Keeping Our Mission, Changing Our System

The First Alternative in Corvallis, Oregon, is a cooperative grocery largely run by working members. We started in 1970 with a group of 100 people and have grown from the first full year's sales of $137,000 to a peak of $1.05 million in 1981. Over the last four years, sales have steadily decreased to the current $973,000 (1984).

Changing social and economic pressures have caused our board and management to look at how the business is organized and how best to adapt to changing standards. First Alternative exists in an economically depressed area, and the store's sales decline may reflect that. But we also may be experiencing a tradeoff between our ability to maintain sales and our heavy reliance on member labor.

We have six paid managers: a financial manager, a working-member coordinator, and four in-store managers. When meetings and other outside hours are factored out, we have only 116 scheduled weekly hours for these paid positions, or less than 3 full-time equivalents. Nevertheless, management duties frequently get pushed aside because the managers have been covering working member positions.

Most of our staffing hours are provided by working members, who must work 2 hours a week to receive a discount. A signup board in the store breaks each day into 2-hour shifts according to position -- e.g., 102-hour cashier shifts, 5 2-hour cheese cutting shifts. These positions may or may not be directly supervised. Our new working-member coordinator will not be directly supervising, but will improve overall training and placement of working members.

There are 190 two-hour in-store positions available every week, and usually 130 of those are filled. The remaining 60 positions are covered by our paid management staff, or left undone.

Training and Turnover

Our working member system has several problems, most of which, we have learned, are consistent with those of our peers.

It is a continuous effort to keep the working member positions filled at an acceptable level. Once we have recruited someone to fill a position, we need to train them to do the job competently. Having someone do a bad job is worse than not having the job done at all; it's hard to explain bad service to customers. Turnover in any of the positions becomes a big factor, since we can generally expect any person to turn over after a few months. This turnover leads to the need for more recruitment and training.

Over the past several years, we have tried many types of recruitment to keep the working member positions filled. The most successful recruitment tool seemed to be increasing the working member discount from 10% to 15%; unfortunately, this level of discount cut into our operating margin more than we could afford. This led to a variable discount of from 10% to 15% based on store performance. The discount policy is revised every two months by the board of directors, based primarily on margin and trends.

Relative to our size, we are much more dependent on working members than most other stores. Having 190 different people doing work, it's hard to create and maintain any form of consistency. The managers don't have the time, on a regular basis, to oversee everyone to find out if people are doing a good job. Our training programs have been inconsistent, partially because we have not been able to find and maintain good trainers, and partially because the managers get drawn into the thick of the daily activities and don't have the time to do training.

The benefits of a working member system are hard to see on a day-to-day level. One tends to see the long lines and the inconveniences that customers complain about. But the social, friendly atmosphere it creates keeps coming up in people's comments. And our prices are lower in general -- but not always as significantly as we would like to think.

At our 1985 annual planning retreat in July, one objective was to decide what to do about the working member system to make it work better. One of the questions that had never been asked before was, "Do we need to keep the working member system?" For the planning retreat, several people drew up scenarios for different staffing structures, ranging from minor changes in the system to a completely paid staff. In the process of collecting data for this exercise, we called 19 other co-ops around the U.S. and asked them about their systems. We included more stores from our own region, to insure more "apples to apples" comparisons.

Often, we make decisions without consulting outside data. We often consider our problems "unique" and therefore more challenging to resolve. In First Alternative's case, the survey confirmed these feelings in many ways, but it also revealed that many of our frustrations are no different than everyone else's. There were wide variances among the co-ops surveyed in the degree of satisfaction with their member labor systems, and in the extent of actual coverage of total working member hours available.

We had been fairly anxious and depressed because of our declining sales, but given the data from other co-ops, we are doing a splendid job of providing good food at low prices, even though our sales are dropping slightly. Our margin is low, but so is our mark-up; we have the lowest payroll as a percent of sales and by far the highest sales per paid hour. This high ratio shows one of the main values of a working member organization. The customer, however, is not comparing us to other co-ops, but to the local competition. Our inefficiencies still stand out, and it is there we must keep our attention.

Guided by the survey, the result of the planning retreat was to keep the working member system with some modifications -- major ones for us, but consistent with what the rest of the co-op world is doing. Specific decisions of the planning retreat:

1. keep the working member coordinator position;
2. create a new operational staff position (36 hours/week) to cover the unfilled working member positions;
3. discontinue our "Other" discount -- we were the only ones in the world, it seems, who were giving discounts for members volunteering elsewhere in the community.

Decisions 2 and 3 required and later received approval by the membership as a whole.

We look at the paid operational staff as the middle ground that allows some resolution for our problems: poor working member coverage and "no shows," and higher paid manager hours being misspent doing non-managerial duties.

The most frequently mentioned reasons why other stores surveyed changed former working member positions into paid ones were poor coverage, inefficiency, and lack of quality service, all of which are very visible problems to customers. Our own biggest fear is that changing to any more paid staff will seriously erode the integrity of our working member system. Virtually all of the surveyed stores, however, said their experiences showed no basis for these fears; to the contrary, most said they saw improvements after moving to more paid positions.

Our own loyalties to our system blind us occasionally into a "protect it at any cost" mentality; but to remain true to our mission requires that we keep pace with the needs of the so-called community to which we claim our allegiance. The working member system seems to be providing us with many benefits, not the least of which are financial. Although we do have trouble keeping the positions filled at the level we would like, there are alternatives to an all paid staff that we feel we must try before we compromise our working member system that has served us so well.