First thoughts on the Myners report

I am going to resist the temptation to pronounce immediately on the Myners report on the Co-operative Group’s governance. I downloaded it this morning and have read it quickly right through. I now want to give more time to the report.

But I am going to offer some immediate thoughts. Firstly, I think it will be hard to fault the critique of the Co-operative Group’s current governance arrangements which Lord Myners puts forward. He is right to remind us that it was the Group Board who led the business into its present plight (perhaps ‘led’ is the wrong word: the Board has clearly not been great at strategic leadership recently).

I think Myners is right to draw attention to what he describes as the ‘practice of hiding behind ‘values’ in order to deflect or stifle criticism and protect self-interest’. Calling yourself a guardian of cooperative principles doesn’t necessarily make this the case.

It is Myners’ proposed remedies which should be the real issue of debate. There are numerous ways in which a very large cooperative business could make itself accountable to its members, and Myners has very firmly plumped for one particular solution. His proposal, as well as other possible solutions, needs proper discussion.

Lord Myners does seem to have damaged his case somewhat by managing to unite against him both the more radical wing of the movement (those who ought to have been his natural allies for democratic rejuvenation of the institutions) with the traditionalist and often uninspiring contingent who are there in the Group’s democratic structures. I would hate to have to spend the time necessary to play the internal political game at the Group, building alliances and offering reassurances, and it would seem that Myners feels much the same way as me – but if reform is to be achieved that is probably what he should have tried to do.

I have signed up for the public webinar next Monday evening when Myners will be answering questions. I am not sure it has been widely publicised, so will give you the link:

Corruption revisited

Thank you to John Boyle for his very interesting comments in response to my blog last week on corruption in coops (including some interesting nineteenth century stories I hadn’t heard before).  You’ll find his contribution if you scroll down to the May 2nd entry and click on ‘comments’.

The issue we have to get right: governance in cooperatives

Expect yet more headlines about the Co-operative Group this week, as Lord Myners’ report on corporate governance in the Group is published.

Pretty well everyone involved in the cooperative movement thinks that the Group’s governance structure needs reform, but that’s about as far as consensus goes at the moment. One of the problems is that many activists fear that governance reform is effectively a euphemism for a comprehensive sell-out of cooperative principles, leaving management in charge of a business which would rapidly become almost indistinguishable from a plc. Some of the voices raised after Myners’ initial report come from this perspective. These get muddled, though, with special pleading from cooperative apparatchiks who have spent their lives working their way through the democratic ranks and now have much to lose (in terms of both power and money) if their role in the Group’s governance is reformed.

An intelligent debate becomes more difficult when the enemies of the cooperative movement are also actively at work in the media and elsewhere in trying to do down the whole idea of a democratic cooperative business model.

What’s the right way forward? Personally, I am rather more interested in the idea of a dual governance structure for the Group, with a members’ supervisory board and an executive board, than the Board of the independent Midcounties society (a group who are usually at the more radical end of things, but who are leading the battle against this proposal of Myners). There are, I think, some successful examples of dual board structures working well for larger cooperatives abroad, where the members’ board acts as the guardian of the organisation’s strategic adherence to cooperative principles. And just consider Britain’s building societies for a moment: isn’t it possible to imagine that a large society such as Nationwide might actually be more accountable to their members if its board had a members’ supervisory board watching over its actions – and the scale of its directors’ remuneration?

Britain’s cooperative movement has become remarkably insular and is almost entirely ignorant of how coops abroad do these things. So an absolute must-read in Johnston Birchall’s latest report for Co-operatives UK, The Governance of Large Co-operative Businesses. As Birchall says in his report “we need to engage in some serious mutual learning on the question of how to ensure member-centred governance in very large co-operatives”.

I concur. And we urgently need much more research work undertaken internationally. Even with Birchall’s considerable academic knowledge, I still feel that we aren’t yet at a position where we know just how well the managements of large coops around the world are working to meet their members’ needs. Some of the coops mentioned in his report have, I suspect, governance structures just as rackety as the Co-operative Group’s own practices

Speaking up for employee-ownership

To Salford (or more precisely “MediaCity UK’) this lunchtime to participate in the R4 You & Yours discussion on co-operatives. Some very interesting comments from my fellow panellist Caroline Murphy of the family construction form Murphy as to why she’d strongly favour the business becoming employee-owned. She was taking part down the line from London, unfortunately, otherwise I would have wanted to continue the discussion with her off-air afterwards. The programme is available as always on the BBC website – we’re about thirty minutes in from the start.

On corruption and delusion

As I think I’ve mentioned, I’ll be at the cooperative conference in Manchester on Friday May 16th, called by Co-operative Business Consultants and others in the movement to help pick up the pieces and rebuild.

I’ve begun to think about the presentation I’ve been asked to do for the workshop which bears the title corruption v. transparency. I’ve said before that a very valuable – if depressing – piece of work for a cooperative historian would be track the story of corruption in cooperative societies from the nineteenth century through the dog days in the second half of the last century and up to our own times. Why would this be valuable? Because it would warn us how not to repeat the mistakes of the past.

Jo Bird, one of the conference organisers, drops me an email to discuss the workshop and makes a very valid observation. She writes of Johnston Birchall’s recent report for Co-operatives UK on governance in large co-ops which lists several examples of corruption in UK coops: “Corruption and malpractice is not talked about enough. Birchall’s list was such a contrast to the unwritten but prominent co-operative value of delusion . Delusion manifests in attitudes such as ‘we are all good guys and rarely do wrong’,” Jo says. I think she’s right.

You and yours and coops

BBC Radio 4’s You and Yours lunchtime programme has been looking at coops this week, and doing so, I’d say, in a balanced and intelligent way.   There have been packages on three very different cooperative businesses, the venerable wholefood shop and cafe 8th Day in Manchester, Clansman Dynamics in East Kilbride (an employee ownership venture which engages in some serious manufacturing work) and  Snaith Salad Growers in east Yorkshire, an interesting agricultural coop which I hadn’t come across before but is worth checking out.

I’ve been asked to appear tomorrow (Fri) on the programme for the final round-up discussion (the feature should be going out about 12.30pm).