Hiring a General Manager

Back in 1997 I wrote a manual for the “Toolbox for Co-op Boards of Directors” series, published by Northcountry Cooperative Development Fund and distributed by Cooperative Grocer. Its purpose was to guide boards of directors of food cooperatives through the steps of hiring a general manager. Now the National Cooperative Grocers Association (NCGA) has published a second edition. In revising the manual, I drew upon my experience with 20 different general manager hirings over the past three years. Following are some highlights.

Put satisfactory interim management in place so that the board does not feel pressured to hire in a hurry.
Most co-ops find it takes anywhere from three months to a year to hire a new general manager. Unless the outgoing general manager gives an open-ended departure date, the board must either:

• appoint an acting manager or co-managers from among existing staff, or
• hire someone from outside the co-op to fill a temporary position.

If the co-op is in a sound financial position with no looming crises, the former option can work well. But if the co-op is struggling financially or faced with other operational or organizational challenges, the board may want someone with the skills and experience to start turning the co-op around without waiting for the new general manager. By taking immediate steps to address falling sales, out-of-control margins, or high labor costs, an interim manager could leave the co-op in better shape for the next general manager.

The sudden or unexpected departure of the general manager can be unsettling and can leave the workplace in significant upheaval. By focusing on keeping the store running smoothly with no plans to stay on at the co-op, an outside interim manager could help stabilize the situation and free up the board to focus on the general manager search.

There are consultants and other independent contractors working with co-ops who could take on this role, although you can’t count on one of them being available at any given time. For co-ops in NCGA, your corridor’s development director is a good resource to turn to for ideas.

A subgroup (the search committee) must commit the time to carry out the recruiting, screening, and logistical legwork.
The final decision to hire a general manager-arguably one of the most important decisions a board can make-is a responsibility that is retained by the full board of directors. However, a smaller group can more efficiently do the actual work of the search. Typically called a search committee, this group develops timeline and budget, recruits and screens candidates, and offers a few finalists from which the board makes a selection.

One of the most important qualifications for serving on the search committee is availability. When it comes time to interview candidates, all committee members need to make time to participate in each interview. It’s not fair to the candidates or useful to the co-op to have a different line-up of committee members at each interview. It has worked well for some committees to have a set meeting time every week.

Search committee leadership makes a big difference in conducting an effective and professional search. The committee chair is the driver, keeping the group focused on the tasks to be done and ensuring that the process stays within budget and follows the timeline.

The board must agree on the required qualifications for the position.
Identifying the required and desired qualifications drives the entire hiring process, including where you advertise, what you say in your ads, how you screen resumes, and what you ask in interviews. Ultimately, the qualifications guide the board in choosing between finalists.

Identifying and prioritizing qualifications is the single most important use of the full board’s time in the hiring process. All the rest of the work can be delegated to the search committee until it comes time to interview the finalists.

Failure to discuss and come to agreement upon the required qualifications at the start can result in a deadlocked board at the end. Better to hash out differences of opinion before there are flesh and blood candidates involved.

It’s okay for the board to change its collective mind about the qualifications in the light of experience with actual candidates, as long as it is an explicit agreement.

Cast the recruiting net wide enough to bring in multiple qualified candidates.
Many boards start out hoping to find a general manager with previous experience in co-ops. But the pool of co-op managers willing to move is shallow. Don’t rule out recruiting outside the co-op sector. Upheavals in the conventional grocery industry have caused many veterans to seek meaningful employment elsewhere. The idea of a community-owned store supporting a local food network has appeal beyond co-ops and the natural foods industry.

The biggest change since the first edition of Hiring a General Manager is the rise of the Internet. More co-ops are now finding their general managers through on-line ads of regional newspapers and job boards such as Monster, Yahoo! HotJobs, CareerBuilder, and others.

Meanwhile, the co-op’s own website can serve as a filtering device. In your ads, require job seekers to go there first and read instructions before they submit a resume. In addition, they can learn about the co-op and the general manager job description or job summary.

If a board member wishes to throw his hat in the ring, require that he resign from the board, not just during the hiring process but for up to a year after the new general manager is hired (that is, if he doesn’t get the job). If the resigned member goes back on the board too soon, his motives could always be questioned when criticizing the new general manager’s performance.

Ascertain whether candidates meet the qualifications and provide truthful, accurate information.
Often resumes give an imperfect picture of whether the person has the qualifications you seek. Phone screening of the most promising candidates allows you to ask specifically targeted questions. Call candidates to:

• get more complete information than they provided in the resume and cover letter,
• ask them about their compensation needs to see if they and the co-op are in the same ballpark, and
• answer any questions they might have about the co-op and the ­position.

If candidates appear to be completely unfamiliar with co-ops, you can ­suggest that they visit the www.ncga.coop , www.cgin.coop or www.cooperativegrocer.coop.

After the screening calls, the search committee selects candidates for a committee interview. Don’t waste your (or the candidate’s) time on someone you feel lukewarm about. In order to come up with a unified recommendation, all committee members should be present at each interview. For local candidates, these interviews can be in person. For long-distance candidates, you’ll need to use a conference call, videoconference, or web-cams.

In planning interviews, design questions to find out to what extent the candidate has the qualifications you are seeking. Emphasize past experience (“How have you handled such a situation in the past?”) rather than hypothetical cases (“How would you handle such a situation?”) You want the candidates to describe achievement and demonstrate how their past experience and special knowledge will help your co-op. Such questions are called “behavioral” or “behavior-based” interview questions.

After the interviews, the search committee narrows the field to potential finalists and seeks outside information about the candidates. There are several different purposes in checking references: verification of factual information, a more complete picture of the individual candidate, more information to determine whether she meets your qualifications, and due diligence to prevent hiring embezzlers or other criminal types.

By talking to former employers, you can at least find out whether she did in fact work there, whether the dates of employment and job titles are accurate, and whether she would be eligible for rehire.

References also give more of a feel for who the candidate really is. Of course, candidates will list as references people who they think will speak favorably of them. This is not necessarily a problem, since you are evaluating the candidate not by a binary system of “good/bad” but in relation to a host of qualifications.

If a candidate has worked in the co-op sector or in the natural foods industry, you may know people who know the candidate, such as brokers, distributors, managers of other co-ops, employees of co-op organizations and consultants. These unofficial references can add to your picture of the candidate. They expect and deserve the utmost confidentiality from the search committee.

Would you hire someone to manage your co-op if he had thousands in credit card debt or recently defaulted on a loan? Or had a felony conviction? For a helpful overview on selecting a background check provider, see NCGA human resources manager Deb Walton’s article in Cooperative Grocer (May-June 2007).

The full board makes the final hiring decision based on the agreed-upon qualifications.
Since the final stage of the hiring process is potentially the most expensive (if you have out-of-town candidates) and is disruptive to daily operations, limit the number of finalists presented to the board to two or three at the most.

Arrange for each candidate, including internal candidates, to meet with the management team. Ask the managers to prepare their own questions. Some co-ops have found it valuable to have search committee members observe the candidate interactions with the management team. Then, after the group interview, give each manager a feedback sheet to rate the candidate in relation to the qualifications.

To give non-management staff a chance to meet the candidates, and vice versa, you could arrange for an informal gathering, such as a potluck, or a more structured forum in which employees can ask questions. Unless yours is a very small co-op, don’t raise expectations that every staff member can meet the candidates.

You can learn a lot by spending informal time with candidates. Each meal or social occasion can be an opportunity for different board members to get to know the candidates-something the search committee can coordinate.

Once the candidates have seen the store, met the staff, and reviewed the financials, their last interview is with the full board of directors. If you have any areas of uncertainty concerning a candidate’s qualifications, design questions that will illuminate those areas. Ask her how she would control the co-op’s total labor costs, including manager compensation, to maintain profitability.

When the board meets to decide whom to hire, it should be in a separate meeting from the final candidate interview. Ask board members to rank each finalist against the list of established qualifications, then go through the list together, noting areas of general agreement. Once the board agrees on its selection, it authorizes the search committee to make the job offer and negotiate compensation within certain parameters.

Negotiate compensation acceptable to the preferred candidate and affordable to the co-op.
Compensation includes base salary, benefits, and contingent pay (bonus). You must consider:

• what other co-ops are paying,
• what your local labor market is paying, and
• what your candidate pool is seeking.

If your former general manager was in that position for a long time, you may have been paying considerably less than a new general manager will require. Be prepared to spend more to get higher value for the co-op. Limiting your candidate pool to those willing to accept lower compensation due to lesser experience or fewer qualifications does a grave disservice to your members and your staff.

Keep in mind that it will be the general manager’s job to manage the labor budget, including her own compensation. Traditionally, the employer makes the initial offer of compensation. However, since you already know the candidate’s compensation expectations from the phone screening, and since the candidate has had the opportunity to review the co-op’s financial statements, you could ask the candidate to make a proposal to you for general manager compensation.

However, if your chosen candidate is relatively inexperienced, you would want to retain the initiative and offer a salary at the low end of your range, plus several thousand dollars to spend for continuing education.

Contingent pay, in the form of a bonus that pays out upon achievement of results, can be an important part of a general manager’s compensation. However, such arrangements take skill to design without creating unintended consequences. A new manager who has never worked for your co-op before is not in a good position to gauge what is realistically attainable. For a manager’s first year in the job, either forego a bonus as part of compensation or stick to a “plain vanilla” bonus program based on easily measurable factors, such as sales growth and net income. Then, after a year on the job, offer to renegotiate the bonus with the manager’s input.

Hiring a general manager is a huge undertaking, fraught with uncertainty. However, with a clear process and an involved search committee-and patience-a co-op can find the right person for the job.

Thanks to National Cooperative Grocers Association for making possible the new edition of "Hiring a General Manager,' with special thanks to Karen Zimbelman for leading this project.

Carolee Colter is a consultant to cooperatives and community-based organizations (250/505-5166 or caroleecolter@cdsconsulting.coop).