Elected representatives of the Co-operative Group are set to vote this weekend on the society’s future governance structure.
Delegates who sit on the seven regional boards, which represent individual members, will be voting on the motion at the special general meeting, which will start at 11.00am. Corporate members of the co-operative, are represented by delegates from independent society members.
The single motion asks delegates to adopt the draft rules in substitution for and to the exclusion of the existing rules. A two-thirds majority is needed for the vote to pass successfully.
At 72 pages, the main changes in the rule book are the creation of a main board made up of an independent chair, three member-elected directors, five independent non-executive directors and two executive directors, including the chief executive.
A 100-strong council will represent member views, act as the guardian for co-operative values and hold the board to account.
In an interview with chair Ursula Lidbetter she said it is time for the Group to change, especially in light of its £1.4bn debt, plus the near collapse of the Co-operative Bank last year.
“We need the stability that our new governance structure will bring, in order to move forward and actually do the things that our members actually want us to do,” she said.
Ms Lidbetter added: “The members want a fully qualified board that adheres to our values and principles. They want the members to be able to hold it to account, and it wants one member, one vote for individual members, so that they get that stake.”
The proposals are backed by Co-operatives UK, ICA president Dame Pauline Green and co-operative lawyer Ian Snaith, who was a governance adviser on the new rules.
But individual members have voiced their opposition. Co-operative Business Consultants, the organiser behind the two Ways Forward conferences this year on the future of the Group, has launched a ‘Save our Co-op’ petition.
The petition (change.org/p/save-our-co-op) calls on Ursula Lidbetter to reject “undemocratic” proposals until they are consistent with co-operative values and principles, as laid down by the International Co-operative Alliance.
It also urges the Group to be open to future change by members exercising one member one vote, without requiring the agreement of the board and/or council.
Jo Bird of CBC said: “The current board of the Co-operative Group want to change its constitution so that it’s less democratic.
“They want a majority board of independent directors who are not subject to open elections, whereas we want the Co-operative Group to be like co-operatives all over the world and to have a board majority made up of buy in from its members, elected by contested elections. We also want the future of the constitution of the Group to be able to be changed by future members.
The petition says the Group’s autonomy and independence is under challenge from the demands of its banking syndicate. The proposal that the board should comprise a majority of independent directors is “directly opposed to the co-operative principle of democratic member control,” it says.
The proposal that such directors should be subject to ratification by members rather than standing in an open election “is not consistent with genuine co-operative democracy”, the petition says. It suggests a nominations committee would ensure a board consisting of a majority of candidates drawn from and nominated by members was competent and qualified.
It also expresses alarm that a proposed rule change would prevent members from making changes to governance without the agreement of the board, “tying the hands of members for generations”.
In response to the petition, Ian Snaith said: “The petition has proved a rallying point for many people with legitimate worries about the way the current proposals deal with the issue of member control of the society. There is also anxiety about the trend towards corporate domination in our neo-liberal world.
“I think that passing these reform proposals is the best way forward on both of those points. The Group will still be a co-op with its status entrenched. Its assets will remain under the control of that co-op and its employees will still work for that consumer co-op.
“I understand why people feel as they do after the bruising experiences of the last year or two. However, this is a time for clear thinking and a calm rational approach. The vote on Saturday will decide the future of the assets built up in CWS and then the Group over 150 years. It will also affect the jobs of 87,000 people.”
Mr Snaith added: “The Group’s recent failings resulted at least in part from the nature and composition of its board and the process of decision-making where the executive is separate from the directors. It would be irresponsible to ignore those problems and refuse to agree proposals to impose greater control on the executive than was achieved under the previous system. Under the reforms directors will be equipped to fully participate in business decisions and will be held to account both by all members through direct OMOV meetings and other decisions and by the member elected Council of activists.
“It is unclear how the system proposed in the petition would remedy the problems of governance that have brought the Group to this pass. The petition’s proposal, while based on OMOV, seems to remove a key part of the nomination committee’s role. To be effective in making sound business decisions as part of a team with the executives and in challenging them on their plans and proposals, the spread of skills on the board needs to match those required at a particular time. The board is best placed to assess that and appointing the independent people seems the obvious way to achieve it. To get the right people as Independent non-exec directors, a sophisticated recruitment process needs to be carried out.”
In a statement to the News, the ICA’s Dame Pauline said: “The Alliance has kept in close touch with Co-operatives UK over the last 18 months as the problems with the Co-operative Group grew. We have had sight of all the materials, reports, papers and comment that has been generated on the underlying management and governance problems and the proposals for reform.
“Handling the UK end of this issue for the Alliance has been the responsibility of Co-operatives UK – as is the role of any national apex organisation within the Alliance on a significant national issue. The boards of both the Alliance and Cooperatives Europe have received reports updating them on the current position.
“The Alliance also, of course, has a very extensive knowledge of the multi-various governance structures that exists across the co-operative world. There is not one single structure, nor one single jurisdiction that prevails across the world.
“The cultural, regulatory and operational approach to governance differs around the world, also between large and small co-operative enterprises and in different co-operative business sectors. While the Group’s proposals contain some provisions that are new to the UK, they certainly fall within the wider framework of co-operative governance across the world. However, only time will tell whether or not the new provisions are sufficient to create a successful governance structure for a major co-operative business in the 21st century.
“The strong input of members will be critical to securing that outcome over the next three years. I would urge them to give the proposals a fair wind at the special general meeting on 30 August, but if they are adopted, it is vital that the new member council should immediately assume their responsibility for the monitoring and evaluation of the implementation against the seven co-operative principles. This will ensure there is a sound and practical basis for the review process in three years time under the control of members themselves.”
In a series of interviews produced by the Group, Co-operatives UK secretary general Ed Mayo said: “Those voting on this set of rule changes can do so in confidence that it doesn’t call into question the fundamental underlying co-op identity of the Co-op Group.”
Mr Snaith added: “These proposals offer the possibility of a vibrant new organisation with proper engagement with the whole membership.”
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