Regime change, and more talk about transparency, at the Hanover Co-op

Having served on the Board of the Hanover Consumer Cooperative Society (the nation's second biggest food co-op) for ten years, including three years as the Board's president, I have been attending Board meetings regularly in recent months and am experimenting with offering public accounts of what transpires at those meetings since the Co-op itself doesn't provide detailed information to members.  Here's my report of the September 30, 2015 Board meeting, with apologies for any biases or personal agendae reflected therein:

Regime change was a major theme of the September 30 meeting of the Board of the Hanover Consumer Cooperative Society.  General Manager Terry Appleby breezily mentioned that his second-in-command, Director of Operations Tony White, was off to a new job with National Cooperative Grocers, the trade group and wholesale buyer formerly known as the National Cooperative Grocers Association. And Board member Michael Bettman made clear that the “succession planning” task force he is convening does not intend simply to come up with a plan for dealing with Terry’s impending retirement – rather, the task force will begin work in January finding the Co-op’s next general manager.

The September meeting featured a notably different cast of characters, and thus a decidedly different tone, than the Board’s summer meetings did.  Absent were Tony Roisman and Brett Tofel, two of the three “Concerned About the Co-op” (CATC) members who joined the Board in May with a reformist agenda.  Back after summer travels were Michael Bettman and Vice President Kay Litten, Board members who are generally supportive of the general manager.

As a result, two previously contentious issues were speedily dispatched with praise for the general manager.

In August, the Board tabled part of Terry’s report on his compliance with the Board’s “asset protection” policy – specifically, the part of the policy that requires the general manager to avoid harm to the Co-op’s goodwill and reputation.  Terry presented a detailed plan on how he intended to shore up the cooperative’s goodwill and reputation in light of more than a year’s worth of public controversy over employment issues, and the Board voted unanimously to accept this report as in compliance with the policy.

“It seems so much of what we have been hearing lately -- the buzzword -- has been ‘transparency,’” observed Board member Kay Litten, who then said to Terry: “I believe you have addressed the cry for more transparency through your communications and engagement plan [which can] leave you vindicated, so to speak.”

Thereafter, the Board voted unanimously to accept as ‘in compliance’ Terry’s report on treatment of staff, on which the Board had deadlocked in July when Kay Litten and Michael Bettman were absent while Tony Roisman and Brett Toifel were present, and which the Board voted to table in August in the wake of the unsuccessful unionization vote at the Lebanon Co-op Food Store in late July.

To the extent either of these changes in the Board’s outlook were the result of revised thinking, or new information, from the general manager, this was virtually impossible for any of the Co-op members in the audience to ascertain.  The Board persists in its steadfast refusal to make the general manager’s “monitoring reports” – i..e., the documents that form the basis of the Board’s deliberations – available to members attending Board meetings.  One of the new Board members, Secretary Harrison Drinkwater, persisted with his view that this is a reform that he favors and that the Board could speedily undertake, but he was rebuffed by his colleagues.  They take the position that this and any other efforts to improve the connection between the Co-op and its members must await the recommendations of a task force being organized by Board members Sarah Blum and Tony Roisman.

Although the Board created this task force and named Tony Roisman its chair in June, and although in August the Board inexplicably voted to create the task force a second time, directing it “to thoroughly investigate all reasonable issues related to communications and transparency” and present recommendations in December, there has been no progress.  Sarah disclosed that she and Tony had not met during the preceding month, that nothing has happened, and that she has no intention of pressing to keep the word “transparency” front and center in the task force’s title.

“Arguing about the name . . . is somewhat of a waste of time,” she said.  “It’s obvious that communications and transparency go hand in hand.  I personally like keeping it ‘communications’.”

 It fell to Board member Victoria Fullerton to remind her colleagues that transparency was among the priorities the Board agreed to pursue in the wake of her election and that of fellow CATC activists Roisman and Tofel.  Meantime, there was the ironic experience, for Co-op members in attendance, of watching the Board congratulate itself and its general manager for a plan to restore member trust and confidence in the Co-op . . . a plan that members were not allowed to read.

Although the Board eschewed criticism of Terry or the Co-op during its September deliberations the Board certainly heard criticism of its own work – the theme being concerns about the effect of statements from individual Board members criticizing the Co-op’s employment practices.

Terry was muted in his criticism, offered during the discussion of his plan to restore goodwill.  “There is a component of the image of the Coop that has to do with management and has to do with operations ,and there is also a component of the image of the Coop that has to do with all of us, including the Board,” he said.  “Operations is going to need help from the Board to burnish our image as well.” He urged that “when the Board makes decisions, there [be] unity around the decision.”  This seemed a veiled reference to the provision in the Board’s Code of Conduct stating that “Board members’ interactions with public, press, or other entities must recognize . . . the inability of any board member to speak for the board except to repeat explicitly stated board decisions.”

Co-op employee John Holmes, a produce supervisor in the Hanover store, was more direct when he addressed the Board during the time set aside for member comments.  “The Concerned About the Co-op group has taken it too far,” Holmes said.  “You’ve planted people onto the board of directors . . . Fighting for subpar employees is a losing battle.”

Saying “we do not care for this group any longer,” and insisting that the Board should not involve itself in personnel issues because “the only job the Board has a say in is General Manager,” Holmes said he is a satisfied employee who intends to work at the Co-op for another 40 years and definitely plans to seek election to the Board of Directors in 2016.

The comment about people being “planted” on the Board of Directors was reminiscent of the claim, circulated via e-mail by former Director of Operations Tony White to local Co-op vendors during the Board election in April, in which he said the Co-op was “under siege” from CATC because its members had been “crashing monthly Board meetings” and attempting to get three candidates elected to the Board who were “proposing radical change to the Co-op, shrinking the Co-op by closing [which] would ultimately cost hundreds of jobs.”

The three CATC candidates ultimately won election but, to date, no proposals for radical change have come before the Board.  Tony White, once a regular fixture at Board meetings and heir apparent to the General Manager, appeared briefly at the May Board meeting to apologize and was thereafter never seen at a Board meeting again.  Now he has departed for a job that will, according to Terry, eventually see him based far away in Portland, Oregon.  It is regrettable in these circumstances that shades of Tony White’s unhelpful comments persist.

The departure of Tony White also in some senses forces the issue of who will lead the Co-op in the future.  John Rosenquest, the Board’s Treasurer, put some of the relevant questions directly to Terry Appleby:  “Tony’s departure puts you in a position of having, of necessity, more direct operational work to do.  You’re also moving toward retirement.  Do you expect to hire an operations manager?  Do you expect to fill that role with existing staff and your own work?”

Terry replied:  “Well, on an interim basis [director of merchandising] Bruce Follett and I will be picking up a lot of the operational stuff.  I don’t have a plan to hire someone immediately.  That’s a conversation I think we need to have.  There is a possibility that if we went out and did a search we might want to look for an operations manager who becomes the next general manager of the Co-op.  That’s why there is an interim situation right now with Bruce acting kind of as the operations manager . . . . It’s a conversation we need to have in fairly short order.”

Michael Bettman, who chairs the succession planning task force, said he didn’t think the Co-op should commit to hiring a new Director of Operations with the expectation that this person would be promoted to General Manager when Terry retires. “I agree,” replied Terry.  “I think you need to hire the general manager that you want.  But there is a possibility we might kill two birds with one stone.”

This exchange suggests that the selection of the Co-op’s next general manager may be more impending than the membership has previously thought.  Indeed, Michael Bettman said he expects to come before the Board in January with a proposal for who will serve on the succession planning task force and whether the task force will use a search firm – a clear sign the Board expects the task force to find the Co-op’s next CEO in 2016.  At the risk of belaboring a well-worn argument, it should be noted here that members attending Board meetings and otherwise seeking to follow the Board’s proceedings are left with interpreting such signs because the Board will not release its monitoring reports and other Board documents to interested members.

A woeful tale shared by Terry and Finance Director Tony Alongi early in the meeting can be seen as a case in point with respect to what makes consumer co-ops different from investor-owned grocery chains.  October 1 is a big day for the nation’s retailers because it marks the official transition to European-style credit cards with microchips in them.  The phase-out of credit cards that rely on magnetic strips is supposed to improve security and reduce fraud.  Unfortunately, according to Terry and Tony A., tests conducted of the new system by a credit card processor on August 28 and September 24 caused a massive system failure that resulted in customers at retailers up and down the east coast being charged more than once for the same transaction because the newfangled system appeared to be, but actually wasn’t, rejecting customer charges.  The Co-op will now scramble to contact members who may have been affected, at great expense to the Co-op.  The outage does not seem to have been publicly reported even though it affected big supermarket chains like Hannaford’s and Shaw’s.

One last item of note: Terry told the Board that the $5 million Hanover store renovation was finished, with only some interior rearrangements remaining.  He said the project was over budget, but by the small sum of $13,000, which Board President Margaret Drye pronounced “statistically insignificant.”