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  • D. Maurice Kreis

My letter to the Board of the Hanover Consumer Cooperative Society

Dear Fellow Cooperators:

With alarm, I learned today via the local daily newspaper that Paul Guidone is leaving the Co-op in a few days and has declined the Board's offer to serve as the permanent general manager.  Naturally I turned immediately to the Co-op's web site for more information, and there I read the Board's letter to the membership.

Your letter referenced 13 conditions Paul had characterized as necessary for him to accept your offer, noting that the Board had agreed to "several of them" immediately.  The letter stated that others had "potential long-term consequences for the organization," implying (but not stating) that you were still considering these conditions at the time Paul declined your offer and tendered his resignation as interim GM.

I am writing with a respectful request for a more forthright explanation to the membership of what happened.

Although I do not know Paul well, and have had no contact with him since I left the Board two years ago, I had occasion to observe him at fairly close hand inasmuch as part of my tenure on the Board coincided with part of his tenure as the Co-op's CFO and, later, his tenure as strategic advisor to the general manager.  He impressed me with his business insight and strategic acumen; indeed, at the time he seemed like the most capable and visionary person involved in the senior management or governance of the Co-op.  His public statements since becoming acting GM, and the financial results reflected in the monthly Board packet, suggest that Paul has been successfully leading the Co-op through one of the most challenging periods in its long history.

Paul's abrupt departure, at a time of severe economic disruption that is especially challenging to the grocery industry, is not the sort of development that is calculated to instil confidence in the Board's stewardship of our cooperative.  The Board's public statement alludes to a claim by Paul that the Board is engulfed in "turmoil" as reflected by the recent resignation of the President and one of the most senior directors on the Board.  Speaking only for myself, I must say that the Board's conclusory statement that it is now "stronger, more cohesive, and nimbler" than before is not sufficiently reassuring.

I am keenly aware that I know nothing about this situation beyond what has been said publicly.  In the circumstances, it is tempting to assume that the Board has the situation well in hand.  It is more than possible that the two resignations, though regrettable, were necessary for the good of the Co-op.  Likewise, it's not hard to imagine that some of those 13 conditions were inappropriate; indeed, the mere existence of 13 demands from a prospective permanent general manager seems like an uncomfortable development.

Still, I think the membership deserves some sense of what these conditions were and why they had potential longterm consequences that were unacceptable.  If this was simply a case of not reaching agreement on Paul's terms of employment -- i.e., salary and benefits, limitations on the Board's ability to dismiss him, etc. -- then, in my view, it would be enough for the Board to clarify, without elaboration, that this is what occurred.  On the other hand, it's possible that Paul's demands implicated broader issues about the management, governance, and strategic direction of the Co-op -- and, if so, I really think the membership should have access to more details.

To the best of my knowledge, the Board has not put aside its commitment to using Policy Governance since I stepped down as a director in 2018.  Among the central tenets of PG are (1) that the GM is the only Co-op employee who reports directly to the Board, (2) that the Board confers as much discretion on the GM as possible, allowing him to take all reasonable steps to achieve the Board's stated ends as long as he operates within the executive limitation policies, and (3) that in evaluating the GM the Board equates the Co-op's performance with the general manager's performance.  Underlying these tenets is the reality that the Board of Directors does not know how to run a $70m/year multi-location retail chain with some 400 employees, and therefore cannot supervise the GM in the manner that other Co-op employees are supervised.

From what I have been able to tell, under Paul's leadership the Co-op has been making good progress toward achieving the objectives in the ends policies while operating well within the limits stated in the executive limitation policies -- all in very difficult times.  Thus, Paul's sudden departure is difficult to fathom.  It's not shocking that Paul will not become the Co-op's permanent general manager -- my recollection is that he is of retirement age and does not really need to take on such a stressful and high-profile job -- but it is worrisome that he declined to stay on through the search for a permanent successor. 

Anyone who has observed the Board since, roughly, 2014 cannot have failed to notice that the Co-op's governing body has suffered a fairly consistent diet of turmoil and trouble throughout this extended period.  At the same time, the Co-op itself seems to have survived and even thrived -- a testament, I think, to how well-managed the business has been.  The circumstances of Paul's departure carry with them the implication that he concluded the Board has overstepped its bounds and presented too big a challenge to the GM's ability to manage effectively.  On the other hand, since Paul is not a career cooperator maybe he found democracy and public accountability too much to take on at this stage of his work life.  Either way, I suspect I am not the only committed member of the Co-op who would like to know more about the situation.

As a former Board president with 13 years of service as a director under my belt, I know almost as well as anyone what a difficult and often thankless job you have.  Please know that you do have MY thanks and appreciation, and I wish you well as you undertake the most important task the Board ever confronts -- that of finding and hiring a new general manager.  If I can be of any assistance to you, formally or informally, please do not hesitate to call on me.

Cooperatively,

Don

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