Learning From A Failure

In the aftermath of an attempt to expand which was successfully opposed by disaffected members and employees, the board of directors of the co-op in Davis, California has returned to its strategic planning activities with a redoubled commitment to member and employee participation in the planning process.

The Context: A Failed Attempt to Expand

In mid-1993, the Davis Food Co-op board of directors was presented with an attractive opportunity for opening a second store. There was very limited time in which to make the decision and close the deal. As is commonly necessary in real estate matters, the board made some negotiating decisions in executive session. Within these constraints the board and management moved quickly to communicate with members and employees about this growth opportunity. Employees were briefed at a staff meeting. Member input was solicited on comment sheets posted in the store and collected in a notebook organized into pro and con arguments. An independent market analysis was completed and presented at member forums.

Debate was, to say the least, lively. There were talk shows, news paper articles, letters to the editor. Debate was often acrimonious. The integrity of board members and management was questioned. Some people seemed to believe that something underhanded and sneaky was going on behind their backs. When a vote was taken to authorize the needed capital loan from the National Cooperative Bank, the measure was narrowly defeated.

In the aftermath, as the board reviewed its attempts to communicate with our four thousand members and seventy employees during the expansion debate. It became clear that we needed an enhanced ongoing process of communication with these primary organizational stakeholders if we were ever to grow the cooperative. The level of distrust and disaffection among a vocal segment of our membership and staff was both distressing and dysfunctional. Improved member and employee participation in our strategic planning process was not just "the right thing to do": it was the necessary precondition to our moving forward in anything approaching a unified fashion.

The Response: Increasing Employee Participation

After some debate, the board decided to design two separate processes for participation in the strategic planning process -- one for members and one for employees. In addition to ongoing communications such as our newsletter, efforts to increase communications with members included a mail survey, focused discussions with randomly selected members, and small group sessions with members to present a draft strategic plan. The remainder of this article will focus on the efforts to increase employee participation.

Since almost all of our employees are members, some people felt that separate access for employees was unnecessary, costly, and perhaps even unfair. All avenues of communication open to members are open to employees as well in their roles as members. For instance, DFC bylaws allow for up to two staff people to be elected as board members by the membership. (Two staff members currently sit on the board.) Staffers, as members, may serve on board committees -- and some do. In addition, a staff advocate, elected by the staff, attends the weekly management meetings and sits on the co-op culture committee.

Staging separate events for employee participation in planning, some argued, would double board and staff time commitments and increase dollar outlays if employee participation took place on paid time. Finally, employees are a small portion of the membership, and their interests (e.g., increased pay) are not necessarily consistent with those of the membership at large. Special opportunities for them to participate in the planning process could give them undue influence.

Employees felt that the cooperative lacked a cohesive vision. They criticised the decision making process and did not feel that their views were taken into account.

Others, however, argued that employees have larger individual stakes in the future of the cooperative than individual members. They spend a greater proportion of their life involved in the cooperative's activities and depend upon it for their livelihood. They also have knowledge about the cooperative that is not available to members at large (or often to the board) because of their involvement with the daily operations of the business. And since the staff is the co-op's primary interface with the membership, they already have undue influence on the co-op's affairs. The negative views expressed at the checkout stands during the expansion debate had an effect on the outcome of the vote. Input from employees as employees was necessary to forge a strategic plan that could garner widespread support.

It appeared that some employees were dissatisfied with more than the notion of a second store. Prior to the advent of the expansion issue, a number of employees had expressed discontent with the process of changing the benefits package; they felt that they had not been included until it was too late. Myriad discontents among the staff had surfaced during the expansion debate. The board felt that it needed more information about th6 extent and sources of employee dissatisfaction in order to focus its efforts to improve morale.

A consultant was hired to conduct an employee assessment. An outsider was used to encourage frank opinions by removing fears of retaliation. The consultant conducted a written survey of all employees and inperson interviews with 24 individuals. Her report verified generalized alienation among the staff. Employees felt that the cooperative lacked a cohesive vision. They did not feel that their views were taken into account in decision making. Employees criticized the decision making process when voicing discontent with the benefits plan and the gainsharing program.

Eager to display their commitment to openness, the board hosted an evening meeting for employees to hear the consultant's report and recommendations. Only two employees (other than administrative staff) attended. Board members were frustrated and disappointed.

Another meeting was held, midday at the store and on paid time, to review the consultant's report and prioritize action items. This meeting was well-attended and productive. Working groups composed of employees, administrative staff, and board members were named to address various issues. When staff were solicited to join a group on employee participation in decision making, no one volunteered. One staffer did allow as how this was a tad ironic. A few folks were pressed into service through peer pressure.

The employee participation working group never met, but others did. A compensation group prepared a report comparing the co-op's wages and benefits with other local businesses, food cooperatives, and natural food stores. The gainshare group gathered staff opinions and recommended changes in the program which were subsequently approved by the board. The training group designed a program of financial education for staff which was approved and funded by the board.

A small but determined "vision" committee brainstormed ways to include staff in the strategic planning process. In October 1993, board members and management attended a strategic planning retreat and drafted a three-year plan for the cooperative. Threeyear goals included further development of the current store; conditions to be met before opening an additional store; and the intention of opening at an additional site.

The vision committee planned and carried out activities to take the draft strategic plan to the staff. Both the October and January staff meetings were devoted to the draft plan. These meetings were on paid time and were attended by most employees.

At the first meeting, the draft strategic plan was presented by board members and management personnel. We broke into small discussion groups to get ideas on "How can staff be included in the strategic planning process?" When the groups reported back to the reassembled meeting, it was apparent that discussion had centered on questions and views about the draft plan. But the subject of how employees could participate was largely unaddressed.

The next step was smaller meetings where staff members could meet with board and management folks and ask questions about the plan and express their opinions. Sign-up sheets were posted in the store. Four employees attended the first session, and only two the second. Despite disappointing attendance, the meetings provided an opportunity for in-depth discussion.

Before the January staff meeting, materials were distributed to all employees. After a brief summary of the plan, we broke into small groups to discuss what things need to be done to fully develop our current store before expanding into an additional store. This time reports back to the large group were extended and were to the point. Employees had many ideas about how to improve the store and were eager to share them.

The Lessons: Learning From Experience

Lesson #1: Building trust is a long term, comprehensive process.

Food cooperative employees tend to be well-educated and idealistic. Their expectation for influence on cooperative decisions are high and sometimes unrealistic. Once employees feel alienated from the decision process, initial attempts to include them may be met with scepticism. Sincere attempts to encourage participation may be viewed as attempts at appeasement and cooptation. Irregular and sporadic opportunities to provide input are unlikely to build the trust necessary for meaningful participation. Only repeated and continuous opportunities for participation in decisions, beginning early in the decision process, can build trust.

To build trust, opportunities for participation in decision making must be not only continuous, but comprehensive. Employees do not make a distinction between influence on one type of decision versus another. Although there may be theoretical differences between operational decisions, personnel decisions, and strategic decisions, employees do not experience participation in terms of these abstract categories. If employees feel they were not heard on a personnel issue, they will not believe that they will be heard on a strategic decision.

Lesson #2: Take the opportunity to participate to the employees.

Mistrust is not the only obstacle to employee participation in decision making. Although employees may sincerely want a voice in cooperative decisions, there are many competing demands on their time and energy, both on thejob and off. Our most successful attempts at involving employees have been during work hours, in the store, and on paid time. These things lower the costs of participation for employees. Staff don't have to transport themselves to another place or make changes in their regular schedules.

Lesson #3: Structure the participation opportunity for the employees.

Initially, we thought that participation activities for employees would have more validity if they were involved in planning them. But we found interest in involvement at this level to be extremely limited. Our employees, it appears, don't care to tell us how they want to tell us: theyjust want to tell us what they think. Asking them to help design the process raises the cost of participation for them. Most employees are neither skilled at nor interested in meeting planning.

Lesson #4: Ask employees for input appropriate to their role as employees.

When we finally got around to asking our employees what improvements needed to be made to the existing store, they responded enthusiastically with good ideas. What employees have to add to the strategic planning process is their intimate knowledge of the workings of the store. This is valuable and important information.

The daily work experience of the line employees does not, however, make them knowledgeable about the food industry, market strategy, or financial management. Providing this kind of overview information is management's responsibility. Certainly management should answer employee's concerns about these larger issues frankly; and information pertinent to these issues should be freely available to interested employees. To solicit opinions from line employees on these issues is inappropriate and may raise unrealistic expectations about the role of employee participation in the planning process.

In conclusion: At Davis Food Cooperative, we are only beginning to learn how best to involve our employees in the decisions that affect them, our members, and ultimately our community. Whether we have made headway in improving the trust of employees remains to be seen. We intend to devote an annual employee meeting to the strategic planning process, and we continue to seek additional ways to involve our employees. One thing is for certain, however. Employee participation, like exercise after forty, requires a permanent commitment in order to attain meaningful results.

Here is a response to this article from Alan Mathewson:

"Expect leadership from management and board"


I read the article by Gillian Butler "Lessons From a Failure," [CG #57, March-April] with growing trepidation for my fellow general manager in Davis.

While I agree with much of Gillian's comments, I kept waiting for her to acknowledge the simple truth which most of us who manage large co-ops have recognized for years. Most (not all) employees are nowhere near as committed to the future -- nor have the perspective -- as management.

I have grown weary of pious claims that involvement will somehow bring a greater level of responsibility and self-lessness. The record for most co-ops in the $4+ million range does not bear this out. Our personnel turnover at Sevananda stands at roughly 30% per year, and I think that's about average. On the other hand, annual turnover among employees earning under $15,000 is about 60%. That's not a function of involvement nor of our lack of investment in staff training. It's a function of economics and, frankly, the mobility of the under-30 generation.

Don't get me wrong. I believe as much as anyone in feedback, but I've learned from experience that idealism has its limits when choices are made by those who have not demonstrated commitment. Our decision at Sevananda regarding team involvement is essentially to only bring to team meetings issues in which team members have a voice. I was surprised to read that Ms. Butler seemed inclined to accept "negative views expressed at the checkout stands" by employees as a valid forum.

Staff members have a perspective and agenda which is generally (yes, there are exceptions) biased toward short term goals. I state this with forbearance to the value I acknowledge in a professional staff. I think it's great to hold informational meetings or referendums, but to expect employees to participate in a decision as big as specific site expansion is inappropriate. The majority of staff expect leadership from management and board.

Our competitors in the industry who operate privately-owned stores and chains have learned where to balance employee concerns with those of the owners. Why can't we? By concentrating the decision making to a clear hierarchy, they run the distinct advantage of being proactive to opportunities rather than reactive to crisis.

Alan Mathewson, Sevananda general manager Atlanta, Georgia

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