Survey Highlights Gaps in Manager Compensation

This edition’s report on general manager compensation provides some striking data highlighting food cooperative practices. A few survey questions for co-op managers provoked a broad range of responses. The authors, Carolee Colter and Peg Nolan, have produced an excellent report of high interest. (However, they have not been asked to approve this column — I guess that makes my remarks “unauthorized.”)

The wide diversity in reported levels of pay and in other responses does not appear to reflect a skewed sample. On the contrary, the nearly one hundred respondents constitute at least one-third of all U.S. consumer food co-ops. In fact, by my estimate, the survey data includes about half of all food co-ops with annual sales of more than $1.5 million.

The range of pay offered co-op general managers is very wide, and the authors highlight this inconsistency. What might explain these results?

As another writer in this edition notes, “A look at our history throws light on the relative sophistication and complexity of the […] challenges we face now.” The history of these co-ops is relevant to their present pay practices, and the survey supports some related observations about their general managers.
Most of today’s consumer food co-ops began in the 1970s and ’80s. The founding organizational culture typically was extremely egalitarian, and pay scales were highly compressed. Cooperatives were seen, correctly, as a wealth-sharing structure — but in many there was hostility to professionalism. Fair compensation was confused with equal compensation, and often there was no significant pay differential for positions requiring greater skills and responsibilities.

Over time, manager responsibilities have grown markedly, along with the co-op. Most surviving co-ops, while not necessarily generous, have given the manager greater recognition and rewards. Co-ops have also improved their manager retention. Longevity among today’s general managers is notable: 60 percent of those surveyed have held their position in the co-op for at least 5 years, and 25 percent for at least 10 years. That longevity is especially impressive considering that many a co-op still underpays its manager.

Together, these managers now oversee thousands of employees. Yet overall pay scales remain highly compressed. The survey results, as I interpret them, indicate that a co-op’s pay ratio, from lowest to highest, usually is about 1:3 or 1:4 — less in many small co-ops, slightly greater in most large co-ops. (A pay ratio of 1:3, for example, describes a workplace where an entry-level full-time equivalent position earns $15,000 and the top position gets $45,000.)

Reasons for this pay distribution may vary, as will reactions to the pattern. But a constant context is the overall labor market, where co-ops maintain internal pay scale ranges that are narrow by comparison with most privately owned businesses. That should be recognized when examining pay for all levels within the co-op. Part 2 of the compensation report, to be published this fall, may shed more light on this.

Meanwhile, most managers stay with their co-op, and their longevity is a strong and positive indicator. They do not appear to be in it primarily for the money! Despite some indications of uncertainty or disagreement, most managers report satisfaction with their compensation.

In addition, most managers report experiencing overall job satisfaction. From what I hear and read, typical manager frustrations in the area of compensation — whether from a poor process for deciding compensation or a board of directors that undervalues the manager’s leadership — are usually outweighed by the additional rewards of a good working environment. Co-op leadership places managers alongside great people in a value-driven organization that builds stronger community, a healthier food supply, and democratic ownership. These elements contribute a great deal to co-op manager job satisfaction.

What recommendations for co-ops? Besides cautioning that many co-op managers remain underpaid, I urge readers to return to “Improving Manager Compensation” (by Carolee Colter in CG #119, July-August 2005), especially this point:
Rather than looking to the base salaries paid by other co-ops, I suggest that boards concentrate instead on working with their general managers to develop a total compensation package that ties increases to achievement of agreed-upon results.

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Dave Gutknecht is editor of Cooperative Grocer ([email protected]).

See other articles from this issue: #124 May - June - 2006