MCC answers questions, some still not satisfied
0 Comments Published by Pioneer Staff on Saturday, June 23, 2007 at 10:00 AM.
Forum addresses concerns about company's actions
By Abby Sewell
Molalla Pioneer
Change is never easy, Molalla Communications Company representatives told a gathering of about 30 cooperative members who turned out for a public forum on Wednesday to express their concerns about the management of the telecommunications company.
But it’s a point of contention in the Molalla community whether the changes at MCC are for the better or the worse.
Criticism has surrounded the local telephone cooperative for several years and has escalated since the arrival of the current management team, most of whom joined the company within the past two years.
Most notably, an anonymous e-mail sent out on April 22, 2007 to hundreds of MCC customers aired a laundry list of complaints about the cooperative and its operations.
MCC never discovered the identity of the message sender, who company representatives said logged in using another user’s identity and then changed the reply-to address to that of the Molalla Pioneer.
However, many of the concerns brought up at Wednesday’s meeting came directly from the e-mail: questions about loss of revenue through the departure of MCC’s former wholesale customers Colton and Mt. Angel Telephone companies, and through a failed business venture into a company called Envada; allegations that human resources manager Christine Cline received a $7,000 raise before the end of her probationary period and that CEO Steve Loutzenhiser hired a friend from Kansas, Lance Eves, to work as internet service manager with the company footing the bill for his relocation costs and six months rent; and that former CEO Michael East left a list of employees to be terminated when he resigned at the end of 2005.
Some of the issues in the cooperative have members threatening to call for a special meeting to recall the MCC board of directors.
During the public forum, MCC’s CEO Steve Loutzenhiser and board of directors were able to address a number of concerns to the audience’s satisfaction, especially concerning the company’s finances.
But others, particularly regarding the work environment and employee turnover at the phone company, remained unresolved when the evening was done.
A hostile work environment
With several former MCC employees and their families in attendance, the discussion grew emotional when questions were raised as to why more than 20 employees — approximately half of MCC’s workforce — have quit or been fired in the past year.
Theresa Martin, an ex-MCC employee who recently resigned, said that a hostile work environment led to her departure.
“I didn’t want to leave my job here,” she stold MCC board members at Wednesday's forum. “This is my home. Now I work for a competing company and it’s a great place to work, but it’s not home.”
During her tenure with MCC, she said, employees received threats from management, had their phone calls recorded, and personal information about employees circulated among the managers.
At one department meeting, Martin said, vice president of marketing and member relations Chris Michalopoulos told employees, “The board only knows what it is told. I can portray this team in a positive light or a negative light … If you don’t play by the rules, I can take you out at the knees.”
Loutzenhiser, who arrived at MCC in April of 2006, described the company as a good place to work. He said changes in CEOs typically lead higher levels of turnover within a company, and that the changing field of telecommunications demands a new skill set from employees.
Loutzenhiser denied that East left him a list of employees to be terminated.
The customers in Molalla and their demands of the telephone company are changing, Loutzenhiser said.
“The demographics, age, type of people and their expectations of of what a telephone company should provide have changed,” he said. “They want more and more bandwidth, faster and faster speeds. … It’s a whole different skill set than was required 10 years ago.”
A changing customer base is just one of the challenges facing MCC, he said. Federal funding for rural telecommunications companies is eroding, and the amount of funding coming to MCC annually through the federal Universal Service Fund declined by $821,000 between 2003 and 2006, he said.
And with the arrival of the Willamette Broadband company in the area, MCC is facing competition for the first time.
Mulino resident Warren Jones said that in the face of those challenges, MCC has lost a valuable resource with the 20 people who departed last year.
“I think you let go some of your best and brightest talent,” he said.
He added that the poor morale among employees and the ensuing problems with MCC’s public image could leave it vulnerable to a takeover by a private company.
Asked whether Canby Telcom has seen similar growing pains, vice president of finances Jim Rennard said that although the Canby telephone cooperative has faced difficult transitions in the past, it has not seen the same levels of turnover.
“Big changes are hard, but I think our people stepped up to the challenge,” he said. “I think that’s a function of giving proper training and support and communicating to employees that this is going to be a difficult time.”
Compensation
Loutzenhiser and the board declined to discuss specific salary figures both at the open forum and in interviews with the Pioneer.
The raise given to human resource director Christine Cline occurred after her probationary period ended, according to board members. And Loutzenhiser said according to an outside consulting firm hired by MCC, Cline’s salary after the raise still placed her below the weighted average for human resource managers at similar-sized telecommunications companies.
In terms of Lance Eves’ relocation, he said, “It’s a widespread practice to provide relocation assistance when relocating from outside the area may be necessary. Lance received relocating expenses that did not cover the entirety of his moving expenses, did not cover the entirety of his temporary housing expenses, and it was not for six months.”
A look at the company’s publicly available 2005 and 2004 tax forms provides further data on the pay scales for MCC’s corporate officers and board members.
The Pioneer compared MCC’s top management salaries to those reported by the Beavercreek Cooperative Telephone Company and Canby Telcom, similarly sized local cooperative telephone companies.
In 2004, Beavercreek and Canby paid their CEOs $133,415 and $162,000 respectively Molalla’s CEO Michael East fell in the middle, earning $149,286. The vice presidents of operations and finance at Beavercreek earned $69,931 and $79,769.
In Canby the junior president earned $97,085. Molalla’s vice president of finance, Steve Jantz, received $111,071.
For 2005, Beavercreek paid $142,225 to its CEO, $75,618 to its vice president of finances and $81,401 to the vice president of operations. Canby paid $139,357 to its general manager and did not report salaries of its vice presidents.
The reported salary of Molalla’s CEO rose to $296,027 in 2005. The MCC board declined to discuss whether the figure included a severance package for East. Jantz, as vice president of finances, earned $115,034 in 2005.
Also reported on the tax forms were compensation figures for the MCC board members, which ranged between $9,300 and $11,550 for the year in 2004, compared to Canby and Beavercreek, where the highest paid directors received $3,000 and $3,155. In 2005, the MCC board members’ compensation ranged from $8,275 to $12,650. In Canby the highest salary was $2,550; in Beavercreek, $3,380.
MCC board members receive $350 per board meeting and $175 a day for regional and national meetings.
Those figures were not reported in this year’s annual report to the members, a fact that board chair Ed Lettenmaier called “highly unfortunate.”
He added, however, “We’re not here for the money.”
Rennard said Canby’s board members receive only $100 per meeting, but he noted that the levels of involvement and responsibility for board members vary from company to company.
More financials
Envada, an internet service provider serving primarily Portland-based non-profits, was a business venture that folded quickly after its inception in 2004. However, other investments by MCC, in the Rural Telephone Bank and the Alamosa cellular company, have brought in more than enough revenue to counterbalance that loss, Loutzenhiser said.
RTB alone brought in nearly $3.4 million in gains in 2006, according to MCC’s annual report.
“In any business you want to diversify to reduce risk and help increase your margins,” Loutzenhiser said. “(Envada) was an investment in a business entity that MCC had full control over that didn’t work out, so we exited.”
And the two wholesale customers that departed last year represented less than one percent of MCC’s total revenue, he said.
On the whole, the company’s finances are strong, with 2006 showing a $3.9-million increase in assets and $700,000 in debt reduction from the previous year, according to the annual report.
While appreciating those facts, members said they want to see more financial details made available to the public, and that ventures like Envada should be openly discussed. The annual reports published by MCC contain barely any financial data, and more complete information is difficult to obtain, members said.
“I understand the concept of risk and reward and that you have capital and want to invest in capital, but why not show us?” asked Mulino resident Mike Wagner.
The end of the forum saw the board and Loutzenhiser promising to make greater attempts at openness.
“One of the main things I heard people say is that they would like more information,” Loutzenhiser said. “So one of the main steps I’d like to take is to find out what information people would like to have, and how we can provide it.”
Lettenmaier added, “I think it’s been productive to have these questions brought up and gives us lots of food for thought.”
Wagner, who mentioned the possibility of recalling MCC’s directors during the forum, reserved his judgment on the meeting’s outcome.
“We’ll see,” he said. “It all depends on what (MCC) does now.”
By Abby Sewell
Molalla Pioneer
Change is never easy, Molalla Communications Company representatives told a gathering of about 30 cooperative members who turned out for a public forum on Wednesday to express their concerns about the management of the telecommunications company.
But it’s a point of contention in the Molalla community whether the changes at MCC are for the better or the worse.Criticism has surrounded the local telephone cooperative for several years and has escalated since the arrival of the current management team, most of whom joined the company within the past two years.
Most notably, an anonymous e-mail sent out on April 22, 2007 to hundreds of MCC customers aired a laundry list of complaints about the cooperative and its operations.
MCC never discovered the identity of the message sender, who company representatives said logged in using another user’s identity and then changed the reply-to address to that of the Molalla Pioneer.
However, many of the concerns brought up at Wednesday’s meeting came directly from the e-mail: questions about loss of revenue through the departure of MCC’s former wholesale customers Colton and Mt. Angel Telephone companies, and through a failed business venture into a company called Envada; allegations that human resources manager Christine Cline received a $7,000 raise before the end of her probationary period and that CEO Steve Loutzenhiser hired a friend from Kansas, Lance Eves, to work as internet service manager with the company footing the bill for his relocation costs and six months rent; and that former CEO Michael East left a list of employees to be terminated when he resigned at the end of 2005.
Some of the issues in the cooperative have members threatening to call for a special meeting to recall the MCC board of directors.
During the public forum, MCC’s CEO Steve Loutzenhiser and board of directors were able to address a number of concerns to the audience’s satisfaction, especially concerning the company’s finances.
But others, particularly regarding the work environment and employee turnover at the phone company, remained unresolved when the evening was done.
A hostile work environment
With several former MCC employees and their families in attendance, the discussion grew emotional when questions were raised as to why more than 20 employees — approximately half of MCC’s workforce — have quit or been fired in the past year.
Theresa Martin, an ex-MCC employee who recently resigned, said that a hostile work environment led to her departure.
“I didn’t want to leave my job here,” she stold MCC board members at Wednesday's forum. “This is my home. Now I work for a competing company and it’s a great place to work, but it’s not home.”
During her tenure with MCC, she said, employees received threats from management, had their phone calls recorded, and personal information about employees circulated among the managers.
At one department meeting, Martin said, vice president of marketing and member relations Chris Michalopoulos told employees, “The board only knows what it is told. I can portray this team in a positive light or a negative light … If you don’t play by the rules, I can take you out at the knees.”
Loutzenhiser, who arrived at MCC in April of 2006, described the company as a good place to work. He said changes in CEOs typically lead higher levels of turnover within a company, and that the changing field of telecommunications demands a new skill set from employees.
Loutzenhiser denied that East left him a list of employees to be terminated.
The customers in Molalla and their demands of the telephone company are changing, Loutzenhiser said.
“The demographics, age, type of people and their expectations of of what a telephone company should provide have changed,” he said. “They want more and more bandwidth, faster and faster speeds. … It’s a whole different skill set than was required 10 years ago.”
A changing customer base is just one of the challenges facing MCC, he said. Federal funding for rural telecommunications companies is eroding, and the amount of funding coming to MCC annually through the federal Universal Service Fund declined by $821,000 between 2003 and 2006, he said.
And with the arrival of the Willamette Broadband company in the area, MCC is facing competition for the first time.
Mulino resident Warren Jones said that in the face of those challenges, MCC has lost a valuable resource with the 20 people who departed last year.
“I think you let go some of your best and brightest talent,” he said.
He added that the poor morale among employees and the ensuing problems with MCC’s public image could leave it vulnerable to a takeover by a private company.
Asked whether Canby Telcom has seen similar growing pains, vice president of finances Jim Rennard said that although the Canby telephone cooperative has faced difficult transitions in the past, it has not seen the same levels of turnover.
“Big changes are hard, but I think our people stepped up to the challenge,” he said. “I think that’s a function of giving proper training and support and communicating to employees that this is going to be a difficult time.”
Compensation
Loutzenhiser and the board declined to discuss specific salary figures both at the open forum and in interviews with the Pioneer.
The raise given to human resource director Christine Cline occurred after her probationary period ended, according to board members. And Loutzenhiser said according to an outside consulting firm hired by MCC, Cline’s salary after the raise still placed her below the weighted average for human resource managers at similar-sized telecommunications companies.
In terms of Lance Eves’ relocation, he said, “It’s a widespread practice to provide relocation assistance when relocating from outside the area may be necessary. Lance received relocating expenses that did not cover the entirety of his moving expenses, did not cover the entirety of his temporary housing expenses, and it was not for six months.”
A look at the company’s publicly available 2005 and 2004 tax forms provides further data on the pay scales for MCC’s corporate officers and board members.
The Pioneer compared MCC’s top management salaries to those reported by the Beavercreek Cooperative Telephone Company and Canby Telcom, similarly sized local cooperative telephone companies.
In 2004, Beavercreek and Canby paid their CEOs $133,415 and $162,000 respectively Molalla’s CEO Michael East fell in the middle, earning $149,286. The vice presidents of operations and finance at Beavercreek earned $69,931 and $79,769.
In Canby the junior president earned $97,085. Molalla’s vice president of finance, Steve Jantz, received $111,071.
For 2005, Beavercreek paid $142,225 to its CEO, $75,618 to its vice president of finances and $81,401 to the vice president of operations. Canby paid $139,357 to its general manager and did not report salaries of its vice presidents.
The reported salary of Molalla’s CEO rose to $296,027 in 2005. The MCC board declined to discuss whether the figure included a severance package for East. Jantz, as vice president of finances, earned $115,034 in 2005.
Also reported on the tax forms were compensation figures for the MCC board members, which ranged between $9,300 and $11,550 for the year in 2004, compared to Canby and Beavercreek, where the highest paid directors received $3,000 and $3,155. In 2005, the MCC board members’ compensation ranged from $8,275 to $12,650. In Canby the highest salary was $2,550; in Beavercreek, $3,380.
MCC board members receive $350 per board meeting and $175 a day for regional and national meetings.
Those figures were not reported in this year’s annual report to the members, a fact that board chair Ed Lettenmaier called “highly unfortunate.”
He added, however, “We’re not here for the money.”
Rennard said Canby’s board members receive only $100 per meeting, but he noted that the levels of involvement and responsibility for board members vary from company to company.
More financials
Envada, an internet service provider serving primarily Portland-based non-profits, was a business venture that folded quickly after its inception in 2004. However, other investments by MCC, in the Rural Telephone Bank and the Alamosa cellular company, have brought in more than enough revenue to counterbalance that loss, Loutzenhiser said.
RTB alone brought in nearly $3.4 million in gains in 2006, according to MCC’s annual report.
“In any business you want to diversify to reduce risk and help increase your margins,” Loutzenhiser said. “(Envada) was an investment in a business entity that MCC had full control over that didn’t work out, so we exited.”
And the two wholesale customers that departed last year represented less than one percent of MCC’s total revenue, he said.
On the whole, the company’s finances are strong, with 2006 showing a $3.9-million increase in assets and $700,000 in debt reduction from the previous year, according to the annual report.
While appreciating those facts, members said they want to see more financial details made available to the public, and that ventures like Envada should be openly discussed. The annual reports published by MCC contain barely any financial data, and more complete information is difficult to obtain, members said.
“I understand the concept of risk and reward and that you have capital and want to invest in capital, but why not show us?” asked Mulino resident Mike Wagner.
The end of the forum saw the board and Loutzenhiser promising to make greater attempts at openness.
“One of the main things I heard people say is that they would like more information,” Loutzenhiser said. “So one of the main steps I’d like to take is to find out what information people would like to have, and how we can provide it.”
Lettenmaier added, “I think it’s been productive to have these questions brought up and gives us lots of food for thought.”
Wagner, who mentioned the possibility of recalling MCC’s directors during the forum, reserved his judgment on the meeting’s outcome.
“We’ll see,” he said. “It all depends on what (MCC) does now.”
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