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.