Month: June 2013

Equal Pay

In this series we aim to debunk some of the commoner myths about co-operatives – the stereotypical beliefs that people hold about what a co-operative is, which can lead to misunderstanding and can prevent people from recognising the very real value of the co-operative business model.

EQUAL PAY

The second topic is equal pay – in a co-op everyone gets paid the same, don’t they? No, not always, some co-operatives do have an ‘equal pay for all’ policy, for example worker co-operatives in the wholefood sector, but this is by no means common. Of course equity is one of our co-operative values, so all co-operatives would subscribe to equal pay for equal work. However many co-operatives do have pay scales and pay differentials, some following the example of the famous spanish co-operative Mondragon, and limiting differentials between managerial staff and shop floor workers pay.

A recent article in Co-operative News described how salaries in worker cooperatives tend to foster gender equality, even though in Europe, inequality in pay between men and women is high. According to the survey: European Project – Active Women in Small and Medium Enterprises (SMEs), in 93.8 per cent of cases in worker co-operatives in Spain, France and Italy, gender based salary discrimination does not exist. The survey interviewed 133 women who said that they receive an equal salary to men for an equal workload.

So when people do get the same pay, how does it work?
At Essential Trading Co-operative, the pay system is based on principles of equality and equity, with a pay scale based on length of service, and is possibly unique among worker co-ops within the wholefood sector in the way in which work responsibilities are allocated. Individuals who wish to join the co-op are recruited into specific roles (e.g. Personnel Worker, Retail Worker, Food Processing Worker). However Essential do not conduct job role evaluations in order to place roles into distinct pay brackets. This is because they do not believe that more value should be placed on some forms of work as opposed to others. Nor are there additional monetary benefits for individuals elected by the co-op membership to sit on committees (such as the Management Committee or Strategy Committee) or elected by their team members to act as Team Coordinators.

However, unlike Suma and Unicorn Grocery, Essential does not simply have one rate of pay. The co-operative operates a pay scale that is based on length of service. All probationary members begin on the same rate of pay. They progress through different pay grades, linked only to duration of employment. It is expected that members will come to take on a greater level of responsibility for the management of the co-op and their own area of the business with time, and it is this that Essential seeks to reward through their graded pay structure.

Similarly, the co-operative calculates members’ entitlement to dividends based on the number of hours that they are contracted to work per week, their length of service and their democratic contribution to the co-op’s decision making processes (e.g. how many General Meetings they have attended and how many ballots they have cast a vote in during the last quarter). Also, all members can access the co-operative’s generous health care scheme.

At Calverts Design & Print co-op, Sion Whellens says “the notion of a ‘market rate’ for different skills and job functions is a myth based on social and workplace hierarchy”. Calverts’ equal hourly pay system has been in place without challenge since 1977.

All workers (whether members or non members) are hourly paid, and the hourly rate is the same for all job functions. The rationale for this is that all job roles are equally necessary to the good performance of the business, and should therefore be equally remunerated – Calverts have never found that their pay system makes it difficult to recruit or retain workers. Staff turnover is less than half the industry average, so they have retained a high and increasing level of skills over the years. All workers are simultaneously members, directors and employees of the co-op. The co-op has never made compulsory redundancies on account of recessions or trading downturns. They have occasionally shared the pain of deferred wages and wage cuts, in order to maintain employment levels in the co-op.

Calverts’ current hourly rate is £16.50 per hour (down from around £17.75 before the current crisis), higher than London industry average. Full time hours are 35 per week, lower than the industry average of 39. All overtime (again irrespective of job function) is paid at x 1.5, serving not only as an incentive to work extra hours when needed, but also for the co-op to maximise working hours and minimise routine overtime.

Thanks to Essential and Calverts members for sharing this useful information.

De-bunking co-op myths

In this series we aim to debunk some of the commoner myths about co-operatives – the stereotypical beliefs that people hold about what a co-operative is, which can lead to misunderstanding and can prevent people from recognising the very real value of the co-operative business model.

JOB ROTATION – OR MULTI-SKILLING

The first topic is job rotation – all co-ops rotate jobs, don’t they?

Well no, some do and some don’t – it’s not a necessary condition for a co-operative. Co-ops organise in many different ways, ranging from full multi-skilling (mostly found in worker co-ops, owned and controlled by employees) to those which have specific roles and job titles.

However co-operatives that do organise around multi-skilling enjoy a variety of benefits – as long as it is implemented thoughtfully and as long as the costs are recognised, anticipated and accounted for.

Job rotation as practised in worker co-ops can be more usefully described as multi-skilling, meaning that all co-operative members must be ready to perform a range of tasks, so when extra hands are required (at certain times of the week for example, or seasonally, or if someone is off sick or on holiday) they are readily available.

Advantages
Apart from the obvious advantage of having those extra hands available, co-operatives that have successfully implemented multi-skilling report improved communications between departments, leading to fewer demands on the personnel department, more variety in the working environment, enabling the co-operative to cope more effectively with high workloads, so members are fresher and enthusiastic for longer; it allows recuperation from stress and enables the co-operative to use labour and skills more efficiently to cope with the troughs and peaks of business.

Pitfalls
If you are learning a new job, you will not be up to speed for some time, and nor will the person teaching you. This is a cost which needs to be built into budgets and projections. If it is not, the lower productivity implied by people ‘learning on the job’ can quickly become a drain on the co-operative’s resources. Another disadvantage is the resentment that can be caused when a trained and qualified worker is recruited for a specific task only to find that he or she is expected to perform tasks they are not experienced in while people who do not have their skills and experience step into their shoes in the job they were recruited for. I am remembering a new-start co-op veggie restaurant that rotated all their members around all jobs including the kitchen, with the unfortunate result that they lost the two qualified chefs they’d recruited! A major pitfall is to assume that all jobs can be rotated and to undervalue the specialist skills that qualified and trained staff bring to the co-operative.

Suma Wholefoods, based at Elland, near Halifax, have been practising multi-skilling for over 30 years and their 150 employees perform more than one role in the co-operative. They say that this broadens their skills base and gives every member an invaluable insight into the bigger picture. It also helps to play to each member’s different strengths, enabling them to ‘think outside the box’ when it comes to creativity and problem solving. Suma workers multi-skill, usually between desk and manual work and contribute to collective management. Drivers often drive for part of the week and work in the warehouse or offices for the remainder. Desk workers are encouraged to do manual work for at least one day per week.

At Unicorn Grocery, in south Manchester, members learn a range of core tasks – working the till, packing, cleaning – and then two or sometimes three people are trained up in specialist roles, so there is back-up when needed.

Suma says: “to avoid the chimps tea party approach of everyone trying to grab the best job, it must be agreed democratically and organised co-operatively. You can use regular HR practice such as job analysis to identify what needs to be done, then share the jobs according to skills and desires. That way you won’t be held to ransom by people with rare skills.”

Summary
What are the key benefits of multi-skilling?

  • improved communications
  • improved awareness of the business ‘big picture’
  • more efficient use of labour and skills
  • more variety, less boredom, less stress
  • more opportunities for individual continuing professional development

And the main pitfalls?

  • assumption that all jobs can be rotated
  • failure to identify those jobs that most need back-up
  • failure to include learning on the job into production costs
  • lack of planning

Co-operantics provides lots of free downloadable resources that will help you with democratic decision-making, the essential foundation for implementation of an effective multi-skilling approach.