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Perhaps the biggest co-op challenge:
Fostering a Sense of Ownership
an email from Michael Bluejay to the ICC-Austin Board of Directors, Feb. 17, 2005 

I submit that the core problem facing the co-op is that the members don't feel a sense of ownership. Every significant problem we have can eventually be traced back to that. If members felt they truly owned the co-op, they'd be excited about it. Excited co-opers makes for happy, vibrant communities where people do their labor because they're proud to exercise responsibility, where they get their friends to live there because they want to share their joy with others, where people want to take on leadership positions because they want to help run something special, and where improved occupancy means lower room rates, more money for maintenance, the opportunity for expansion, and a happier staff since there would be more members to pick up some of the slack and they'd be more likely to actually do so.

All other perceived problems are just *symptoms* of the real problem. Lack of interest in leadership positions? That's members not feeling a sense of ownership. Bad occupancy? That's members not recruiting because they're not excited about living here, because to them it's just a place to live, not something they own and build and run together -- i.e., no sense of ownership. Crumbling buildings? That's not enough money, because occupancy is low, because members don't feel a sense of ownership. It all goes back to that.

Unfortunately I think Evan's position is a good example why we never make any progress in this area. Everyone is so concerned that the solution won't be 100% perfect that we wind up keeping the *problem* which is even worse.

I submit that your criteria for a solution shouldn't be whether it's perfect, but whether it's better than what you have now. And what you have now scrapes.

No change you make will bring enormous success immediately. That's not the point. The point is that changes can *get the organization started* on moving forward. Otherwise, by doing nothing (or at least nothing bold) then you resign the co-op to the same malaise that it's suffered from for a couple of decades now.

The idea of whether and how to reward members and/or houses for increased occupancy speaks very directly to fostering a sense of ownership. Whether such a system actually significantly improves occupancy in the short term is actually kind of academic. Is it a core belief that members should benefit from cooperation or not? If so then then why haven't we been working towards that? And if not then why do we even call it a co-op? If allowing members to reap the benefits of cooperation is something we believe in we should find a way to make it work, rather than focusing all the ways it might *not* work.

The article on my website about how to lower room rates in the summer as occupancy goes up is just one way to have a system where members actually benefit from cooperation. It's not the only way. The idea in my original article wouldn't work exactly as written right now because conditions have changed since I wrote it, most significantly that summer room rates have already been reduced significantly. But the point is not whether you should enact the specific revenue-sharing idea in my article, it's whether you should come up with *some* way to have members enjoy the results of their efforts to cooperate by building the co-op. It's something you haven't had for years.

Here's an example of how we had an opportunity to move forward but didn't. When I was on the board a few years ago we had a bonus system that worked like this: We'd take the room charges we collected from a house, add in any late fees or any fines we received from the members, and subtract out the utilities expense, and call the resulting figure the Net Revenue, then compare that to the *budgeted* net revenue of room charges minus a budgeted allowance for deadbeats plus a budgeted expectation for fees and fines minus budgeted utilities, and then figure that the house would get 20% of the difference between the two, but *only* if the whole organization was at a minimum level of occupancy, but even then if they'd earned a bonus it would only be paid at the end of the semester and it would be reduced by any deficits that the house suffered in bad months. Huh?

This system failed miserably because it was miserably complicated. The board strove for "fairness" by making the calculations detailed and putting in lots of exceptions and qualifications, but that meant they gave up simplicity. And without simplicity it was doomed. You have to be able to explain it to members in one sentence or it won't work. People have to be able to *understand* how something works while you're explaining it before their eyes glaze over, and if it's going to motivate them they have to be able to *remember* it as well. From scratch. This system wasn't *more* fair because it was so complicated, it was *less* fair because it didn't serve anybody.

In Spring 2002 I proposed overhauling our bonus system with a set of super-simple bonuses, such as that each house would get about $100 for every month they were at 100% occupancy. To make my point that this was better than the system we had at the time I interviewed many ICC members, then-current board members, and former board members, and not a *single* person could accurately how the bonus system in place at the time worked. And I don't mean they were a little off, they were *really* off. Yet despite the fact that maybe me and the accountant were the only two people in the organization who even understood the bonus system, the board was resistant to adopt my proposals because they could identify something about them that they felt wasn't 100% fair or perfect and thus they thought we should retain a confusing system that was even worse than the proposed solution.

I kept pushing for change because I believed strongly in it. Then in summer the board, which was largely new and not yet indoctrinated to resist change, passed the new bonus proposals. Those lasted a couple of months before the new fall board decided to scrap all the new bonuses completely and not even replace them with anything else.

That leaves you in the situation you're in now: For the last two years, if occupancy were good, the houses would get 0% of the benefit directly. Any excess profit would go straight to ICC central.

I want to tear my hair out every time I hear someone complain that house-based bonuses aren't fair because the houses aren't "equal". Besides the fact that I flat-out do not buy that idea, buying into it means that you've resigned yourselves to never having an easy revenue-sharing system that motivates members to fill their houses and which rewards them when they do so. Period. The cockamamie system we had before didn't work, and the next one won't work either.

Since I'm no longer involved with the organization I'm going to speak freely: The fact that Evan likens a simple bonus system to tax cuts for the rich is exactly why this organization is spinning its wheels and not making any progress. It's exactly why you wound up having NO bonus system rather than have a bonus system that was mostly good but had a few minor flaws. And if you don't change this attitude, it's exactly why the organization will continue to struggle because while leadership pats itself on the back for thinking that they're being super-fair the reality will be that the houses are empty and with insufficient revenue you can't get them fixed up properly, and nobody has a sense of ownership.

If someone wants to liken my ideas to Republican class warfare then remember that it cuts both ways. I could easily say, with some justification, that the objection to a simple bonus system on the grounds that it's not 100% fair is the same thing as being against welfare because some people who receive it might not deserve it. (e.g., Heliods might get their bonus easier because Helios was recently spruced up and thus easier to fill, so the Heliods might not "deserve" all of the bonus they get.) This is like complaining about Cadillac-driving welfare moms. The solution isn't perfect but that doesn't mean you throw it out the window and keep the problem which is even worse.

Every co-op has the ability to shape its own destiny, and that's been proven by the fact that in recent years *every* house has enjoyed excellent occupancy for at least a semester or two. Frankly, any house that says it can't improve its occupancy is copping out, explaining why they're doomed to failure rather than making any effort to improve. Then again, one reason that people have that attitude is because they don't believe in their communities. Start fixing that problem (by fostering a sense of ownership) and then it won't even occur to anybody to think that their house is getting the short end of the stick, because they'll know that that's not what's happening.

The fact that some houses might be a little bit easier to fill than others is a big form of injustice? Please. It's not. It's not tragic injustice that Arrakis is newer than the other houses. It's not injustice that HoC has a pool while the other houses don't. It's not injustice that Helios was the most recent house to get significant facilities attention. It's not injustice that French House has a stronger sense of community than some of the other houses. Now, in contrast, compare that to these facts right now:

(1) Neither houses nor members have any meaningful *direct* incentive to fill their houses,

(2) Houses which make the effort to fill up receive no financial direct benefit for doing so, with all of the excess profits going to ICC, and

(3) When your staff tries to suggest fixing this there are cries that it's the same as tax cuts for the rich.

I won't go so far to say that that's injustice, but it's sure as hell wrong. It's definitely a *lot* more wrong than the fact that some houses might be a little (not a lot) better positioned to earn a bonus. If one were available.

Coming up with a bonus or profit-sharing system is not the only thing that can instill a sense of ownership, but it's a big one, and it's a start, which is more than we can say for doing nothing.

I would like to challenge the board to devote an entire session to brainstorming ways to foster a sense of ownership. If it's true that there is not much sense of ownership now, then I can't see how continuing to do the same thing we've been doing all along, or making only minor or token changes, will make the future any different.


P.S. I don't want to get bogged down in details because I'm trying to impart something much broader and much more general, but as an example of the kind of pessimistic thinking I believe permeates so many board discussions, here's how I addressed that in my proposal from a few years ago about the new bonus system I was floating.


Board members might be concerned that one house could have good occupancy while other houses were floundering, and then we'd be forced to pay out bonuses to certain houses in a time of crisis when money is scarce. That's a valid concern, so I ran the numbers on it and I don't think it's a problem. Here's my thinking on this:

Let's assume that this scenario actually happened, with one full house vs. a bunch of vacant ones. How much would ICC be out in a month? About $100. Big deal. We could lose $40,000 from bad occupancy in one semester alone. I say, if one house can maintain 100% occupancy during a depression that's so severe that the other houses are floundering, then they've EARNED their $100. Taking it away from them would only hurt morale, which in turn could lead to worse occupancy. If you have one unit that's performing well during a crisis, it's EXTRA important to reward them for it.

Now let's look at the Doomsday Scenario in which all houses have 100% occupancy but New Guild is completely empty. That would cost us $550/mo. for nine months, or $4,950. And we'd be at 79% occupancy. In that case, it would be the bad occupancy that was killing us, not a measly $5000 in bonus money. We were at 79% occupancy just recently, and obviously neither bonus money nor any other ~$5,000 expense were the most of our worries at that time. Let's face it: If all the houses are 100% full and New Guild is completely empty, then the bonus is irrelevant; you have bigger chunks of tofu to fry.