The resignation of Euan Sutherland, following the revelation of the scale and nature of his total remuneration package, carries a stark warning to the remaining Co-operative Group leadership, which must now reflect carefully on this and what it means for the future.
Without experience of the co-operative or mutual sector, new management must understand the critical importance of maintaining strong relationships with the rest of the co-operative movement. There is scant evidence that this has been considered important so far and the swift decision to dramatically reduce funding for co-op organisations will dismay long-standing co-operators further now that the hypocrisy of the executive pay policy has been laid bare.
The immediate response to this fresh crisis has been to accelerate the agenda for reforming the structure of the Co-operative Group. No one doubts that governance changes are needed and much has been said of the weakness of non-executives – though few have benefited more from this than the current executive team. However, rather than rushing headlong into irreversible changes, breath should be taken and we should all calmly reflect on the issues.
Eminent as Lord Myners may be, it is not credible to base the future governance of the Group on the views of one man. What has been presented as ‘straight talking’ has been received as little more than abusive to individuals who, for all of their faults, have had the best interests of the co-op as their guiding principle. I personally reject the idea that there is no business experience on the Group board – remember, the CEOs of some of our biggest co-ops are there – and it is also wrong to suggest that elected directors are only in it for the money. It does not help Lord Myners’ chances of bringing about real change to polarise views in this way.
So there are three immediate actions that should be taken to steady the ship and set a fresh course that will begin to build trust and confidence between the Group leadership and its members:
1. Scrap the 100% retention payments
There is no place in a consumer owned co-operative business for un-earned executive bonuses. How these came to be requested by management, and then approved by the board, must be explained. Equally, no member of the current executive will carry the confidence of the membership if they do not immediately and publicly declare that they will not accept such payments.
2. Establish an eminent co-operators group to advise and support Lord Myners
The current leadership of the Group should re-connect with the wider co-operative movement. The best way to do this is to establish a panel that can provide advice and support as the Group goes through its reform process. Ideally, someone like former CEO Sir Graham Melmoth or former chairman Keith Darwin, who have the credibility, experience and ability to provide candid advice to help steer the Group to the next phase in its co-operative future, would chair it.
3. Put ‘Have Your Say’ on ice
The leadership should look to cool off areas of unnecessary conflict with members. The leading nature of a number of the questions in the ‘Have Your Say’ survey has caused concern that has been commented on elsewhere. The fact that the survey was not confined to the Group’s millions of owners – the members – has further damaged its credibility. Those questions where controversy remains should now be put aside for calmer reflection.
The next few weeks will bring new challenges to the Co-operative Group. It can only succeed through this period if all of its members and managers pull in the same direction, and co-operate.