Critics Concentrate Fire On the Harvard Coop

IT WAS THE BEST of times and the worst of times for the Harvard Cooperative Society this year. Coop sales and profits reached new heights, but so did public criticism of the Coop.

Few observers have found fault with the Coop's present financial position. Sales increased this year 13 per cent to a record $18.9 million. More importantly, in the face of continued attacks on Coop management practices, the rebate on membership purchases is expected to increase from last year's 5 per cent. The situation has improved dramatically since 1970, when the Coop rebate hit an all-time low of 2 per cent.

At the same time, the Coop has been through what Milton P. Brown '40, Coop president and Filene Professor of Retailing at the Business School, termed "a very rough year" of adverse publicity and lawsuits. Student dissatisfaction with the Coop came out in the recently-completed elections for Coop Student Directors, in which 5 of the 11 candidates nominated by the Coop stockholders were beaten out by students who gained spots on the ballot by initiative petition.

Also, Donald E. Steele, the most vocal Coop critic during the past year, won one of 11 non-student directorships. He will be in a position next year to press directly for reform of present Coop practices.

Steele's relationship with the Coop has been long and stormy. While a graduate student in Linguinstics, Steele served two terms as a student director, resigning in 1971 to become manager of the Coop's Law School branch. He left that post last year after disputes with an immediate supervisor and attempted to win back a seat on the board of directors.

Steele began his public salvo against the Coop when he was thwarted in his election bid. His name was kept off the ballot for lack of sufficient signatures; he claimed that the Coop went out of its way to invalidate a large percentage of his signatures. Battling the Coop head-on, Steele sued to have last spring's director election invalidated. Although the Coop finally won the case this spring, the publicity arising from the litigation did little to improve the store's image.

The Coop's choice of product lines, its treatment of employees and its physical expansion were among the many targets of Steele attacks during the past year. The attacks kept Steele's name in the news and virtually assured his election to a directorship this year.

Although Steele was at the vanguard of the anti-Coop movement, he did not stand alone. Fred Fox, who resigned in September as Coop controller, the following month filed a $100,000 lawsuit against the Coop, alleging "breach of contract." The case is still pending in Suffolk County Superior Court. A former accounts payable manager, John Roberts, charged in November that he resigned due to intense and unfair pressure applied on him by Howard W. Davis, general manager of the Coop. The National Labor Relations Board began an investigation of the Coop last fall after union organizers complained they were being "harassed" by Coop security guards. A group of local Chicano students led by Carlos M. Alcala, a third-year law student, in April called the Coop "racist" for refusing to discontinue the sale of Farah slacks. Farah is the object of a nation-wide boycott organized by employees who seek to unionize Farah's main plant--whose workers are primarily Chicanos--in El Paso, Texas.

The Coop is quick to rebut its critics. General manager Davis recently labeled many of Steele's criticisms as "contrived." He claimed that a new profit-sharing plan more than compensates Coop employees for any losses they might have suffered resulting from the adoption of a new pension plan last year. The Coop pension plan has been one of Steele's favorite targets.

President Brown defended the Coop's decision to continue the sale of Farah slacks, explaining "This is a matter between union and management. The Coop can't adequately take a position on this issue." Brown pointed out that the Coop talked to both management and union organizers from Farah before reaching its decision.

Brown also defended the Coop's treatment of its employees, calling working conditions at the Coop as good or better than those of any store in Boston." He said that the Coop has not become unionized because workers are generally content with their pay, and he denied that security guards harassed union organizers last fall. "The union would have sued us if there had been any real harassment. Going to the NLRB was just a publicity gimic," Brown said.

But rebuttals to specific complaints have not solved the Coop's public relations woes. Most students seem to feel that they have little or no input in the Coop decision-making process. "I really get frustrated when I realize that I own part of the Coop yet no one even lets me know what goes on over there," a Harvard freshman complained recently.

THE GROUP OF STUDENTS which seems most satisfied with the management of the Coop is the one most familiar with the Coop's operations: the student directors. Directors contacted by The Crimson were unanimous in their praise of Davis. Kenneth G. Bartels '73, a member of the board, called Davis "an outstanding individual" who has done an excellent job as general manager of the Coop.

Bartels said, however, that Coop directors have little control over management, since they rarely have adequate information to justify going against management recommendations. "It's rare that anyone on any board knows anything about what's going on. But at least a lot of diverse views are represented on this board," he said.

Close ties between the Coop and other business interests, however, have been objects of constant criticism. "Maybe if the Coop weren't so tied in with the rest of the business world it could become the socially constructive force many students wish it were," Steele said recently.

The Coop is tied to other busness interests as well through its board of directors. Frank L. Tucker, professor emeritus at the Business School and Coop treasurer, is a director or trustee of various industrial, financial, or non-profit organizations, including the County Bank of Central Square. The Coop has done most of its financial and has received its major loans from the County Bank ever since its dispute with Harvard Trust in 1970.

Brown serves on the board of Allied Stores, whose holdings include Jordan Marsh, Boston's largest department store. General manager Davis is one of several former Jordan Marsh executives brought to the Coop by Brown.

Although there is absolutely nothing wrong with Coop directors having outside business interests, some students are critical of such ties, especially because this is a university community which prides itself in its independence from outside interests. The Coop does employ business professionals because it is not a backyard operation. But therefore it should expect hostility from the many students who have a low regard for big business.

AS THE COOP grows both financially and physically, the question of whom the Coop serves arises more frequently. Steele and others have warned that the Coop is in danger of losing its cooperative tax status since so much of its business does not involve cooperative members.

The official number of Coop members has declined 15 per cent in the past four years. This decline may very well be only a temporary phenomenon; Brown claims that past membership figures were inflated by imprecise accounting methods, and many long-time Coop members may have allowed their memberships to lapse temporarily when rebate checks all but disappeared. Nevertheless, business with non-members has been a growing percentage (albeit a very slow growth) of total Coop business in recent years. Davis estimated non-member business at 40 per cent of total business last year.

Undoubtedly, the Coop is still predominantly oriented toward students, which is to be expected. Although students make up less than half of all Coop members, they are the store's chief customers. The Coop is the largest seller of books and records in New England, products which serve the student market primarily.

However, the Coop in recent years has expanded into some areas of little interest to students. Some critics contend that the selling of such products as housewares, major appliances and expensive cameras and the refurbishing and rental of commercial space on Bow St. are not enterprises in which the Coop should be involved.

Davis defends expansion into these areas on the grounds that they are necessary to support unprofitable student-oriented enterprises. The Coop makes no profit on record sales, since it must sell records at discount prices to compete in the tough Boston market. Textbooks are notoriously unprofitable (despite the fact that the Coop has a monopoly on Harvard reading lists) since they are so bulky and may only be sold at a low 20 per cent margin. Davis asserted that the Coop would have to discontinue many of its student-oriented lines were it not for the profit it makes from lucrative ventures such as the Bow St. development.

However necessary Coop expansion into non-student areas may be, it inevitably creates resentment among students who feel that the Coop is thereby neglecting the quality of service in student-oriented areas. Complaints about textbook service were frequent enough this year to warrant the Coop's publishing a pamphlet explaining how faculty members could expedite textbook orders and help improve textbook service.

Brown may well have been accurate when he called the Coop management "totally dedicated to running this place for the students." The board of directors has little to gain for itself--the salaries of its members are independent of the size of the Coop's profits.

On the other hand, the Coop's image among students has sagged badly, and that image can only be improved by providing opportunities for more student input in Coop decisions. The results of the recent board of directors election are encouraging in that students who may have been critical of Coop practices in the past--including Steele and two Chicanos, David P. Samano '74 and Lorenzo Ybarra, who will seek to have the Farah slacks issue re-examined--have been incorporated into the Coop decision-making process.

However, students will never have a real say in management of the Coop so long as they do not have the expertise to arrive at management decisions independent of the advice of the more-experienced non-student directors. Perhaps the equalization of influence between non-student and student directors is not possible if the Coop is to continue to be run competently: But perhaps some alternatives, such as placing a limit on the number of years that a director can hold office--thereby controlling the influence of any one director--would be workable and would help bring about this equalization.

The much smaller Yale Co-op has recently implemented many reforms, including placing a limit on director tenure. If the Harvard Coop seriously wants to improve its responsiveness to students, it should carefully study the results of the reforms of its New Haven counterpart