Zingerman’s to explore cooperative structure and shared employee ownership

    paruari3

    Over the past several months, I’d heard from a few reputable sources that the folks at Zingerman’s were exploring the possibility of transitioning to a business model in which their 600-some employees would share ownership to some degree. And, a few weeks ago, when I’d heard that an unknown person had edited the company’s Wikipedia page to reflect this fact, I knew it was just a matter of time before someone in the press got hold of it. Well, this afternoon, that finally happened. The Business Insider released a story about the Ann Arbor company’s planned transition to a worker-owned co-op, and now other stories are starting to pop up around the web… So, I guess there’s no turning back now.

    Here’s a clip:

    …(The Zingerman’s Community of Businesses) are founded on a unique philosophy. They lack a traditional business hierarchy and emphasize collective decision-making. The unorthodox strategy has worked well for them, and the company is on track to make $50 million this fiscal year.

    In the next few years, Zingerman’s plans to adopt an even more radical business model, becoming a worker cooperative, where its 600-plus employees will own the company and influence its direction.

    A worker co-op is an old business model that has seen renewed interest post-recession due to a lack of investors creating jobs in communities. But Zingerman’s has been focused on getting its employees to think like owners long before hard economic times.

    One of the tenets of modern cooperatives, open-book management, has been in effect at Zingerman’s for 20 years. It is a management philosophy founded on the idea that even the lowest-level employee will work better if they know how the company is doing financially and should have a stake in its success…

    While the details are still sketchy as to what this would mean for Zingerman’s founders Paul Saginaw and Ari Weinzweig, and the 18 or so managing partners currently operating businesses under the Zingerman’s umbrella, I can’t help but think that this is a positive move for workers – one which will perhaps reverberate through the region… Worker-owned cooperatives, as I suspect you know, are on the rise once again in America, and it’s exciting to know that the folks at Zingerman’s are going to be among those leading the charge.

    Hopefully, some day soon, I’ll have details to share about how this evolution will likely happen, and what it’ll mean for the people at Zingerman’s. In the meantime, here’s a brief clip from the Ann Arbor News, who apparently got a hold of Weinzweig shortly after the news broke.

    …Weinzweig said he wants to give Zingerman’s employees the opportunity to better influence the direction of the company. The goal is to implement the worker cooperative plan in 2015. By 2020, Weinzweig said he hopes all of Zingerman’s businesses are managed by partners and owned and partially controlled by employees…

    [note: If you haven’t already, you should also check out my recent interview with Paul Saginaw on why we have to raise the minimum wage.]

    This entry was posted in Ann Arbor, entrepreneurism, Food, Uncategorized and tagged , , , , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

      28 Comments

      1. Grumpy
        Posted June 18, 2014 at 9:33 pm | Permalink

        I am really shocked to hear this news. I never got the impression from my 3 years working in the ZCoB that they gave a shit about their employees at all. We certainly were not paid a living wage as the recent media blitz indicated. I’m glad that things seem to be changing over there, but normally everything they say is bullshit so I am somewhat skeptical that this will actually happen in a meaningful way.

      2. **TOM**
        Posted June 18, 2014 at 11:16 pm | Permalink

        I’m truly sorry that you had to work hard and felt unappreciated, Grumpy. I’ve never worked for Zingerman’s, so I don’t know how hellish things are there. I do know, though, that they insure all of their employees, start people at a rate above minimum wage and open all of their meetings to staff. I’ve worked quite a few shitty food service jobs, and none of them offered even one of these.

      3. Grumpy
        Posted June 19, 2014 at 1:02 am | Permalink

        They started at $7.75 when I started in 2005. They only offer insurance to full-time employees after 6 months., not all employees. “Opening meetings to all employees” is more like subjecting them to psychological torture constantly telling how great it is to work there. I wasn’t working in food service and it wasn’t “too hard” for me. I was basically working the equivalent of a full-time warehouse forklift operator and a full-time purchasing position but getting the pay and treatment of a basic low level hourly employee. There were a lot of fairly major unsafe working conditions. They maxed out around $12/hour. Go fuck yourself **Tom**

      4. Posted June 19, 2014 at 3:20 am | Permalink

        People around there love to hate on Zingermann’s, but seem to give every other crappy business a free pass.

        It reminds of how people rail on the evils of Wal-Mart, while supporting exploitative small businesses which skirt paying taxes and SS for their employees by paying paltry cash wages under the table.

        At least Zingermann’s is trying.

      5. Grumpy
        Posted June 19, 2014 at 6:23 am | Permalink

        What the fuck are you talking about Dr Larsen?

      6. Anonymous
        Posted June 19, 2014 at 6:55 am | Permalink

        I’ll second that. At least they’re trying. Most business owners in their shoes would cash their checks and keep quiet. Instead they’re talking publicly about the minimum wage and looking for ways to involve employees in their growth. That should be celebrated.

      7. anonymous
        Posted June 19, 2014 at 8:02 am | Permalink

        the ypsilanti food co-op should do this

      8. Yet another anonymous person
        Posted June 19, 2014 at 8:21 am | Permalink

        This is great news. I noticed that the article in BI didn’t mention, for instance, how they would share revenue with employees or involve them in decision-making, but it seems like a move in the right direction. With regard to the above comments, I’d like to say that a job that appears good from the outside might be kind of horrible. I didn’t work at Zingerman’s, but I worked at the Ypsi Food Co-op, and I think the main underlying issue was that employees were made to feel like they were a part of this great cooperative enterprise (so, you know, we should volunteer our time, be happy with no benefits or raises, etc.), even though it wasn’t. A similar shitty job at some big box store might have paid the same, had the same benefits, but at least it would just be a job without the pressure to treat my employer like a charity and put up with everything (for the greater good!). I love small businesses, but they can take advantage of the public perception of being good employers without having to actually live up to that perception. I’ve heard similar stories from people working for non-profits. Worker ownership, in my mind, is the only solution. Maybe some combination of worker and community ownership is possible, too.

      9. Eel
        Posted June 19, 2014 at 8:44 am | Permalink

        Do yourself a favor and never read the comments on Ann Arbor dotcom.

      10. idea man
        Posted June 19, 2014 at 9:58 am | Permalink

        It’ll be interesting to see how the navigate it in such a way to get the buy-in from all the managing partners. I imagine it won’t be full employee ownership, but that the employees will have more of a voice, and some amount of equity. I look forward to seeing how this plays out.

      11. Jcp2
        Posted June 19, 2014 at 12:01 pm | Permalink

        It’ll be an ESOP.

      12. Grumpy
        Posted June 19, 2014 at 1:09 pm | Permalink

        Notice the headline change? It’s a fake story! Again! No one gives a shit because the are all too happy to eat up the Zingerman’s bullshit PR. To both of their credits, Mark’s interview with P Sag is the only article about the “really great better than living wage – it’s THRIVABLE WAGE!” PR campaign that I have saw that had real information about the actual current wage structure at the various Z bizzes (still somewhat inaccurate because I saw job postings for $9/hr Zing job at the same time). Most of the articles were saying that they pay everybody $20/hr and that they always have, which is very far from the truth. Like I was saying before the insane assholes who populate this site started attacking me, there are indeed a lot of good things about the organization and I am glad that they are making these improvements to benefit employees, but the public perception is far from accurate (especially as of 5-10 years ago). If they had spent a quarter of the time they spend on elaborately beating into their employees how great they have it on actually making it a good place to work, they could have done a lot. I think they should try to be a little more honest. Also the businesses are pretty different from each other. Zingerman’s Mail Order is the one that was a hellish climate of terror and zinginess playing make-believe at open book finance and lean production. I have heard that some of these issues have been addressed since they illegally terminated me and denied me unemployment.

      13. Tom
        Posted June 19, 2014 at 2:23 pm | Permalink

        Now we get at the truth. They fired Grumpy.

      14. Anonymous
        Posted June 19, 2014 at 2:49 pm | Permalink

        So Zingerman’s was the worst hell hole in the world to work at, the pay was terrible, and they treated people like shit, but you didn’t quit. Why is that?

      15. Grumpy
        Posted June 19, 2014 at 4:13 pm | Permalink

        I walked out and never came back after they suddenly without warning told me that they were going to change my job to a completely different one. I liked a lot of things about the job and was really good at it. The main problem was that the managing partners were assholes. I never said that it was the worst hell hole in the world. I said that the idea that they pay and treat their employees well is a dishonest public relations thing. Bullshit is the problem, and a lot of that is not even directly coming from them but from people like y’all that are more interested in kissing their ass than knowing any accurate information about their employment practices.

      16. Taco Farts
        Posted June 19, 2014 at 5:11 pm | Permalink

        Anonymous, I’ve worked awful jobs for way, way, way too long. Contrary to what those who think that the “Free Market” will solve every problem would have you believe, we all don’t have the financial freedom to just up and quit anytime a business treats an employee like shiat.

        Grumpy, I know it can be hard to let go of the rage, but if you really want to be heard, it’s probably going to be closer to honey than vinegar here. We all know the guys who are fired for cause and then go on and on cursing constantly in all caps about the awful conditions, it’s all bs, unfair, etc.” Yeah, I stole a few hundred dollars, but once they told me I had to come back from lunch seven minutes early!” They ruined the rage game for those of us who have real points to make about substandard conditions and organizational attitudes. If you can make those points in a calm way and not personally attack your doubters, I suspect you’ll gain a lot of cred. If you can’t well, this is the internet. I hope you’ve found more rewarding employment since then.

        As far as the subject of the post goes, I hope the employees’ first action is to shut down ZingTrain operations and replace them with what it sounds like, The ZingTrain, an actual train with a Zingerman’s food car and generally lavish attitude about travel. That or vote to discontinue use of “Zing” as a prefix on any future product or service.

      17. Grumpy
        Posted June 19, 2014 at 6:00 pm | Permalink

        I wasn’t fired for cause. They eliminated my position and tried to force me into a completely different job with fewer hours that I was not interested in. I am not filled with rage. I am very glad that I stopped working there. I got a graduate degree and then fell into a job with a local business that pays better and is oddly similar but better in almost every way. Basically all of my co-workers hated working there. After I left I think there was some sort of intervention relating to the “climate of terror” fostered by the one managing partner in particular (this is just second hand information – I don’t know the specifics). I’ve had worse jobs than that one and certainly don’t think it’s among the worst employers around. I do think based on my experience that it had one of the biggest gaps between the reality of working there and the insane projection of being a really great place to work. I find it very problematic that there has been a complete fabrication of what they pay their employees in their PR push, including duping the POTUS. They certainly are not anywhere near the best employer in Ann Arbor and specifically have not paid anything approaching a living wage until this brand-new initiative. I think these developments are great if they actually follow through with them. Since the press and public are so eager to pile praise on them as though these radical changes have always been there and the mistaken assumption that their relatively high prices are tied to generous employee compensation (their margins are lower than average, but they carry very expensive products), they don’t really have much incentive to turn them into reality. I don’t think I personally attacked anyone, Ms. Farts. I have being personally attacked for trying to point this stuff out. I think this story of becoming a “worker-owned cooperative” that the blogger ran with (even though he is personal buds with the leader of the organization who probably could have clarified that it is not accurate) is very problematic since worker-owned cooperative is a pretty specific structure that they are not actually pursuing as far as I can tell. They go with it because all the misleading stories translate into more $$$. It’s dishonest and I think harmful in the long run to the general state of labor conditions in the area.

      18. Posted June 19, 2014 at 6:22 pm | Permalink

        I did change the title of the post this morning, Grumpy. I originally said “worker-owned cooperative.” When I woke up, I had a message from an employee who reads the site, stating that it likely wouldn’t be “a worker-owned cooperative” in the truest sense, as I’d suggested. I didn’t ask for details, but my guess is that they’ll increase employee ownership, but that the whole thing won’t be employee owned. At any rate, I changed the title accordingly. The truth is, I still don’t know what this will look like. And, to be honest, I don’t get the sense that the folks at Zingerman’s do either. All I know if that they want to move toward a co-op model where people at every level of the company have more of a say, and more of a share of profits, etc. And I think that’s a good thing.

        For what it’s worth, I agree with you about the industry being tough. I’ve had my share of food service jobs, starting at Pizza Hut in high school, and working my way up to some of Ann Arbor’s finer restaurants like the Brown Jug and Seva. The work was rough, and the pay was terrible, but I knew what I was getting into… Not having ever worked at Zingerman’s, I can’t speak about how they treat people. I have, however, attended my share of Zingerman’s meetings, and I’ve always been impressed by their openness and inclusiveness. (They have a policy where any employee can attend meetings.) Sure, there’s quite a bit of pro-company propaganda, but that happens at a lot of companies. (Check out Google sometime if you really want to see some cringeworthy stuff.) The point is, I think it’s great that Zingerman’s is trying to change things, and that they’re willing to embrace positive change. You can hate them. It’s your right. But I don’t see the Brown Jug, Main Street Ventures, or anyone else in town trying this kind of thing, and I appreciate for Paul and Ari opening themselves up to this kind of criticism.

      19. Grumpy
        Posted June 19, 2014 at 7:16 pm | Permalink

        The meetings were probably the worst part for me. Anyway, for context here is one of many articles claiming that all the Zingerman’s businesses do and have always paid a starting wage of $21/hr which I find to be abhorrent dishonesty counterproductive to the struggle to achieve better labor practices across the board. Similar phenomenon as the false worker-owned co-op story that will probably be everybody’s new false assumption about the organization.
        http://aattp.org/why-this-smart-deli-owner-invests-in-his-employees-pays-them-thrivable-wage-plus-benefits/

      20. Grumpy
        Posted June 19, 2014 at 7:26 pm | Permalink

        Terribly sorry, I made a typo in an earlier comment.
        In the other interview article Paul cited $9/hr as entry wage but at that time there were job postings on the zing website for $8/hr positions. I find this whole narrative that any complaints are due to people expecting utopia or unwilling to do “hard work” very demeaning to the working class.

      21. Anon
        Posted June 20, 2014 at 4:40 am | Permalink

        I used to work for Zingerman’s and look back on my experience there very favorably. About 5 years ago I started at $8.50 an hour as a seasonal temp answering phones at Mail Order. This was raised to $9 when I was hired in the post-season. The culture there was wonderful. They served restaurant-quality lunches for free to the ENTIRE seasonal staff daily… delicious things like apple-manchego-lime salads and slabs of ribs. They had daily tasting sessions for their myriad of products – olive oil sippings, brownie taste tests – to educate their crew on the product and its background. Not to mention the world class customer service training, because of which I am now an asset to any service oriented employer – which of course behooves me as well.

        When I was still seasonal, I was invited to be one of a handful of “new employees” on a voting panel to make a determination on whether to elect Steve Mangigian as a managing partner at Zingerman’s Coffee Co. I got to sit at the table with Paul and Mo and other partners and hear his presentation and just thought they were the coolest people on the planet.

        I work for a local nonprofit now, but I will always love Zingerman’s and patron their establishments with gratitude for my days as an employee there and fondness for their yummy, top quality foodstuffs.

      22. kjc
        Posted June 20, 2014 at 9:08 am | Permalink

        Grumpy = ring of truth.

      23. Dan
        Posted June 20, 2014 at 10:01 am | Permalink

        when exactly did Mark turn into a double-talking politician? almost every post now, he’s covering his ass with back peddling bullshit. straddling the fence with “let me play devil’s advocate, but I’m not really saying this, just what if” bull shit.

      24. Brainless
        Posted June 20, 2014 at 12:37 pm | Permalink

        “the insane assholes who populate this site”

        I’m just a brainless unfrozen neaderthal blog poster, but I think we just got a little clue as to why you got your ass fired. Seriously, are these the sort of communication skillz they teach at grad school now? ‘Cause if so, you got ripped off.

      25. Grumpy
        Posted June 20, 2014 at 5:22 pm | Permalink

        Brainless, I studied pure mathematics. For some reason, there was no required coursework on “communication skillz” for blog comments. I would agree that I was ripped off since my degree hasn’t done me any tangible good, but I didn’t pay any money for it. Have you ever read the comments on here? I don’t think that characterization is very far off, especially in the context of being personally attacked and ridiculed for pointing out that Zingerman’s is lying about their wages.

        Like I have repeatedly said above, I think that these are good potential developments but would prefer to congratulate them once they have actually been accomplished. Anon, who loved working for $9/hr because Ari and Mo are so cool, is pointing out the same disconnect with the hype about $21/hr starting wages. The ZCoB is good at a lot of things, but marketing bullshit is probably their strongest suit. For the most part, they use it for good, but using the bullshit machine to misinform people about their low wages is very offensive to me.

      26. Posted June 21, 2014 at 8:52 pm | Permalink

        Apparently the folks at Zingerman’s have clarified their position. Here’s a clip from MLive.

        Zingerman’s released a statement Friday intended to clarify reports earlier in the week that the company planned to transition to a “worker-owned co-op.”

        According to the statement, the state of Michigan does not have a provision for a “worker-owned cooperative” business structure, and the Zingerman’s Community of Businesses plans to employ a “hybrid” structure.

        The new business model will allow employees to participate in the ownership and control of Zingerman’s various business entities which are predicted to bring in more than $50 million in revenue this fiscal year.

        Staff will also have the opportunity to own interest in the Zingerman’s brand and be included in the decision-making process “at the Community level.”

        I can’t seem to find the Zingerman’s statement, just this mention of its existence at MLive.

      27. Posted June 22, 2014 at 6:19 am | Permalink

        Apparently the full statement for Zingerman’s wasn’t much more than what was shared by MLive. Here it is.

        Clarification Statement regarding Recent Zingerman’s Business Story

        Zingerman’s Community of Businesses would like to clarify the information published in the Business Insider story earlier this week.

        The story reported that Zingerman’s Community of Businesses planned to transition to a “Worker-owned Co-Op.”

        A “worker-owned cooperative” is not an accurate description, as the State of Michigan makes no provision for this type of business structure.

        The new business entity will instead be a hybrid structure that will allow employees to participate in the ownership and control of Zingerman’s Community of Businesses.

        Zingerman’s staff will have the opportunity to own interest in the Zingerman’s brand, and more importantly, Zingerman’s employees will be included in the decision-making process at the Community level.

      28. Grumpy
        Posted June 23, 2014 at 10:56 am | Permalink

        This clarification is pretty misleading and potentially harmful to the actual cooperative movement. It is true that “Worker-owned co-operative” is not an official business structure in MI, but they do exist in the state. They can can be set up as a C-Corp or LLC (or probably some other structures) with the co-operative ownership structure specified in the bylaws. Zingerman’s doesn’t really have the option to convert since it would likely be hazardous to their credit ratings and they don’t actually want to hand the businesses over to the employees. I hope this doesn’t discourage the development of true worker-owned (and other types of) co-operatives in the community.

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      1. […] ago the Business Insider posted an article stating that, in the near future, Zingerman’s would be transitioning to a “worker-owned cooperative”. As you may not know, however, the folks at Zingerman’s quickly came out to say this wasn’t the […]

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