Hiring A General Manager

I don't want to disappoint my readers. This article is not going to tell you where to find a general manager. If I knew a source of well-qualified people eager to be managers of co-ops, I'd go into the head-hunting business. Due to the phenomenal growth of the natural foods industry, retailers in general, not just food co-ops, are having trouble finding good people to manage stores. What this article will do is help the board think through the steps needed to ensure a clear and professional hiring process.

Step One: Arrange for interim management

Most co-ops find that it takes anywhere from 3 months to a year to get a new general manager in place. Meanwhile, someone has to mind the store. The board should appoint an acting manager or co-managers. This means approaching the person or persons currently in the positions of highest responsibility at the co-op to offer them a temporary position. In making this offer, clearly define the duties and compensation involved, and agree on what will happen to the acting manager or co-managers once the new general manager is hired. No one should be out of a job because s/he stepped forward to help the co-op in time of need. At the same time, s/he should understand that a pay increase or bonus for the added responsibility is a temporary arrangement.

One person is definitely easier for the board to supervise. But when no one is willing or able to take on the job alone, there may be two people who can share manager duties. See my article, "The Perils of Co-Management," (CG #53, March-April 1994).

Sometimes the acting manager or a member of an interim management team becomes the new general manager, after gaining enough experience or confidence to apply. This was the case at Willy Street Co-op in Madison, where the former grocery manager served as acting manager and was eventually hired for the general manager position.

Step Two: Set up a search committee

A smaller group than the full board needs to do the actual work of the search. Typically a search committee will draft the job description, job requirements and proposed compensation; develop a budget and timeline for the search process; and then submit these proposals for approval by the full board. The budget should include advertising and candidate travel expenses. Then the committee places ads, screens responses, checks references, develops interview questions, selects candidates to be interviewed, makes travel arrangements for out-of town candidates, conducts interviews and makes hiring recommendations to the board.

The search committee benefits from the participation of one or two staff members, both by gaining a perspective on the reality of store operations and by building staff support for the new general manager. It should be clear to staff and board members of the search committee that they are expected to maintain confidentiality. This is a particularly important issue when a general manager of another co-op or of another local business expresses interest in the position. If all applicants are publicized among staff and membership, such a candidate may hesitate to apply.

Because the search committee has a heavy work load, co-ops with the means to do so might consider hiring an outside party to place ads, handle inquiries, do some of the screening and arrange the interviews. Mississippi Market in St. Paul, Minnesota, in the midst of a management search as of this writing, has contracted with an outside consultant to administer parts of their hiring process.

Harvest Co-op Supermarket in Boston has gone further than this and hired an executive search firm. Search firms work on either of two arrangements, retainer or contingency. Under a retainer arrangement, a firm is paid a percentage of the annual salary of the general manager (typically 30 percent plus expenses), whether or not they find the candidate who is eventually hired. A retained firm works closely with the client to gain a thorough understanding of its mission and workplace culture, then reviews its data base of potential candidates, personally contacting those who appear qualified. Usually retained firms will place blind ads, screen respondents, do thorough background checks, and then assist the client with negotiations. Finally, retained firms usually guarantee the placement of a candidate for one year. If the new manager leaves or does not successfully complete a trial period, the firm will help the client find another manager. The drawback for many co-ops is that retained firms typically recruit only for positions that pay at least $60,000 a year.

In contrast, a firm working on contingency will receive compensation only when one of its candidates is accepted. Typically, contingency firms are willing to deal with openings with annual salaries as low as $30,000. Because they have less at stake, these firms tend to put less effort into recruitment and background checks. According to a 1991 study in Human Resources magazine, contingency firms found acceptable candidates for their clients 40 percent of the time, compared to 82 percent for firms on retainer.

In choosing a search firm, the Harvest Co-op board looked for experience in dealing with other mission-driven organizations. Their eventual choice has worked for numerous non-profits, Northeast Cooperatives and Ben & Jerry's. If natural foods experience is an important qualification for your co-op, there are several search firms advertising regularly in industry publications. To check references on search firms, ask for a list oftheir clients and then contact those with hiring authority (boards, CEO's) with a list of prepared questions to gauge client satisfaction with the search firm's services.

Step Three: Define the position

Whether or not you use outside help for your search, defining the general manager position, qualifications and compensation is a step that only insiders can carry out. Job qualifications are particularly important, since they will be the basis for screening candidates and for making the final hiring decision. Although you may have to make compromises down the road, it's helpful to start out with a clear vision of what you're looking for. Depending on the circumstances of your co-op, you may want to emphasize experience with retail management, natural foods, cooperatives, planning and budgeting, working with a board, and/or turning around a struggling business. From my own observations I will hazard a generalization that mainstream grocery management does not graft well onto natural foods cooperatives unless the person in question has managed an independent store (not a chain store) and has a strong personal interest in natural foods.

What are you willing to offer in terms of salary and bonus? Before you start recruiting, you should determine a range for base salary, depending on the candidate's experience. For the going pay rates in co-ops and natural food stores in your size range, consult the annual surveys in Cooperative Grocer and Natural Foods Merchandiser.

Developing a bonus or profit-sharing arrangement for a general manager is a subject for a whole other article. In most cases, some form of compensation contingent on results is highly desirable; it allows a manager the opportunity to earn more income through her/his own successful performance, even if the co-op could not have initially afforded to offer it as part of the base salary.

In your ads it is best not to specify the salary range. If candidates see a range, they tend to expect to receive the top of the range and would be dissatisfied with less. Ask them instead to specify their salary requirements when they send their resume. But do spell out the benefits ifyou offer medical insurance (the top-rated benefit among job seekers) and generous vacation, say over two weeks a year (more than most large corporations offer).

Step Four: Recruit qualified candidates

If you're not using a search firm, where should you recruit? This depends partly on what you are looking for. Most co-ops advertise in Cooperative Grocer, the Natural Foods Merchandiser, and local and regional newspapers.

They also send out announcements to other co-ops. Industry trade shows such as the Natural Products Expos and National Nutritional Foods Association and its regional affiliates have job posting boards and provide an opportunity to find and meet informally with potential candidates. Also talk to your suppliers and brokers, and don't neglect regional environmental and sustainable agriculture networks.

Whether or not the search committee believes there are qualified internal candidates, post the job announcement for staff as well as recruiting outside, and automatically interview any staff who throw their hats into the ring. However, I would not recommend hiring an internal candidate without any consideration of outside candidates. By assuring everyone that s/he was the best possible choice, an open hiring process builds more support for the internal candidate, once hired, than a closed one.

Answer all candidates who respond to your ads. For the first stage, it's enough to send a pre-printed postcard saying in effect, "We received your resume and we will contact you if we wish to interview you.

Step Five: Screen the candidates

The heart of the screening process is to compare the qualifications of candidates to the qualifications you have already established. Some search committees find this process is made easier by setting up a matrix and rating candidates on each qualification. Often resumes give an imperfect picture of whether the person has the qualifications you seek. Phone interviews to get answers to specifically targeted questions can save time and effort, whether or not the candidate is local.

If you are paying travel expenses to bring candidates to the co-op for face-to-face interviews, it makes sense to check references first. Amazing as it seems, some co-ops fail to check references. I've heard horror stories such as the manager who turned out to have been fired by a previous employer for embezzlement, or the untreated manic-depressive who went into a manic period just after taking on the job.

It's true that former employers are nervous about giving out information, since they could be liable for defamation. Nevertheless, careful research can reveal at least that something significant is being covered up. Also, there are release forms that candidates can sign that consent to former employers giving out truthful information. (See an attorney for the best wording.)

For a job as important as the general manager's I suggest checking every reference for the past 10 years, not just the most recent job. Don't confine the reference check to the individual listed by the candidate, but talk to a number of contacts from the organization, such as the current general manager, personnel manager, current board president, possibly the sales rep from a major supplier. And verify education information as well. A survey of human resources professionals indicated that education is the area where candidates most often commit resume fraud.

Step Six: Interview the top candidates

In planning for interviews, design questions to find out to what extent the candidate has the qualifications you are seeking. Emphasize past experience ("How have you handled such a situation in the past'?") rather than hypothetical cases ("How would you handle this situation?"). Before the interview, send out packets with the job description, latest newsletter, membership brochure, annual financial report and any other materials that would help introduce your co-op. After showing candidates the store, ask for their impressions.

In order for the search committee to come up with a unified recommendation, it makes sense for all committee members to be present at each interview. This will go most smoothly if one person is designated as the lead interviewer who will ask the prepared questions. The other can observe, take notes, and chime in with occasional followup questions. Then schedule debriefing time immediately after each interview to share impressions.

If a candidate is coming from out of town, this will probably be the only opportunity for other board and staff members to meet her/him. Therefore the search committee will want to arrange other forums besides the interview. These could range from an informal potluck to which staff and board are invited to socialize with the candidate, to a structured meeting in which staff andior board members could ask questions.

Step Seven: Make a job offer

While you should expect to take a long time to recruit, once you find a candidate you are satisfied with, the board should move quickly. Don't leave a candidate hanging for more than a week. Don't wait for a regular board meeting to roll around. It sends a negative message to a candidate if the board can't seem to make up its mind. The board should authorize the committee to negotiate compensation within certain parameters.

Then the search committee makes a job offer to the top applicant, considers any counter-offers, and negotiates a final agreement. Some co-ops, such as First Alternative in Corvallis, Oregon, choose to have a formal contract with their general managers. Typically a contract will refer to the job description and will specify compensation, length of contract, conditions for termination by either party, and arbitration in case of disputes. A contract is a legally binding document and should only be entered into with the advice of an attorney.

Don't tell any other candidates that they have been rejected until you have a firm commitment from your first choice. Everyone who took the time and effort to be interviewed should be contacted by phone.

Final Step: Plan for succession

When you have been through this process, you can see the advantages ofdeveloping future managers from among current staff. One goal the board can set for the general manager is to create a plan, for board approval, to systematically develop desired skills and experience in several co-op managers, in order to be prepared in the future.