Human Resources Survey Gives a Close Look at Co-op Compensation

By Walden Swanson, Dave Gutknecht
093 March - April - 2001

This is the first of an annual Cooperative Grocer Human Resources Survey report. The survey is designed to help co-ops evaluate their HR and compensation practices. We believe this report will be a valuable resource for boards of directors setting management wages and for managers setting staff wages and benefits.

This report is organized by:

  • Major findings
  • Methodology
  • Basic HR parameters
  • Pay issues
  • Benefits
  • Board compensation
  • Member labor costs
  • Training and profit sharing

SURVEY KEY:

Store Categories and Totals

Large (LG)Medium Large (ML)Medium Small (MS)Small (SM)annual salesannual salesannual salesannual salesover $7,000,000$4-7,000,000$2-4,000,000under $2,000,00011 stores21 stores21 stores34 stores

 

Cooperative Grocer Human Resources Survey

Hourly Pay for Co-op Managers

Reported by Store Size:Upper Quartile /Median /Lower Quartile 

Large

 

Medium Large

 

Medium Small

 

Small

 UQMedianLQ UQMedianLQ UQMedianLQ UQMedianLQGeneral Manager35.5332.2126.70 21.6220.6720.05 20.7918.4417.43 16.6314.4211.30Store Manager23.0021.2520.34 17.6317.3016.28 16.3515.0012.75 10.609.588.38Finance24.7921.7319.22 18.2117.7014.47 15.5013.5512.50 11.7910.508.00Marketing19.2017.6815.84 15.1913.2412.64 12.5011.5011.00 11.5910.5010.00Merchandising22.2018.4717.84 16.7613.1012.03 12.6311.6310.56 10.639.507.63Office14.7413.3712.85 13.9011.609.48 12.5510.609.99 10.008.507.00Membership16.4814.7413.12 13.8313.089.75 11.5010.009.33 10.508.007.25Human Resources19.8618.6417.66 16.5114.9713.20 13.2612.0010.13 13.3110.509.50Data Processing20.1517.0914.42 13.1012.0010.00 12.0010.009.99 10.8810.259.25Front End17.9515.5014.27 13.2012.8712.00 13.0012.0010.75 10.008.507.50Grocery17.9416.4615.15 14.1613.0012.05 13.0012.5011.39 9.618.257.50Deli21.9418.3715.64 14.3513.1012.50 12.4911.5010.00 9.508.507.75Meat18.4316.8215.50 13.7711.0011.00 12.1311.0010.00 8.887.756.88Produce17.5716.5015.96 14.9313.5310.70 12.5011.5010.93 10.8510.007.50HABA16.8816.0714.91 13.5813.0812.00 13.0011.5010.50 10.509.008.13General Merchandise15.9015.6014.55 14.9313.0511.35 12.0010.009.99 9.258.006.88

Major findings

Perhaps the most interesting conclusion is something that may be obvious, but that we hadn't "known": Wages and benefit packages strongly correlate with co-op size. Larger stores pay people more and offer more and better benefits. If you work in a small store, one way to get paid more and to get more benefits is to increase the co-op's volume.

Even though personnel costs increased with size, Margin Minus Labor (showing operating margin after labor expenses) were the highest in the large stores, probably reflecting increases in efficiencies, productivity, and margin.

Turnover is high for cooperatives for all size, reflecting similar levels in the conventional grocery indusry. Cooperatives have a median turnover rate of 60%, and this is not statistically influenced by population density or store size. Our human resources strategies need to provide recruiting and training systems for this labor context.

Member Labor programs don't necessarily lead to higher or lower costs. For stores where member labor discounts as a percent of sales is high, there is a slight tendency for operating margin (after expenses for labor and member labor discounts) to be lower. This is an area for more study, however, because the variability was very high, and some of the data are questionable. For example: in many stores, board and any other purchase discounts are indistinguishable from staff and other labor discounts. Next year's survey will attempt to provide more detailed analysis.

We do not suggest drawing any conclusions about member labor programs from the data, except to say that when member labor purchase discounts are above 2.5% of gross sales, the remaining operating margin is often too low to maintain profitability. The exception to this is where member labor is by design extremely high, such as at Park Slope Co-op, Honest Weight, or Weavers Way. In these co-ops, member labor is required or strongly encouraged, and a significant amount of the work is performed by the members. In this model, economic results can be good and sometimes very good.

Methodology

Thanks to the many talented people who helped with the survey design and analysis: the Human Resource Retail Advisory Team (HRRAT).

This year, 79 cooperatives with 87 stores responded to the Cooperative Grocer Human Resources Survey. That is probably the highest response co-ops have ever provided for this type of survey, representing 30% of all U.S. natural food cooperatives. The responses came from 33 states and 1 Canadian province.

As expected, some surveys were incomplete, and some sections were filled out incorrectly, so totals may not reflect the entire set. In cases where corollary information was available, estimates were made to fill in the blanks. The CoCoFiSt database was also used to complete portions of some surveys and for some of the analysis.

For most responses we have provided medians and quartiles. Often more useful than mean (or average) figures, the median divides a population in half, while the quartiles reflect the upper and lower one-fourth. The median is not influenced by extremely large or small values as is the mean. Quartiles are independently calculated on each variable. For example, the upper quartile for general manager compensation reflects the point marking the highest one-fourth of figures for general manager compensation.

Basic HR paramaters

Management Structure: 87% of the cooperatives reporting indicate that they operate with a General Manager. Four cooperatives use a co-manager system, and six co-ops use a management team as top management.

The largest stores are most likely to use a General Manager structure -- 30 out of 31 Large and Medium Large cooperatives.

Unions: 5 of 79 cooperatives reporting on this item indicate that they are unionized.

Payroll services: 55% of cooperatives prepare payrolls in-house, 20% use ADP for payroll processing, and 25% use other payroll services. The larger the cooperative is, the more likely it uses a payroll service. Here are the percentages of each size that send their payroll out: Small: 37%; MS: 49%; ML: 53%; LG: 58%.

Payroll Periods: 58% pay every other week, 18% pay on the 1st and 15th, and 29% pay weekly. Interestingly, no large stores pay on the 1st and 15th.

Full Time/Part Time: The median number of weekly hours worked to be consider full time (FT) was 32, and 53% of employees are considered FT. The mdian number of weekly hours worked to be considered part time (PT) was 20. Large stores tend to have more FT employees: SM stores had 39% FT and 61% part time PT, while LG were just the opposite at 60% FT and 40% PT.

Turnover

Turnover is remarkably consistent among surveyed co-ops. As a gauge of turnover, Carolee Colter suggested using "the total number of employee separations for a year divided by average number of people on payroll." Using this ratio, the median co-op turnover rate is 60%, with not much variability by store size. The upper quartile turnover rate was more varied, with the large stores at almost 100% and the small store rate at 80%; MS was 86% and ML was 81%. The lower quartile turnover rate was 33% for ML and 55% for Large, with Small co-ops coming in at 35% and MS co-ops at 47%. The data swing wildly, yet the medians remain fairly stable.

Salary Ranges

There is a straightforward correlation between co-op size and pay.

Payroll as a percent of sales is remarkably constant for the first 3 groups -- medians are 21.74% for SM and MS and 21.90% for ML. LG payroll as a percent of sales goes up to 22.94%. This is influenced by the greater frequency of large delis and scratch bakeries in large stores.

However, if you include member labor discounts as a percent of sales, you get total labor costs that are very closely clustered. SM stores have the highest percent, followed by LG, ML, and MS stores. These figures are somewhat confounded by different product mixes, so Margin Minus Labor is a better indicator to use when comparing labor efficiency.

What is encouraging is that Margin Minus Labor does not decrease with size as individual labor costs (pay rates) go up. This indicates a margin and/or productivity increase at larger sizes, with part of the proceeds recouped from greater productivity going to the staff in the form of higher wages and more benefits. This size to pay/benefits relationship is the strongest we found in any of the data.

For all co-ops reporting, the median GM hourly pay is $18.85 -- or about $40,000 per year. The median of all other managers is $15.30 -- about $32,000 per year. For LG, the amounts are $32.21 and $22.89 -- annually, that's $67,000 and $48,000. For ML, the general manager's median pay is $43,000, with other managers' medians at $38,000. For MS stores, the amounts are $38,000 and $32,000 respectively, and for SM the amounts are $30,000 and $22,000.

We used 2,080 hours in a year to figure salaries, which assumes a 40 hour work week (x52) for managers. On a per hour basis, this means that the pay is overstated, assuming that managers work more than 40 hours per week.

We were concerned about the cost of living (COLA) impact on these figures, so we researched this question and found that the averages are very close to the national Consumer Price Index (CPI) norm. However, when you compare your results to those in this survey, you will need to use a "factor" to adjust the report to your locale -- and some of the adjustments are very large! There is a website for finding an adjustment factor for your locale: www.mazerecruiters.com.

Benefits

Paid Time Off includes Vacation, Holiday, Sick and Personal Days. The median days off are 13 in the first year, 16 days during year two, 18 days for 2 to 3 years, 20 days for 3 to 4 years, and 24 days for more then 4 years of tenure at the co-op.As with pay rates, Paid Time Off is greater in larger stores.

During the first few years, store size does not seem to matter much in terms of Paid Time Off. However this changes as an employee's tenure at the co-op lengthens. Co-op staff in large stores tend to receive more days: by the fourth year, large store staff receive about 25% more days off than small store staff.

As a rule, vacation time accumulatesif not used each year, and sick time is lost if unused at all co-ops; however, the data can be improved in the next survey by separating these two questions. Except for small co-ops (60%), vacation can be cashed in when leaving the co-op (90%).

Health, Dental, and Disability

Health and dental benefits were distinguished between full time (FT) and part time (PT) employees. For FT employees, 80% of co-ops cover an average of 85% of single person premium costs. In addition, 25% of co-ops cover an average of 87% of single staff dental premium costs. Only 5 stores reported carrying disability insurance, and all of these covered 100% of the premium. Four of these five offered both long term and short term coverage in this category.

For Dependent and Family Coverage for full time staff, about 50% of the co-ops covered some part of the premium cost. The amount of the premium coverage declined from the average of 85% for a single plan to an average of 65% for dependent and family plans.

Note: the data is a little confusing because someco-ops offer single person, dependent, and family options, while other co-ops offer just a single plan and a family plan (which would encompass the dependent plan structure). This makes the data a little hard to compare precisely. Several co-ops stated that they pay a fixed amount per employee and arrange to have family and dependent insurance available.

As with other benefits, the larger the co-op, the higher the percentage of staff covered and the higher the percent the co-op pays toward the premium. A majority of the larger sized co-ops offer dependent and family benefits, compared to a minority of the smaller sized co-ops.

For PT Employees the percent of staff covered and the percent of premium covered deteriorate rapidly: 33% of part-timers are covered under the single plan, with 19% coverage for dependent and family plans. The percent of premium covered drops to 60% for the single plan and to less than 50% for dependent and family plans. About 10% of PT staff have dental coverage, and 1 co-op offered disability to part-timers. Again large stores offered significantly more and higher benefits to part-timers.

Providers: Approximately 90% of both health and dental coverage comes from insurance companies rather than self-insurance.

Other Benefits: Retirement plans are offered by 60% of the co-ops reporting. Only 13% of SM co-ops offer some type of plan, but 100% of LG co-ops do. Most of the retirement plans are either a 401K or an IRA. Five co-ops offered SEPs.

Almost all the co-ops offering a plan "matched" the employee's contribution, with an average cap of 3% of pay. Some 41% of co-ops offered Salary Reduction Plans, with twice as many "premium only" plans as there were "full plans."

In total, 18% of the co-ops provided Employee Assistance Programs. This was another benefit that was different based on size: 3% of the SM co-ops offered EAPs, while 50% of the LG co-ops did.

Employee Purchase Discounts were offered pretty much across the board and averaged 15%. There was a lot of variation though -- the high was 33% and the low was 5%. Most co-ops didn't distinguish between FTs and PTs in terms of this benefit.

Member labor: About 70% of the co-ops offer some sort of member work program. The breakdown by size of co-op offering this opportunity to members was 58% of LG, 79% of ML, 61% of MS and 77% of SM co-ops.

For all co-ops, the median number of member workers, the amount of work, and the discount amount were:

  • for 23 weekly workers, 2 hours of work for a 15% discount;
  • for 25 monthly workers, 4 hours of work for a 10% discount.

The average member labor discount as a percent of sales is .82.

As noted earlier, there is a slight negative correlation between Margin Minus Labor (MML -- the amount left to pay operating expenses after subtracting labor costs from gross margin) and the total amount of member labor discount. But the variation suggests that a well run member labor system can benefit the co-op and a poorly run one can ruin a co-op. Moscow Food Co-op and Community Co-op in Bozeman both have high member labor percentages, but also have high MML numbers after adding those high member labor discounts into labor costs. Overall, MML for stores without member labor is 12.98% and for stores with member labor is 12.13%.

Co-ops have fostered many innovations in this area. Middlebury Co-op offers a 10% discount on $60 for every hour worked and has about 20 people taking advantage of the program. Several co-ops, including Hunger Mountain, pay member workers for brief stints while they work at the co-op. Community Co-op in Bellingham provides a $5 coupon for each "job", which usually takes about an hour. Weaver Way requires all adult members to work 6 hours per year, resulting in 24,000 hours of work.

Training and profit sharing: As a percentage of sales, ML and MS co-ops spent more on training than large or small co-ops. Profit sharing was also higher for these middle groups.

Board of Directors

Seventeen co-ops (approximately 20%) reported giving board members stipends, with a median amount of $360 per year. Seven co-ops compensated their board officers, at a median of $600 per year. For those providing a different stipend to their board chairs, the median was $710 per year.

Most co-ops provided their board members with purchase discounts that average 14%.

Conclusion

This Cooperative Grocer report should be a valuable resource for boards and managers when setting pay and benefits policies. When evaluating this report, remember to let us know how to make it more useful.

Other resources:

For CGIN members, there is a wealth of Human Resource information available on the CGIN web site -- job descriptions, evaluation tools, etc. We encourage you to take advantage of these tools that have been developed by some of the best co-ops in the country. We encourage you to join the CGIN listserve too. Subscribe at www.cgin.org/listserve.html.

For those of you that are CoCoFiSt members and interested in HR specific topics, you can subscribe to CoCoHumRs, an email discussion group focusing on HR issues. To subscribe, send an email to CoCoHumRs-subscribe@egroups.com or sign up through the CoCoFiSt web site.

If you didn't submit data this year, we'd still like to have it to improve the comparability of data for next year's survey. You can find a form to fill out at www.cocofist.com.

CDS will offer an individual co-op run of this database which will display your "factor adjusted" data along with the medians and upper quartiles for stores your size. Contact Walden Swanson at Walden2@msn.com for details.