Don Kreis: Wine and Cheese Party at the Hanover Co-op?

Consider what happens when your food co-op – the place where you buy all of your groceries, because you love the customer service and the idea that no outside investors are extracting wealth from you and your neighbors – does something you think is awful. Let’s say, for example, that for no reason apparent to you, the co-op fires your store’s wine guy and its cheese guy. Each is a friendly employee who has, countless times, helped you find just the right item to make the meal you are about to prepare just perfect. You smiled whenever you saw either of them in the store; you chatted them up whether or not you needed wine or cheese on any particular day. Now, they’re gone.

Then you read in the local newspaper that the co-op fired your favorite food purveyors because they had been talking to their fellow employees about forming a union – an activity that is expressly protected under federal labor law. The newspaper’s columnist says it is so, apparently because the two fired employees told him that.

What do you do, if you are a loyal member of the co-op? Well, the other day I got an email from a longtime member of a co-op who is in precisely this situation. The member in question said he spends about $6,000 a year at his co-op, and has resolutely defended it against the claims that circulate in the community that the cooperative is an elitist organization whose prices are higher than those of the local supermarket chain stores.

But, said the member, the treatment of the two fired employees “is simply wrong” – so wrong, in fact, that “unless there is some meaningful action from the [cooperative’s] Board I will cash out my shares and organize my life so that I do not have to spend another dime in the co-op.”

Righteous indignation in the face of alleged injustice feels good, of course, but in this instance I would respectfully suggest the member in question is doing precisely the wrong thing. Allow me to explain.

The cooperative to which this member belongs was founded in 1936. It has thus been nurtured by several generations of loyal members, to the point where the organization has some 400 employees, about $75 million in annual sales, and four stores – one of which belies the co-op’s elitist reputation by serving a mixed clientele whose previous supermarket declared bankruptcy.

Would that community, and the nearby Ivy League college town where the co-op’s flagship store is located, be better off if their cooperative disappeared? Would that do honor to those whose hard work and loyalty built the organization? Would that be good for the remaining employees? Are today’s members, the beneficiaries of a great legacy, justified in deciding not to pass that legacy along to future generations? Because when you decide simply to walk away from your co-op when it does something that, you presumably think your fellow members should follow you out the door –consigning your 77-year-old co-op to oblivion.

“I’m not spending another dime there” is the instinctive reaction in our profit-maximizing economy – and it is indeed the right response when you find out that some investor-owned firm, which depends on your business to generate profit, is doing something noxious. In those circumstances, voting with your feet is your only recourse. At a consumer co-op – which, if you are a member, you own – it ought to be the last recourse.

Which, of course, raises the question of what should be the first recourse. The next meeting of the cooperative’s member-elected board of directors is on July 23 –and the board, expecting a crowd of angry members, has moved up the start time by an hour to 4:30 p.m. Concerned members should turn out in droves, but to listen rather than to speak.

For what should they be listening? Not, certainly, a detailed explanation of why the two employees were fired. As the owner of a local farm that sells goods to the co-op said in a letter to the editor the other day, “I certainly might be wary of discussing matters of that nature on my farm with [the newspaper]. You make public reasons for letting go employees in a public forum and pretty soon you may be getting calls from lawyers.”

Nor should members be listening for denials from the general manager and his key deputies to the charge of attempting to prevent unionization. Management may well make such an assertion –but what else could the management team possibly say? If members of this cooperative are prepared to draw such a sinister inference in the absence of any direct evidence then there is nothing the general manager can usefully say. Cynicism might well be the right default when observing what big multinational corporations do, but a cooperative should be all about trust. If the trust isn’t there, then the co-op has a lot of work to do.

Indeed, the question of trust is the real issue here.

Brett Fairbairn, a well-respected scholar from Canada who has dedicated his career to studying cooperatives and cooperation, has described trust as central to cooperatives’ success. In his seminal 2003 essay “Three Strategic Concepts for the Guidance of Cooperatives,” Fairbairn writes that “[t]he trust that members have in their co-operative is a source of economic success and co-operative advantage. Trust means greater member loyalty, which assists the co-operative to be more successful.”

According to Fairbairn, “any business that creates trust among its customers will be able to perform more efficiently as a result, but co-operatives have some special advantages in this regard. The fact that they are member-owned and -controlled, and do not exist to create profits for any group outside the membership, means they can more easily be trusted by their members. This potential co-operative advantage is made real to the extent that the co-operative succeeds in making itself transparent to its members.”

When Fairbairn refers here to “transparency,” he is not suggesting that cooperatives open all of their records and internal discussions to member scrutiny. He would certainly not urge a cooperative that dismissed two popular employees provide a detailed and specific explanation. Rather, by “transparency” Fairbairn means, among other things, that “members are well-informed—frequently and through multiple channels—about business, service, and financial results,” and that “members understand the industry or sector of which their co-op is part; they can see ‘through’ their coop to markets, forces, social and economic trends beyond.”

The widespread and angry reaction to the dismissal of the two co-op employees suggests that this particular cooperative may be what Fairbairn calls a “black box” co-op – the opposite of the transparent organization he envisions. According to Fairbairn, a “black box” cooperative is “a large, complicated, opaque organization. . . . It deals with its members, and it deals with wider markets, but each transaction is limited in scope: the members can’t ‘see’ the market, or the sectoral trends, pressures, and opportunities, through the co-op. It is probably natural that older organizations tend to adopt some of the features of a black box with respect to their members. Historic measures, new policies, and adaptations are not well understood by members, or well explained. Compromises and ambiguities accumulate.”

Exhibit A is the member-email quoted above. “I do not want the co-op to discuss labor relations in public,” writes this member, “but I do want my co-op to hold a higher ethic at heart. If not then I can shop anywhere because where I lay my money down doesn’t matter anymore.” To the extent this member is typical, the trust that Fairbairn extols is gone and the membership simply does not understand how a responsible and ethical consumer-owned grocery enterprise can manage to compete with the corporate supermarket chains while remaining the kind of workplace that reflects the high aspirations of the cooperative movement.

Do the members of this cooperative know that one of the seven Board-defined “ends” (i.e., objectives) to be pursued by the organization is that “there will be a major source of employment in the community that provides personal satisfaction to employees, livable wages, and financial security for employees and their families?” And do the members know what evidence exists to demonstrate whether the cooperative is achieving this objective along with the six others the Board has defined? (Another one: “There will be a vibrant cooperative sector in the economy, both nationally and regionally, and a local community educated in the value of cooperative principles and enterprises.”)

If members are confident that the co-op has become, or is becoming, the sort of workplace described in the preceding paragraph, trust among the members will be sufficient to carry it through the present crisis. In that situation, members would naturally understand that the co-op sometimes needs to fire even employees who are helpful to shoppers and well-liked by members.

On the other hand, if members lack that confidence, they should demand it. They should tell the board and management that a black box cooperative is not acceptable. It’s a much better idea than tendering one’s shares and taking your grocery business to a supermarket chain that will never hold itself publicly accountable for the kinds of workplaces it is operating.

Don KreisDon Kreis is a co-op attorney who has served on the board of the Hanover Consumer Cooperative Society. Opinions expressed in Cooperative Vermont opinion pieces are the author’s and don’t necessarily reflect the views of all Cooperative Vermont participants


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