Suma workers’ co-operative 25 years on

This article by Andrew Bibby, in a slightly different form, was first published in the Financial Times, 2002

Management textbooks would all agree that it is a hopelessly idealistic business model. All the employees, from the senior executive team to warehouse packers, are on the same wages. The company is led by an elected management committee, chosen by the members of staff at regular general meetings and answerable to them. Management authority is there to be questioned. The commercial buyer, with a multi-million pound budget to look after, regularly drives a delivery truck. As a way of running a company, it is surely impracticable.

The problem for the sceptics is that Suma, the workers' co-operative in question, is celebrating 25 years in business this month [Oct 2002].

One of the pioneers of wholefood distribution in Britain - it claims to have been in the vanguard with organic, non-genetically modified and fair trade foods - Suma has recently expanded into a new warehouse and distribution centre at Elland, West Yorkshire. It has more than 100 people on the payroll and points out proudly that it was the first workers' co-operative to achieve Investors in People status. Although the turnover - about £14m - makes it a small-scale player in retail terms, in its niche market it is now the dominant independent operator. Its own-brand goods, from kidney beans to recycled toilet paper, are sold in leading supermarket chains.

Bob Cannell, a long-term Suma employee who has responsibility (shared) for personnel issues, argues passionately for the benefits of co-operative working - but also stresses that democratic control does not replace the need for management.

Suma's progress since the 1970s is a fascinating tale of organisational evolution. For its first seven years, the co-op tried to operate with weekly general meetings of all members, attempting to decide both strategy and day-to-day matters by strict consensus. "A bad model. It's the tyranny of the individual - if one person objected, nothing could happen," Mr Cannell says. He accepts that it allowed competitors to jump into their market.

Under its current management structure, all members meet for quarterly general meetings and for special meetings as necessary, including the one-day strategic meeting every July at which the coming year's business plan is discussed. The elected management committee meets weekly, and in turn oversees the work of the company officers who act as personnel, finance and operations directors. These officers, though co-op members, are not permitted to be management committee members. Below that there are the equivalent of departmental heads, though Suma prefers to talk of "functions" being managed rather than departments. All these roles are typically performed on a job-share basis rather than by single individuals.

There is clearly no room for command-and-control style management: co-op members cannot be simply instructed to do things. Mr Cannell describes this as both a practical problem for management and a huge benefit, the advantages of a committed workforce being felt particularly in times of difficulty. Similarly, the co-op's practice of job rotation is seen as a strength. A day away from Elland driving a delivery lorry, for example, has the benefit of enabling the company's senior team to keep directly in touch with customers, Mr Cannell argues.

Suma is one of a number of surviving workers co-operatives, which were set up in the 1970s and 1980s. Unlike some, it has maintained wage equality and pays about £17,000 a year to all staff. There are other employee benefits, including generous maternity and partner leave and a pension scheme based on ethical investment - not to mention the free vegetarian cooked meal each lunchtime. The co-op aims to peg its pay roughly at the level of average local earnings.

Arguably the most significant drawback is Suma's inability to benefit from equity capital. Its expansion has been almost entirely funded from retained profits, hampering its ability to move quickly. Other co-operatives of Suma's generation have chosen less purist routes out of this dilemma: Poptel, the co-operative internet service provider, for example, recently restructured to bring in venture capital, so that its worker-members now collectively control only a bare majority of the trading company's shares.

Suma's 25th birthday comes at a time of overdue renewal in the British co-operative movement, with retail co-op societies and workers' co-operatives now having a single representative association, the Co- operative Union, for the first time in a century. The union is also reaching out to other co-operative bodies, including housing co-ops and credit unions. In the retail co-op sector, the two largest societies, CWS and CRS, came together two years ago to create the Co-op Group and in turn the Co-op Group is at present merging its two financial subsidiaries, the Co-op Bank and CIS.

Mr Cannell at Suma talks of the opportunities these developments bring for "C2C" - co-op to co-op trading. Suma, he says, wants to grow, though he qualifies this immediately by stating that growth for its own sake is not the main objective: the priority is the creation of sustainable jobs.

Suma also guards its founding principles carefully: its website declares firmly that Suma is, at heart "a political statement that workers can successfully manage their own businesses without an owner/manager elite".

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