Comment: Time to have your say on the future of the Co-operative Group’s democratic structures

March saw another bitter public battle with the Co-operative Group; this time it was instigated by those who are currently representing the interest of its eight million members....

March saw another bitter public battle with the Co-operative Group; this time it was instigated by those who are currently representing the interest of its eight million members.

A series of leaks around the plans to sell the farms and pharmacy businesses, and Euan Sutherland’s proposed pay packet of £3m, led the chief executive to publicly declare the organisation was “ungovernable” and walk out after a 24-hour stand-off.

More leaks on his resignation and of Lord Myners’ governance plans were blamed on one or more individuals in the boardroom by Mr Sutherland, although Lord Myners later conceded it could “possibly” have been one of the executives. The investigation is ongoing.

The battle of directors versus management is explosive. Private emails from former Bank deputy chair Rodney Baker-Bates, released as part of the Treasury select committee investigation, highlighted the divide; and ex-CEO Peter Marks talked of the same struggles.

It was a bold move for the Group board to break with Co-op tradition and appoint a CEO from outside the movement, which was presumably grounded in the realisation of the need to be a more serious business.

Even before the failure of the Bank, Euan Sutherland’s plan was to revitalise the old fashioned British institution and implement a series of changes based on strategy from the plc world. Not necessarily a bad thing, as he reminded us that we should not be afraid of profit.

This refocus could not have come at a better time, especially since the assertion that the Group itself has almost been wiped out by “incompetent directors”, according to Lord Myners. But we must await the results from Lord Kelly’s investigation before making a final judgement.

The interim Myners plan has received mixed reviews. Yes, the Group wants greater connections to its individual members, so the proposals to directly elect directors and to have a vote on “big deals” fulfils certain romantic ideals.

But the love for Lord Myners stops there. While his analysis is spot-on (if a little embellished), his solution for a professionals board will turn the Group into a de facto plc overnight. The need for professionals to help challenge decisions in the complex business seems readily accepted, but the complaint is that ‘real’ co-operators must still sit on the board.

An executive committee of elected members without real power and influence will strengthen the distrust between members and management.

Another complaint is the selection of directors from “plc competitors”. There are hundreds of successful co-operative business leaders around the world who could surely bring both a business and co-operative brain to the table. The two are not mutually exclusive.

Lord Myners has also neglected Britain’s own co-operative business leaders for this job. Those who sit on the current board are running very successful independent co-ops. These independents are understandably frustrated at being sidelined – especially considering they are owners of the Group too (with a 25% block of votes).

It is also this quarter of votes that Lord Myners may need, especially considering that a two-thirds majority is required for a change of Group rules. But, as Lord Myners says in this issue, these are currently draft proposals and the final version will be released next month.

Let’s hope there’s time to have your say before then.

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