Democratic Management in the Real World

I don't have any statistics on this, but I'd bet that the vast majority of natural foods co-ops started out as collectively run organizations. For many members and employees of those co-ops, the concept of "democratic management" was just as important as consumer ownership or natural foods. Over the years all but a handful of those co-ops have either converted to a more accountable management structure with a general manager or co-managers reporting to a board of directors, or they have gone out of business due to mismanagement among other causes.

Yet the ideal of a democratic workplace has never really died. New waves of employees coming to work at co-ops expect to have some voice in the overall direction of the co-op and store operations "because it's a co-op." On the other hand, most of us who have survived the collective era have no desire to go back to running the store by voting in endless meetings. Nor do we want to give up the structural clarity and accountability of hierarchy.

Nevertheless, there are solid, business reasons for finding effective mechanisms for employee participation in management. Companies out there in the "corporate" world are experimenting with flatter organizations, self-directed work teams, and a variety of employee involvement schemes. There are studies showing that some of these programs lead to higher productivity. Furthermore, from my own observations the best-run co-ops weave employee input into every aspect of operations. There may be specific programs in place to solicit employee suggestions, but more importantly there is a culture of employee involvement in every decision that impacts working conditions.

How can your co-op involve employees, provide them a forum for expressing their opinions and give management the benefit of the observations of the people actually doing the work? One way is to set up work teams run by the employees themselves. In the January-February issue of Cooperative Grocer we read about Hanover Co-op's Performance Improvement Teams, in which groups of employees do research and come up with recommendations. PIT's, task forces, project teams -- these are probably the most realistic use of teams in a retail setting.

The best-run co-ops weave employee input into every aspect of operations. There is a culture of employee involvement in every decision that impacts working conditions.

There seem to be some employees and a lot of board members out there who long for the ideal of self-directed work teams -- that is, departments managed democratically by groups of employees. However, research on such teams shows that it takes 3 to 5 years for them to become effective. In a high turnoverenvironment, the tremendous investment required in developing team members walks out the door every year; self-directed work teams are impractical for, say, your deli or your front end, and probably all your other departments too.

Another way to involve employees is to give them a regular place for a to be heard by management. At Outpost Natural Food Co-op in Milwaukee, the Employees' Forum grew out of the bargaining process for their most recent union contract. A survey of employees revealed that there were a host of non-contract issues that could not be addressed through the bargaining process. Most of these had to do with communications store-wide and between departments. At the suggestion of an employee, the management team agreed to set aside an hour every month for employees to bring questions and concerns which management would answer, either at the meeting or later through the meeting minutes.

Outpost's initial Employees' Forum in July 1998 laid the ground rules, including:

• One employee from each department may attend the Forum.
• Employees may bring written questions from coworkers.
• Department issues should first be taken to that specific department before coming to the Forum.
• No personnel issues (i.e., concerning individuals) may be discussed.

Topics raised at Employees' Forums range from the strictly operations ("We need a No Parking sign by the loading dock," or "Let's move the book rack and open up more selling space") to the philosophical ("Are we living up to our commitment to natural foods in the deli?"). From observing one Forum and reading the minutes of others, I get the impression that the emphasis falls more on the pragmatic than the philosophical. One of the best features of the Employees' Forum is that people get concrete answers to their questions within a clear time frame.

Outpost's system might work well in co-ops where the main goal is to promote communication between management and employees. But some co-ops want more employee involvement. They have experimented with varying degrees of success with the concept of a staff council. These bodies (under various names) typically consist of 3 to 5 employees elected by the non-management employees, or of representatives from each department. Their job descriptions may include some contradictory roles: advocates for staff in conflicts with management, arbitrators of grievances, disseminators of information and collectors of input, representatives of "the staff" in developing pay systems and personnel policies.

Problems with staff councils

I have yet to find a staff council which satisfied both management and the staff. The most common problems, all intertwined with each other:

• Unclear roles, or too many hats.
• Not enough continuity, due to too short terms or high turnover in the group.
• Creating barriers to direct communication between employees and their supervisors.
• Going on anecdotal or skewed data.
• No true accountability.

The root cause of most staff councils' deficiencies is that their mission has not been clearly thought through and defined at the start. Such a group could provide a useful communications channel between management and non-management employees, but who will initiate this communication? Does management team authorize the staff council to poll the staff on certain issues? Or does the staff council decide for itself? By what mechanisms will the council give out and take in information? A log book, a bulletin board, phone calls at home, messages in a mailbox, e-mail, a staff newsletter, survey questionnaires? When the council's source of information "what the staff thinks" is whoever is motivated enough about an issue to approach a council member with an opinion, the council will inevitably proceed on biased and limited information. Such a situation allows council members to pursue personal agendas in the name of "the staff."

In theory a staff council is accountable to the staff, but if elections are not contested or if the council is made up of volunteers from departments, then there is really no way for employees who are dissatisfied with the council as a whole or in part to remove them before their term. And there are no consequences for a council's failure to work constructively with management, no sanctions for an individual's violation of confidentiality or neglect of assigned tasks. There is yet another problem with staff councils-- the National Labor Relations Act. In the 1930s Congress passed the NLRA to help unions in their intense, often violent struggles to win recognition. One of its provisions was designed to prevent companies from setting up pseudo-unions to keep real ones from organizing. As a result, only recognized labor organizations are allowed to "represent" employees, to negotiate with management, or even to discuss wages, benefits, hours, working conditions or anything else that is usually the subject of collective bargaining. This makes it technically illegal for management to involve a staff council on these issues, especially if that body is elected or chosen by the staff in a representative capacity. On the other hand, a former National Labor Relations Board member has written, "If the [staff] committee makes no proposals to the employer, and the employer simply gathers information and does [with it] what it wishes...the committee would not be a labor organ-ization...Committees whose purpose is to collect information are lawful."

As it happens, there is no penalty for breaking this provision of the NLRA. However, if your co-op decides to start or maintain a staff council that is elected by the staff and/or deals with pay and benefits and other workplace issues, be prepared to discontinue it immediately in the event of a union organizing drive or an unfair labor practice complaint to the NLRB.

One useful role a staff council can play is that of witness. At Ashland Community Food Store in Oregon, when an employee has a performance improvement meeting or is being terminated, either manager or employee can request a council member as a witness. At these meetings the council member is not expected to intervene and must maintain confidentiality. The general manager finds the witness role to be helpful in difficult, emotionally charged meetings, especially when there is the potential for legal action.

If, despite the pitfalls, your co-op wants to have a staff council, here are some suggestions for making this group as constructive as possible:

• Insist on a work plan for the council with defined outcomes, which will be developed together with management.
• Give the council a budget, including the cost of council members' labor.
• Set terms at a minimum of one year, and staggered.
• Choose an advocacy role or an arbitration role for the council -- not both.
• Educate council members to have realistic expectations. Management is not obligated to do what even a majority of employees want, although knowing what they want is extremely valuable information for management to have.
• Develop mechanisms for the council to hear from a broad range of staff opinion, not just the "squeaky wheels."
• Hold an annual mutual evaluation of management team and staff council, based on the council's work plan and job description.
• If you are creating a staff council for the first time, call it an experiment and give it a sunset provision. Then evaluate it according to its work plan and continue only if it has proven useful and constructive for both staff and management.