Monday, 13 July 2009

Management and Motivation @ Co-ops 2009

A great debate at Co-operatives 2009 ran through the whole day starting in the Employee Participation and Engagement Workshop, continued into the Co-op Studies fringe meeting, rattled around the coffee bar and exhibition space and was still going at dinner.

It was whether the Suma Wholefoods flat pay structure could be a model for the movement. Bob Cannel of Suma explained that,

“We operate a democratic system of management that isn’t tied to a conventional hierarchy. Using an elected Management Committee to implement decisions and business plans, decisions that need the consent of every co-op member given at general meetings – there’s no chief executive, no managing director and no company chairman.”

“Working at Suma the workers must show initiative and be self-motivated, supporting one other in collective teams. Fulfilling regular daily tasks and being part of the management is a new skill which new members have to learn, whether their previous experience is on the shopfloor or in management”.

Having grown consistently for 30 years Suma believes that their success is based on all the members sharing responsibility. But the rub is all workers are paid the same net daily wage.

This flat pay scale is a good annual wage of around £25,000 for manual warehouse workers but is less attractive for conventional management grades. For Suma workers this pay reflects the collective management element and overall wage costs are industry average.

Bob says, “Multiskilling and equal pay underpins our operations; it allows us to use labour more efficiently to cope with the troughs and peaks, keeps people fresh and enthusiastic and it allows recuperation from stress. You can spend time throwing sacks in the warehouse after leaving a high responsibility position and then re-enter the fray in a different job.”

With employee anger at the huge rewards for failure in the banking collapse many find merit in the Suma model. But this is a recurring theme in management theory.

Is organisational efficiency driven by processes or people? If by process you need very smart (and expensive) people to design the processes, if by people you need highly skilled and motivated staff.

The idea that free individuals are more productive than slaves is not new. Indeed when Napoleon ruled most of Europe he argued it was because every one of his soldiers carried a marshal’s baton in his knapsack.

Suma workers are certainly free individuals, well educated and highly motivated. Their business model is one in which decisions are taken close to the point where issues arise and intelligence is evenly distributed across the system. Job variety means everyone has an awareness of the issues others face. With this business culture imposing any kind of ‘chief’ would be like trying to herd cats.

This raises questions for other co-ops. I find the term Human Resource Management makes me think of robots as a lot of HRM business thinking has come from Japanese manufacturing where process is paramount. Shorthand for this is the term ‘lean’ based on keeping constant pressure on costs.

A crude version of lean has been imported into Britain by our Business Schools, with all its subsets like, Just in Time, Total Quality Management or World Class Manufacturing attempting to guarantee success by a focus on process design.

Businesses that copy these methods almost always fail to achieve Japanese results because they only copy half the process. The other side of lean is about a continuous improvement, new product development and innovation. In the Japanese case hard to copy as this takes place in faraway Japan.

It is this creative side of the process which needs the anarchic atmosphere of a Suma. New ideas and radical innovation do not come from robots, from slaves to a system.
Also workers who just do what they are told when faced with a shock to the system are incapable of doing anything about it.

In the co-op sector we know that individual initiative in the workplace makes a huge impact to the bottom line. Having intelligence distributed across a system encouraging flexibility and problem solving close to the shop floor is good for business. No matter how talented a senior management team or effective a board of directors they would be swamped if they had to make every decision. Even the best designed business systems are abstractions of reality which means that ‘stuff happens’ and people have to deal with that ‘stuff’.

A balance has to be struck between people and process but importing corporate attitudes into co-ops is not the way. When new technology was driving industrial success Robert Owen saw the most important part of the business was the human behind the machine. “If due care as to the state of your inanimate machines can produce such beneficial results, what may not be expected if you devote equal attention to your vital machines, which are far more wonderfully constructed.”

The new buzz in management education is leadership but as Napoleons story shows without a well motivated and highly skilled army even the greatest leaders cannot guarantee victory.

The Answer is Blowing in the Wind

Roy Bailey and Tony Benn performed their, “Writing on the Wall” show, at this years Levellers day in Burford and if there is an issue where the writing is on the wall it is in the subject for discussion that day - the coming energy poverty crisis.

In a fit of free-market zealotry, when energy appeared to be plentiful, the UK pursued an everything must go privatisation policy - from electricity, gas, coal, nuclear and oil nothing was safe even the wires and pipelines went with the promise of low prices from competition.

Now we can see where this deluded strategy has lead us as we face the twin crises of energy security and climate change. New Labour Ministers often tell us ‘ownership does not matter’, seeing the powerless PM last summer, begging for hand outs from these global megacorps to pay for lagging for pensioners shows the nonsense of this view. Not only are we paying more for our energy we are also suffering from underinvestment in all forms of energy generation.

As for renewables forget it! The global giants refuse to invest in UK renewables as they seek higher short term profits from investments overseas. No wonder the UK is facing a looming energy gap.

Compare us to Portugal, with no indigenous carbon energy sources, it now obtains over half its energy from renewables. Having invested in wave power – technology developed here in Scotland – renewable energy that you can set your watch by.

Locked into free-market dogma progress on renewables in the UK is pitiful. It is not just the investment strike by the energy giants we have failed to give a lift to small scale renewables development with preferential feed in tariffs giving them the certainty they need for investment.

The lack of investment in our privatised energy infrastructure has prevented what some say is the rational development away from large scale, wasteful industrial scale energy production, towards a decentralised model producing energy closer to where it is needed using new technologies.

Despite the challenges to small scale energy projects there are today some exciting co-operative developments in renewables. One does not have to travel far across the countryside nowadays to see campaign posters against wind turbines

This resistance to private sector wind development can be overcome if the wind farms are owned by the communities in which they sit. Energy4All represented at Burford by John Malone was formed by Bay wind Energy Co-operative to promote community owned energy co-operatives.

Bay wind an Industrial & Provident Society, was formed in 1996 to allow a Cumbrian community to invest in a local wind farm. The original board of directors included 7 members of the community from Ulverston and Barrow. The first share offer in 1996/97 raised 1.2 million to buy two turbines at the Harlock Hill wind farm. In 1998/99 the second share offer raised a further £670,000 to buy one turbine at the Haverigg II wind farm site. Preference was shown for local investors, so that the community shares the economic benefits from their local wind farm. Around 40% of existing Baywind shareholders live either in Cumbria or North Lancashire with a wider number from the Northwest Region.

To date Energy4All has promoted seven community owned energy co-ops in England and another seven in Scotland. Speaking at Burford, John Malone said “Energy4All was created due to daily enquiries received by Baywind Co-operative from people looking to replicate the success of Baywind, the UK's first community-owned wind farm. Baywind co-op has generated enough green electricity to power 1,300 homes a year whilst paying an attractive return to its 1,350 members (averaging 7% per annum), and supporting local initiatives, such as the Baywind Energy Conservation Trust. Owning a wind farm increases awareness of and involvement in renewable energy developments, maximises financial returns from local resources, and mobilises environmental concern.”

No one thinks that wind of itself is the solution to our all our energy needs but anything that gets us out of the clutches of the global power giants and contributes to tackling the crisis we face is important. The largest Energy4All co-operative is Westmill Wind Farm in Oxfordshire. Officially opened by Jonathan Porritt of Friends of the Earth in May 2008, Westmill consists of five 1.3MW turbines, capable of generating sufficient electricity to power the equivalent of 2,500 homes. Over £4.4 million of share capital was raised from its 2,382 members, through community investment, who collectively own and control it.

The scale of the challenge is such we need to maximise all of our indigenous energy options. We need therefore to go much further. When oil was discovered in the North Sea, there was a realisation that it was going to be a long term risky business bringing it to shore, we established a public sector business to undertake this challenge -The British National Oil Corporation.

If we are to take on the challenge of developing a renewables industry particularly in the capital intensive wave and tide power arena we will need a similar public sector champion. We need a British National Renewables Corporation.

Unlike the wind you can set your watch by the tides around Britain’s coast and if the Portuguese can do it so can we. With a global shortage of credit we cannot wait for the private sector to come to the rescue.

If we want a significant renewables sector we need co-operatives but we also need a large scale public sector engagement.

If your community wants to investigate its own renewable energy scheme visit: