Co-op Group AGM tops the news bulletins

With the media obsessing today about the Co-operative Group’s AGM in Manchester, I feel almost obliged to add my own short blog.

Journalists like a simple story, and have built up today’s event as a make-or-break occasion. It’s certainly significant, but only one step on the road to a new governance structure for the Group. My two predictions are these: the motions before delegates will pass, and the Myners proposal won’t in the end be implemented as it stands. What will happen after today is a period of further discussion (ie, compromise). What will emerge will be something which gives the regional coop societies more of a role and (I hope, although this is perhaps less certain) produces a board which is not simply made up of executive directors and traditional business-background non-executives but also includes a cohort of ‘ordinary’ elected member-directors.

I was at yesterday’s Cooperative Renewal conference, where ex-CWS chief executive Graham Melmoth weighed in to the debate. His comment on today’s event was as follows: “The [Special General Meeting] motion I think has sufficient elasticity to permit a short filtering process to be introduced into the Reform Architecture without unduly impeding progress, eg a small group of Members would be commissioned by the Board to review the Myners Report, reflect on it and produce a final blueprint”.

Elasticity is the key word here. In other words, there is still much to play for.

However, governance is just one aspect of the necessary renewal of the Group. I was arguing yesterday at the Renewal conference that a root-and-branch reform of the corporate culture of the organisation is even more important… and perhaps more difficult to bring about.  More on that another day, perhaps.

Here’s my suggestion for the Cooperative Risorgimento

There’s a lot I find valuable in Lord Myners’ report. But I have one difficulty with his approach – his proposals are focused solely on a top-down approach to governance reform.

If the Co-operative Group is to change, there also needs to be bottom-up reform. The Group’s shops need to be radically different in their relationship with their customers than the competition.

I see a lot of my local coop. I shop there pretty well every day (it’s my corner shop). I chat with the staff. I bump into friends. I sometimes bemoan the stocking disasters (there was even a time when the shop ran out of potatoes). But my close relationship with my shop does not have any link to my distant relationship as a member with the Group.

Here’s my suggestion: Area Councils should go. Members should be invited to identify with their local shop. There should be meeting of member-shoppers at least every year, where we’d be given crisps and something to drink and get to talk to the store manager and an appropriate more senior member of staff. We’d probably moan a bit, but we’d also contribute good ideas, which would make the shop better. And we’d feel engaged.

I’m proposing to call my idea the ‘Cooperative Risorgimento’: it sounds better than ‘cooperative resurgence’. (And maybe if it happens Garibaldi biscuits will come back on the shelves, too).


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:

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