Q&A with Ursula Lidbetter: The reform of Britain’s largest co-operative

Over the past four weeks, Co-operative News readers have been sending in their questions to Ursula Lidbetter, chair of the Co-operative Group, over the organisation’s governance reforms. Questions...

Over the past four weeks, Co-operative News readers have been sending in their questions to Ursula Lidbetter, chair of the Co-operative Group, over the organisation’s governance reforms. Questions about the structure, conflicts, business and accessibility of elected members were collected from emails and social media.

 

Governance structure:

Can you define governance in one sentence?
– Adrian Ashton

“Governance is the structures, rules and processes by which an organisation is directed and controlled, and good governance seeks to enhance alignment of interest, accountability and transparency in order to improve organisational performance.”  Maybe you can come up with a more snappy alternative!

 

What will be the future for area committees?
– Francis Hull, Nottingham & East Area Committee

Our society’s strength lies in its potential to have real impact in communities and our new statement of purpose puts this front and centre.  Our democracy and our wider member engagement should therefore reflect this.  To allow time for the new council to consider the best way to do this, it is proposed that area committees stay in place for now and work with the council following the SGM on appropriate structures at grassroots level of the society ready for the AGM in May 2015.

 

How will future directors be more accountable to members and take seriously the notion that ‘the buck stops here’?
– Geraint Day

The new structure will significantly increase the number of members that have an effective voice in the running of the society. Members will be given the opportunity to exercise control over directors by choosing whether to elect candidates individually and being able to remove a director by regular new elections following a short term in office, and (in exceptional cases) through a right to remove directors before the expiry of their term of office. Directors will be accountable to the membership at society general meetings and to the council.

 

Has the Co-operative Group looked internationally at how successful co-operative businesses are governed?
– Dr Iain MacDonald, Consultant to the International Summit of co-operatives

Other co-operative governance models (including large international co-operatives) are being carefully considered. While interesting and informative, the difficulty with international comparisons is that overseas co-operatives are governed by different legal systems and operate in different markets. While a particular governance model may work for a large consumer co-operative in the Netherlands or Switzerland, these jurisdictions are governed by different legal and regulatory frameworks and market conditions. An example of the difficulty posed by different legal systems is the two-tier board structure that many large co-operatives have adopted in continental Europe, i.e. an operating board of directors directing and overseeing the business and a supervisory board of directors guarding values and steering the sustainability and social goals agenda. Two-tier board structures are not formally recognised under English law which would subject directors to undefined and ultimately unacceptable legal risks.

 

Accessibility:

Will we be permitted to contact our representatives directly in future and be given the means to do so? The membership team are great, but I would like to be able to communicate with the people I’ve voted for without having to ask the membership people to forward my messages for me.
– Kathryn Rose

We’ve a massive opportunity to completely revitalise our membership and communications. The move to one-member-one-vote, is just part of that. It’s envisioned that members will now be able to engage directly with the council through modern technology, including internet and live webcasting. As I’ve said before, social media was invented for co-operatives. It provides an array of innovative mechanisms to facilitate discussion and debate, form communities of members with shared interests and identify new opportunities for co-operation. Following registration of the new rules, the first job of the new council must be to develop a new culture, structure and processes that encourage co-operators to debate and contribute to our future success.

"Social media was invented for co-operatives"
“Social media was invented for co-operatives”

How are you going to bridge the communication gap between the management and the members, so as to keep the Group from going into extinction while maintaining the business purpose?
– Mark Ani

We want members to be able to engage directly with the council, the board and the executive management team through modern technology including the internet, webinars and live webcasting.  Members will also have increased democratic rights, including the right to attend and vote at society general meetings. It is also one of the main responsibilities of the council to be a forum in which the interests of members are represented and promoted. When performing this role, the council will solicit views and ideas from members and make recommendations to the board. The member nominated directors on the board (elected through competitive one-member-one-vote elections) will offer invaluable advice on how to manage a co-operative society in accordance with values and principles.

And I know that absolutely key to communication is the commitment and enthusiasm of our 90,000 colleagues who can carry our message out to members and in to management every day, if given the tools to do so.

 

Conflicts:

Why have elected co-operators from area committees to the board been given virtually no time to read and digest complex governance proposals at each stage of this process?
– Christopher Hall

Unfortunately time is a luxury we cannot afford: it is already over a year since the onset of the crisis and members, colleagues and other stakeholders, including regulators, are now expecting us to deliver our key reforms. The risks of delay are simply too high.

While the governance proposals are significant, they are not new to the Group (many of the current reforms were debated during previous Constitutional Reviews). This time we must act. To delay would unacceptably increase business and financial risk. I am confident that you will work night and day, if necessary, to protect our society and so will I.

 

How can we prevent opportunistic behaviour of managers and presidents of co-operatives?
– Davide Baresi

By putting in place a board with the skills and experience to hold the senior management to account, with appropriate checks and balances in line with the best standards of governance. Creating the right culture is equally important.

 

As chief executive of Lincolnshire and chair of the Group, I think there is an inherent conflict of interest between these two roles during the governance process – how do you reconcile this?
– Sally Chicken, East of England

As a director of the Co-operative Group, I have a legal duty to act in the best interests of the Group at all times. The board’s code of conduct sets out comprehensive guidelines for declaring interests and managing conflicts which all directors, including the chair, must comply with and I am very careful to do so. The aim of the governance reforms is to put the Group on a firm footing and on the road to success, and that is in the interests of all of our members, both individual and corporate.

 

Business model:

How will the governance structure meet the needs of members, and will it take into consideration the diversity (and potential future diversity) of our businesses?
– John Goodman, Goulash Co-op and Co-operative Group member

A strong Group board will be a cornerstone of the governance reform
A strong Group board will be a cornerstone of the governance reform

The cornerstone of our governance reform is to put in place the strongest possible Group board. This is an absolute imperative to enable us to stem the Group’s declining competitive position and help restore the Group’s financial strength and reputation. This new board needs collectively to possess the best available commercial expertise and technical skills for successful stewardship of  the Group’s assets on behalf of our members. Directors will be selected specifically for their skills, to ensure our diverse range of businesses has a high level of appropriate oversight. At the same time, we must ensure that members’ voices resonate throughout the organisation, including appropriate representation and to safeguard our values and the Co-operative Group’s status as a consumer co-operative. As part of the move towards one member one vote we will increase member engagement, so that the society meets their shared needs and aspirations.

 

Member engagement:

Examining the new democratic structure, with a new board and a council of 50 members is a drastic reduction in active members involvement in the retail activities. This leaves around 500 active and informed members in the wilderness. What is there now for these dedicated members?
– Alfred Ott, North London Area Committee member

The dedication of members is the lifeblood of every co-op. The 500 are very important but just imagine if we had 5,000 or five million such committed members. That must be our aim too. It is recognised that area committees, or a local equivalent, have a very important role to play at the grass roots of the society. It is proposed that the council will redefine the composition, role and responsibilities of area committees and will establish them by May 2015. The input experience of area committee members will be key to this work so let’s start collating ideas now.

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