January 24, 2016; The Globe and Mail
Last week, employees of Goodwill stores across the Greater Toronto Area arrived at work to find the doors locked. CEO Keiko Nakamura announced that the organization would be closing 16 stores and that employees would not be getting their final paychecks. While Ms. Nakamura is still getting her $200,000-plus salary, employees are scrambling to make ends meet and calling for her resignation.
But who is there to make her resign? The board has, itself, resigned en masse—or as the Toronto Sun puts it, “promptly ran for cover like cowardly rats deserting a sinking ship.” Sue-Ann Levy of the Sun goes on to write, “The board turned the whole mess over to CEO Keiko Nakamura to act both as CEO and her own board, as if they had no fiduciary duty whatsoever to protect Goodwill’s assets. In their statement, they call her a ‘capable and strong leader’ whom they support to find and implement the ‘long-term solutions needed.’”
“I tried for two days to reach every member of the board for comment,” Levy reports, “most particularly former chairman Michael Eubanks, [a Liquor Control Board of Ontario] exec. An assistant to Eubanks informed me Thursday that only the PR consultant hired by the board would be speaking.”
The media coverage of the CEO of Goodwill Toronto, which is extraordinarily thorough, has taken a split stance; some point out that Goodwill was troubled long before Nakamura arrived at the helm, while others think that closing down stores with little warning to employees is yet another example of her history of earning a high salary for incompetent leadership on the backs of the poor. In fact, the matter appears to be an unhappy combination of the two—a “troubled organization hires leaders without the goods” situation.
The Globe and Mail reports that the current Goodwill crisis did not happen overnight: “While the organization’s closing was abrupt, a Globe and Mail analysis of Goodwill’s operations shows that its decline was long in the making. The group’s financial woes stretch back well over a decade, and the charity weathered a string of major and minor crises for years as it attempted to find a solid financial footing.” Reports suggest that it was overinvested in real estate, struggling with labor issues, operating in an increasingly competitive market.
In 2008, amidst the general economic crisis, Goodwill Toronto asked consultants from Goodwill in the U.S. to teach it to redress its financial woes, but this “help did not come cheap,” and the help was terminated early even as “Goodwill Toronto was left with a $160,263 (U.S.) bill it couldn’t pay. It agreed to make $1,000-a-week installments until its financial health improved.”
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No matter the history, Goodwill Toronto staff think the current crisis rests squarely on Nakamura’s shoulders. “This is cruel what she’s done. Very cruel what she’s done,” said Raphelia Debique, a former Goodwill employee. “She’s sleeping tonight, she’s warm, she’s going to eat and she’s not thinking about us. We have nothing. Because we’re the people with the barriers that they vowed to hire. To help.” Other staff are hopeful, and one employee, Zahra Mohamed thinks that Goodwill Toronto can be revived: “We know we are in a mess. But we know we can come back.”
Since last week, Global News has reported that employees will be receiving checks, and it quoted Nakamura as stating that “I regret the concern, anxiety and frustration the staff of Goodwill has experienced as a result Goodwill’s cash flow crisis resulting in the closing of all stores and operations.”
Some Canadian journalists have related the current mess to Nakamura’s track record elsewhere. Toronto Sun investigative reporter Sue-Ann Levy called Nakamura’s tenure at Goodwill a “failing upwards” in reference to her scandal-ridden past at the helm of Toronto’s public housing corporation. In response to Nakamura’s teary press conference on January 19th, Levy wrote that Nakamura was giving a performance of crocodile tears:
I say crocodile tears because almost five years ago to the day, I saw the same pathetic performance from the same woman who refused to concede that she—as CEO, making upwards of $220,000—had anything to do with the spending abuses at Toronto Community Housing Corp. (TCHC) which were so ably revealed in a scathing report from then Auditor-General Jeff Griffiths—even though she was part of the executive team when the abuses occurred.
During that scandal with the TCHC, Nakamura again had her supporters and her detractors. In the end, she was forced out of the job after an audit probe found that the “cash-strapped organization’s books revealed staff spent tax dollars on inappropriate expenses, such as a boat cruise for staff training and a planning meeting at the spa, and didn’t follow purchasing rules.” Nakamura wasn’t implicated directly in these expenses but was ousted so that the TCHC could get a “clean slate.”
When Nakamura jumped to Goodwill, The Globe and Mail points out that her “background was in the public sector, and she had no experience running a retail-store chain. At Goodwill, she was overseen by a volunteer board that also lacked significant retail-management backgrounds, many of its members coming from other parts of the business or charitable world. They resigned en masse last Friday and have declined to speak, leaving many questions about their handling of the crisis.”
This is not the first story NPQ has covered involving complaints against a Goodwill site. One odd story from Memphis involved a raid, charges of discriminatory wages, and the federal investigation of fraud. There’s no doubt these operations are faced with increasingly difficult operational landscapes, which is why their boards and executive leadership should be stellar and above reproach, and why support of the operations in various cities should be generously informed and supported by the national network. The idea of suddenly locking out 430 workers while the exec continues to be paid is the worst possible look for an organization serving this constituency, and it reflects not only on that organization, but the network and, in fact, the entire sector.—Amy Butcher