Having directors on a board elected from an organisation’s membership base is important for co-ops. The UK’s Co-op Group has had its current mechanism for this in place since 2015, following the governance reforms of 2014. These member-nominated directors (MNDs) are meant to strong commercial backgrounds and proven skills while bringing the voice of ordinary members to the boardroom.
There are 12 directors on the Group’s board: four MNDs, five independent non-executive directors (INEDs), two members of the executive team and the chair. Each year, one or more MNDs are elected for a three-year term by the membership. Current MNDs are Sarah McCarthy-Fry, Margaret Casely-Hayford, Hazel Blears and Paul Chandler.
The road to the boardroom
For Paul Chandler, the journey began with a graduate training scheme from Barclays Bank. “When I was launching into the job market in the early 1980s, Barclays was offering one of the best training packages for new graduates,” he says. “My game plan was to get really good commercial and financial training that would stand me in good stead, whatever sphere I went into.” The scheme funded him through an MBA, and by the age of 23 he was a bank manager in the City of London.
When he was 30, Mr Chandler was appointed chief executive of SPCK, a Christian publisher which had over 30 bookshops and an international development grant programme. “That brought me to the intersection of using business for wider purpose,“ he says, “because SPCK had a particular mission. That intersection became the focus of my career.”
After nine years, he became head of Traidcraft, the retail and development charity that helped pioneer Fairtrade in the UK. “I had been a volunteer activist for Traidcraft for a number of years. It felt a very logical move because it was still using my business skills for a bigger purpose. But it also gave me real engagement with what was essentially a membership organisation. Traidcraft isn’t a co-operative, but it is dependent on the goodwill, activism and capital that comes from its supporter base.”
He left Traidcraft after 12 years: “I felt it would be unhealthy for the organisation to have the same chief executive for longer. Rather than trying to find another single chief executive role, I decided to try to create a non-executive portfolio.” This saw him run an ethical investment company, become chair of the William Leech Foundation and join the board of Engage Mutual Assurance.
Soon after, the Co-op Group began to look for its first MNDs. Mr Chandler was first elected in 2015.
The MND difference
“When the core Group was in a financial crisis back in 2015, I thought keeping ethics on the agenda would be a struggle,” says Mr Chandler. “But I can genuinely say it didn’t feel like that and it hasn’t since. At every point, the board has appreciated how fundamental the co-operative values and principles are in running the Co-op Group, and how without those, we would have no differentiation.”
MNDs have complete credibility on the board “because we do have commercial understanding and experience,” he says. “That means we will be listened to not just as campaigners, or member advocates, but because we’ll have sensible things to say and make powerful commercial arguments. And at the same time, the INEDs and executive directors have got a passion for co-operation and make very good member-orientated points.”
Mr Chandler says MNDs have an extra responsibility to keep engaged with members, through events such as Members’ Council meetings and Join in Live events – all of which have been held online in 2020. But the members who come to these events are a subset of the total membership, he adds.
“We have over 4 million members; in reality, only 100,000 or so are really engaged, but as an MND team we have to consider the interest of all our members.” Consequently, Mr Chandler uses internal market research and his own experience, particularly to analyse how consumers relate to issues around businesses ethics.
“We’re not on the board as member delegates,“ he adds. “We are there to take members and their priorities into account, and then work out what is going to be the best course of action to recommend to the board. What the MNDs are always arguing is, yes, we need to be profitable – because members get no benefits if we go bust – but we need to be profitable doing business in ways that are good business. The core of living out the co-operative values isn’t about how we use the surplus, it’s about how we make that surplus in the first place.”
MNDs of the future
Finding people who have both business and co-operative sensibilities is tricky. To this end, the Group takes two approaches: education, and new ways of promoting the MND role. Throughout 2020, its MND Joint Selections and Approvals Committee has been working with Gatenby Sanderson, a public and non-profit sector recruitment specialist, to look at an MND development pilot, which would work with future candidates to address gaps in commercial and board skills.
The committee hopes to launch the pilot early next year, working with unsuccessful applicants from 2021; following a self-assessment questionnaire, applicants would complete situational judgement questions responding to different board scenarios and an online timed case study report. A small number of candidates would then receive a bespoke package from Gatenby Sanderson to support them with the next MND nomination process.
“This is a new pilot, and I’m sure it will need to evolve over time,” says Mr Chandler. “It’s responding to one side of the challenge – people who may have a strong co-operative and values background, but need to address gaps in their business skills and experience. In my view, this is not going to be a short-term fix – if it’s business experience that is lacking, that doesn’t come overnight, but it’s helping people see these routes, so that in three or four years time they may come back as a stronger candidate.
“The other side to the programme, which we haven’t developed so much, would be for someone with a business background who really has good values, but who has never really engaged with the co-operative movement.”
There are other education opportunities open to the Group, too; the Co-operative Wholesale Society and the Co-operative College once delivered schemes which benefited the likes of Debbie Robinson (CEO, Central England Co-operative) and Ursula Lidbetter (CEO, Lincolnshire Co-operative) respectively.
Mr Chandler thinks the time may be right to revisit this. “I benefited from the Barclays scheme hugely, because they made sure I got exposed to a whole range of business areas. We should be training people in that same way; there are already some good internal development strands, but it’s less formalised than a graduate scheme. Maybe the time is right, soon, to reopen that.”
This year the Group is also advertising MND positions widely, using digital channels and professional search agencies. “But we also need word of mouth,” says Mr Chandler. “It’s people who might read this article and think, ‘Oh, I haven’t quite got that business experience, but I know someone who does’. Can we encourage them to think about applying? That, I think, is the ideal route through which we should be getting new candidates on board.”