects were being approved by the workers and consumers in our worker-consumer co-op.But the Capital Plan of projects has already been agreed, without our approval, and again, it is not being published.But worse. The fund money itself will not be used to finance the capital projects. Oh no. The fund will simply be used as collateral to BORROW more money (perhaps three or five times the amount of the fund). Each year.And we workers will once again be the ones having to shoulder the sole burden of paying off the debt and the interest. Which we are doing at the moment, to the tune of $2 million a year, on the still existing $8 million debt.Yes. You're reading that right. Even after the debacle of the store expansion in 2007/2008, which nearly bankrupted our co-op. When we still have $8 million of debt to erase. When the only plan so to do is to make the overworked workers work ever harder. Yes. We are planning to fund yet more unknown capital spending with new borrowing.But how, once more you ask, how could the Board possibly get the authority to borrow more money? We, the owners, would stop them. Think again. The Board changed the By-Laws to give them sole and absolute authority to borrow whatever capital monies they need.All of this has been going on and continues because you good folks do not put down your foot. What can you do? Put down your foot. And save our co-op. Provide feedback to the Board.Oh. And in case you were thinking that there might be meetings, at which you would be able to hold the co-op leadership publicly accountable, think again. There will be tables. Where you can have a chat with one or two folks. Away from the glare of any transparency or openness.I would respectfully suggest that you might want to consider the following as a response to the Board missive:1) Shop more at WSM. And take more of an active role in the co-op. So that plans like this are not just dumped on you.2) Take part in the current feedback exercise. Write to: board@weaverstreetmarket.coop. Please don't let important decisions about our community co-op be taken by a self-selected few just because you allow them to do so by default.3) Ask that that the first financial priority for 2012 be a sustainable profit, and an immediate plan to eliminate the existing $8 million debt – a plan that does not impose further burden on your long-suffering workforce.4) Ask that the second financial priority be an improvement in the condition of workers to be agreed with the workers.5) Ask that the third financial priority be that no Capital Plan be implemented until it has been agreed by workers and consumers, and simply refuse to allow 80% of your patronage dividend to be retained until such consent has been given.6) Ask that the fourth financial priority be an absolute moratorium on any and all spending on or borrowing for the Capital Plan until such time as the current debt has been eliminated in full; consultation has concluded on the Capital Plan; and the grievances of the workforce have been addressed.I too believe that our community can only benefit by having a thriving, sustainable co-op. I too believe that it requires a sound capital base. But I also believe that our community worker-consumer co-op can only thrive when it has a happy workforce, and a consumer base that is respected and included in important decision-making.We are a co-op for a reason. And that is because we expect more of ourselves than to be thinking merely of making money. We are supposed also to be thinking of the social impact of our business on our owners, consumer and our workers. That is why we pride ourselves on having a triple bottom line: social and environmental, as well as financial.It is time to take as much care of the social and environmental bottom lines as we do the financial. Either we have the funds to do so, or our Board should not be sending out missives saying we have returned to financial health.Please provide the Board with your feedback. And when you think of borrowing, please be thinking only of 'borrowing' my suggested financial priorities for FY 2012 … !!

Geoff Gilson's picture

Consumer-Owner Dividend = $3

In among all the erroneous chatter the Board and corporate office of WSM are currently sending to consumer-owners about the supposed financial health of WSM, those of you who are consumer-owners will by now have worked out that it is not just the workers of WSM who are suffering financial woes. In contrast to the Board and corporate office's declarations of financial nirvana.Tucked away at the back of the expensive-looking Board brochure that just thudded its way into your mailbox is the information that, in return for the WSM Board and corporate office taking away your 5% consumer-owner discount two years ago, they have just decided to give you a dividend of - wait for it - $3.Of course, we are told, the amount of your dividend is as low as it is so that you can further help to build the financial strength of our community co-op. Um. Arrant nonsense.And that the discount-to-dividend process is a nationwide phenomenon, designed to strengthen co-op's all across the nation by encouraging much-needed loyalty in co-op's. Er. Half true.The WSM dividend is low in order to help build the strength of WSM? Hmm. The dividend is low:1) Because we are still paying off $2 million a year on the undemocratically-raised debt, that was used to finance the failed capital expansion of 2007/2008. And, unless consumer-owners use the opportunity of the current feedback exercise to request change, we will be paying off at that rate for the next four years.I continue to suggest that the sensible way forward is immediately to establish a Board Committee of Owners to undertake a thorough review of the debt, and to make recommendations as to its early disposal.This would free up $2 million a year, which could then be used to invest in much-needed improvements, reward long-suffering owners with real dividends, and improve the lot of your hard-working, over-stressed workforce.I first put forward the idea of such a Committee at the Annual Meeting in 2008 (um, we no longer have Annual Meetings; we have 'tables'). The Meeting agreed. The Board and the corporate office then undemocratically overturned the decision of the Annual Meeting of Owners. And here we are. With a $3 dividend.2) Because the bulk of this year's financial 'profit' is being retained by the WSM corporate office, to build a capital fund, against which more monies will be borrowed (yup - MORE debt), in order to finance unspecified, undiscussed capital projects.I have suggested that the Capital Plan first be discussed openly. That it should be costed. And that absolutely no funds should be set aside or monies borrowed until owners have approved the Capital Plan, and have given their specific authority to spend monies on it.As for the claim that WSM is merely following the example of other co-op's around the nation, in changing the discount into a necessarily-smaller dividend, I say, 'almost.'The concept is one called 'Economic Owner Linkage,' and was devised by a Professor Brett Fairbairn, with whom I have been in correspondence.Not least when we agreed that Director Elections in a truly open and democratic co-operative are not the be all and end all of democratic expression.Directors do not have carte blanche to do what they like. Their election represents merely the first step in co-op democracy.Elections choose the folks we co-operators want to have structure the ongoing democratic conversation within our co-op.Frankly, there is next to no conversation within our co-op. Conversation suggests two-way, immediate, accountable dialogue, where the outcome is determined by all those taking part in the conversation, not just a corporate office or Board operating a veto at the conclusion of the exercise.Specifically, it is not one-way 'feedback.' Nor is it a 'Suggestions Box.'The essence of 'Economic Owner Linkage,' if it is properly implemented, is that it is a deal.In return for owners agreeing to have the return on their investment based upon the performance of the co-op, the co-op opens up the democratic process, to ensure that owners actually control that performance.The Board of WSM are well aware of this. They attached Brett's report on the subject to one of their Board Minutes.Is there a consumer-owner out there who feels that, in return for replacing 5% with $3, they got more democratic conversation or more control of the performance of the WSM Board and corporate office?Well, if you are a consumer-owner who feels that didn't happen, then now is your chance to ask for it.Complete the WSM Feedback Form. Sigh - it's at least an opportunity to START a conversation.Would you mind if I had a few suggestions for completing the WSM Survey - which can also be found online?Question 1 --  Might I suggest that the most important of the proffered suggestions are (excuse the abbreviations): downtowns, food system, worker conditions, and product quality?Question 2 -- This might be your chance to ask for more democratic control of the performance of WSM, as your promised 'return' on a smaller financial return.You might want a restoration of Annual Meetings, more elected (as aopposed to appointed) Directors, an online discussion forum, or a Consumer-Owner Discussion Group.Question 3 -- Again, might I suggest the important proffered goals are: survival, savings and debt?Question 4 --  (a) The Capital Plan first to be submitted to the ownership for approval; (b) Savings to be spent on new capital projects, only after projects are approved by owners; (c) No more long-term borrowing by WSM without the prior approval of owners; (d) A Board Committee of Owners to be established to review the existing long-term debt of $8 million, and to make recommendations for its early disposal; and (e) [This is a weird one; the WSM Survey touts improving worker conditions in Question 1, but not as a financial goal in Question 3; er, how do you improve worker conditions without it being a financial goal? So ... ] Establish a Committee of Worker-Owners immediately to draw up plans for improving worker conditions.Question 5 -- Up to you!Question 6 -- Ditto!Question 7 -- The last few years have seen the WSM corporate office and its Board concentrate power in the hands of a self-selected few. It is time for this to be reversed, so that workers and consumers in our worker-consumer co-op are truly those who democratically control decision-making and performance in our community co-op.I would suggest you might ask that, once Annual Meetings are restored, motions are allowed. They are not at the moment.I would also suggest that the Board be stripped of the power it gave itself to change By-Laws without the approval of ownership. That's how $10 million was borrowed without owner knowledge in 2007/2008.The path to true, sustainable financial health in our community co-op is to abide by the simple truisms that work for successful co-op's all around the country.Sell what the consumers want, in the way workers want, by putting control in their hands, not in the hands of a self-selected few.Spend only what you earn. Borrow as little as possible. Do nothing if it does not serve the common needs of your consumers and workers.And, if you think you may be stepping outside those sustainable limitations, put in place a process that allows you to do so only after the most stringent, democratic and accountable consultation.Now, try fitting that in the little box provided ... !!