Citizens bring forward petition to remove MCC directors, management
4 Comments Published by Pioneer Staff on Friday, July 27, 2007 at 5:01 PM.
By Abby Sewell
Molalla Pioneer
Four Molalla residents showed up at the Molalla Communications Company office on Friday afternoon bearing copies of a petition that, if successful, would oust the majority of the telephone cooperative's directors and upper management.
The petitioners say the action is necessary to spur change in a board and management team that has not been responsive to the public’s concerns; while MCC management say that a removal of the company’s leadership would jeopardize the cooperative’s financial stability and disrupt service to the members.
The petition follows on an open forum that took place June 20, in which members questioned the MCC board of directors and CEO Steve Loutzenhiser about high rates of employee turnover; a failed business venture by MCC into a company called Envada; and a perceived lack of openness on financial matters, including failure to post data on the board members' compensation in the annual report released to members.
At the forum, some members threatened to attempt a recall of the board, an action that would require a written request for a special meeting by 10 percent of the cooperative's members.
MCC's bylaws allow removal of board members by a majority vote of the membership at a special meeting.
The petition presented to MCC on Friday calls for a special meeting to be held Oct. 30, 2007, in which members would vote on the proposed removal of three of MCC's five directors, as well CEO Loutzenhiser, vice presidents Chris Michalopoulos and Steve Jantz, human resources director Christine Cline, network operations and internet service manager Lance Eves, and law firm Foster-Pepper LLP.
The document calls for removal of directors Ed Lettenmaier, Marcie Marsh and Kay Wise for "permitting the removal of over 50 percent of employees, including veteran key employees of MCC in a 12-month period ... creating a hostile work environment, diminution of services, destruction of the co-op, families and community fabric, failure to report the amount of directors' compensation and excessive spending in a wrongful manner."
As replacement directors, the petition proposes MCC members Peggy Smith, Michael Raub and Mike Wagner, all of whom made an appearance on Friday to hand the petition to MCC staff.
Asked why two of the directors, Ron Jones and Lorraine Peters, are not being targeted for removal, petitioner Peggy Smith said, "Ron Jones is brand new (on the board) and came up through the ranks of Molalla Telephone Company (where he worked for eight years). And I know Lorraine Peters has stuck up for the MCC employees on several occasions."
Jones and Peters could not be reached for comment.
Upon being notified of the petition MCC board chair Ed Lettenmaier said, "It's unfortunate, but they have every right to do it."
He added, however, that under the bylaws, if members vote to remove directors from the MCC board the remaining directors would appoint their replacements, rather than the replacements being specified by the petitioners.
For his part, Loutzenhiser questioned the petitioners’ motives.
“I find it interesting that the people running for the board in the petition are also the people instigating the petition,” he said. " … It seems that these people have a personal agenda and it's not what's in the best interests of the cooperative."
Wagner, who made a previous unsuccessful bid for an MCC board position, running against Lorraine Peters in March 2006, said the three proposed replacement directors were asked to by other MCC members to put themselves forward as candidates.
Asked about the timing of the petition, he said, “We are doing this now because we have waited more than one month (since the open forum) and nothing has happened. MCC is hoping that we will disappear.”
On Friday, the same day the petition was presented, the MCC board mailed a letter to the approximately 30 people who attended the June 20 open forum, responding to the concerns brought up at the meeting.
The letter compares MCC’s internet connection speed and prices favorably to other small rural telephone companies; cites a membership survey in which 92 percent of the 1058 respondents said they would recommend MCC’s services to family and friends; and points out that net margins of $4.5 million in 2006 show the company to be in good financial condition.
The gains came despite an unsuccessful business venture by MCC into a company called Envada, which folded in 2005 after losing $119,434 in 2004 and $25,596.
"I believe we have addressed every concern (the petitioners) have had, except for why specific individuals that are associated with them, or who they know about, are no longer working at MCC," Loutzenhiser said.
MCC has consistently declined to discuss personnel issues involving specific employees.
After having received and read the letter on Monday, Wagner said, “There’s really not any new information in there … It’s nicely done, but it’s not responsive.”
The removal of three board members, five key staffers and the law firm would throw MCC into chaos, Loutzenhiser said.
“Is (the petitioners’) goal to destroy the company or just to gain employment opportunities for those they desire?” he asked.
Wagner acknowledged that the proposed changeover in leadership at MCC would take some adjustment but added, “Firing 20 people in the last year didn’t seem to be difficult for the company, according to top management … I’m confident that the employees will be more than happy to pull a little harder in a short time frame, because that hostile work environment would no longer be there.”
Loutzenhiser said the “hostile work environment” does not exist and characterized the petitioners and their supporters as a small but vocal minority of MCC members, who are unlikely to sway the majority of the company's customers.
"Quality service, phone service, broadband internet, financial stability and payment of capital credits is what the majority of members are interested in," Loutzenhiser said. "And according to statistics (from a recent membership survey), they are satisfied."
With the current membership of MCC standing at 5,228, the petitioners will need to collect at least 523 signatures to call the special meeting for removal of directors.
The petitioners said they might withdraw the petition if MCC met certain demands, but declined to discuss the points on which they would be willing to negotiate.
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Thanks for reading.
Joe Wilson
Editor
To concerned: Please email jwilson@eaglenewspapers.com so I can send you what you requested.
My name is Daniel Eleen, like many other employees of Molalla Communications Co. I too had written to the Board of Directors seeking their help. I received no response from any of the Directors regarding this letter. All I got was a letter in the mail from MCC's HR Manager advising me to stay away from the board and company property. Why would the board of directors refuse to even listen to one of their employees who desperately needed their help?
Below is my letter I submitted to the board just after termination.
(Please note: I removed the names of the employees and managers for their privacy)
Dear Molalla Communications Board of Directors,
After my third attempt to request a hearing with the board I was terminated from my job. The current managers would not allow postponement of my signing of unjust accusations brought forth against me and it was not until after I was officially terminated that I was informed by the CEO that he will contact the board and present them with my request of a hearing. As stated in the company Policy and Procedures handbook (Pg.8)
This was not fair to me in any way! Now that I’m no longer employed with Molalla Communications this greatly reduces my chances of meeting with the board.
I’m not writing this letter to ask for my employment, but rather show to you how unjust these actions are! The CEO informed me (After being fired) that he will send to the board a copy of my Commitment Memo, my email to an ex-manager, and the email requesting a hearing. (My second request) I kindly asked that they please include the email the HR Manager sent me and the reply I emailed her providing all the information she requested including the reasons behind my actions. This request was REFUSED! The CEO told me that he decides what information they will provide to the Chairman! This is unethical and I feel that it was my request to have a hearing with the Board of directors not his and the two emails are crucial in the defense of my supposed misconduct!
There was no policy on my actions and during our meeting I was told by the HR Manager that “You knew the feeling we have towards the previous supervisor, yet you still emailed him?” How can I be reprimanded on the “Personal” feelings management has against a past manager. This is not acceptable conduct on their part!
Please understand that this letter is not at all a demand of assistance. I would simply like to have the time to present my case to the board of directors. To have the opportunity to not only express my concerns, but also provide you with the necessary/crucial information that will aide in my defense.
Included with this letter are copies of my email correspondence with my managers and HR related to this issue. Personally I feel it’s sad that I was not provided the option to present this to you before my termination. Instead I was told by the Human Resources Manager that in quote. “The board will not meet with you! And that it was because of all the anonymous letters that were sent to them in the past!”
In my opinion that is for the board of directors to decide and that it wasn’t fair to me or the board to have this stated. I truly hope that you decide to meet with me regarding this matter. If you have any questions regarding this matter please feel free to contact me anytime.
Sincerely,
Daniel Eleen
MCC did not value past employees.
Mike Wagner is one of the Petitioners. He is also Vice-Chair of the Mulino Hamlet and a Clackamas County Planning Commissioner.
MCC Board to Petitioners: “We have considered your comments and the MCC Board has decided not to accommodate your suggestions given at the close of the meeting on 09/11/07.”
Sufficient to say “mediation” never really began!
Member Pressure Results in MCC Changes
Over the last several years we Petitioners have asked the MCC Management and Board to make certain changes to the Co-op. While the Board would not have made these changes without pressure, to the Boards credit it has responded to several issues.
Several years ago any person wanting to run for the Board had to get 25 MCC member signatures to run and they had to run against just one person. At that time the Board exempted itself from the 25 signatures. As a result of the Boards changes to the by-laws at the next election in 2008, all persons running for the Board, including the Board Members themselves will have to get the 25 signatures.
In addition, the Board has amended the bylaws to provide that the highest vote getter(s) is the winner. In the past the highest vote getter running for individual position was the winner. It would have been possible in past elections, on years when two positions are elected, for one person to get more votes than the person in the other position, and still loose the election. In 2008 there will be two positions and the highest two vote getters will be the winners.
These two changes greatly level the playing field for persons who want to run against incumbents. It makes it more fair and equitable for all the MCC Members.
In 2006 the Board reported that it received $350 per day for attendance at Board meetings and $175 per day for attendance at educational seminars. In 2007 the Board did not report any compensation or expense levels. A review of the MCC bylaws indicates that Board Members are required to “report the method and amount of Directors compensation to the members at the annual meeting.” The Petitioners have felt for years that reporting the rate of pay was not the same as reporting the total amounts. The Board, after years of pressure, finally published on the internet its Compensation for 2006 as $58,850.00 and its Expenses as $45,993.78.
Why a Petition for a Special Meeting
The recent petition for a call for a special meeting centers on the importance of the employees to the co-op. MCC has focused entirely on the bottom line and internet speeds. The Petitioners have argued that over the long haul and in the face of future competitors (cell, cable, etc.) that loyalty to MCC will be the key tipping point to success in the future. How can MCC address this issue, when it terminates and forces out 24 of 40 employees in 14 months. These employees and their 100 years of total service are what made MCC what it is today. MCC had no loyalty to these employees, so why should they be loyal members of MCC. The bad feelings and lack of confidence in MCC are not only diminished and destroyed in these past employees, but also in their spouses, children, parents, relatives and friends. This does not even include the businesses that have already resigned from the co-op.
The Petitioners are trying to change the culture, thinking and heart of MCC. It is interesting to note that in the European Union that employees come before shareholders. In the EU companies are required by law to have employee representation on their Boards.
The employees are not without some responsibility. They did not organize to protect themselves, even when they were advised to do so. They falsely believed that MCC would recognize their importance and their contribution to the co-op. They also falsely believed that the tight knit small town philosophy of community would ultimately protect them. Unfortunately, they were wrong.
“Boards that Make a Difference”, by John Carver suggests that “The chief executive may neither cause nor allow any organizational practice that is imprudent or unethical.” This book also discusses a “fabric of values.” It also states that “Violation of the law is so patently a case of imprudent behavior that no additional words need be wasted.” The policy that the only good employee is a new employee is neither prudent nor ethical. Many of the employees that were pushed out had to take jobs further from home, move out of the community, and take pay cuts. The idea that they were not qualified to do the jobs that they had done for years and years, flies in the face of nearby companies hiring employees precisely because they were well trained.
What we want MCC to do is to treat employees fairly, equitably and humanely, which based on our interviews with many past employees and reviews of written documentation (which has been presented to MCC) has not been done. The MCC Board did not grant grievance hearing, even when requested to do so. If MCC had adequate grievance procedures and followed them we would not be where we are today. Major companies who are looking at long term healthy relationships have policies such as those below:
Reaching Full Potential
MCC supports a “Full Potential”' program to grow sales and enlarge profitability. People in every part of the business are taking action to achieve the best possible long-term performance for our Members. MCC invests in our employees' skills and capabilities to help them achieve their full potential, which in turn helps MCC to succeed. Current priorities across the Co-op are developing our talent, succession planning and engaging our employees in pursuing their full potential.
Developing Talent
MCC invests in identifying and developing the talents of its employees. MCC provides employees with challenging work that stretches their capabilities, and embeds this with training and development activities tailored to their individual needs. MCC integrates the performance review with the overall “full potential” goals of the co-op.
Succession Planning
MCC has a systematic succession management process for senior leadership roles. MCC identifies leadership talent and development needs, and follows this up with individual development plans that are monitored by senior management to help secure effective succession when required.
MCC aims, through these means and others, to develop fully the capabilities of our employees and to deploy them in the most effective way. Employees are encouraged to advance their careers where this makes sense for their development and for the business. Our selection processes are focused on an individual's capabilities and record of performance.
Engaging Employees
For employees to reach their full potential, we have to make sure they are properly engaged in the business. Not only do we provide the training and development opportunities that represent an investment in both their and MCC's future, but also a safe and responsible working environment that encourages respect, gives them the scope to apply their capabilities and to assume responsibilities, and enables both individual and team contributions to be recognized.
The new employees are now writing glowing letters to the newspaper. Without appropriate policies they too will be turned out very soon. While the Board may be citizens of the year in Molalla, they are not citizens of the year to the people that were pushed out of the community.
If you don’t care how your phone money is expended or if all you care about are the raffle prizes and the meals, you are missing out on what this small community is trying to accomplish. For MCC it should not just be “enriching our members lives,” but it should be “enriching the lives of our members, our employees and our community.”
Sincerely,
Mike Wagner