Midcounties: New Co-op Group governance process ‘derailed at the first hurdle’

Contested elections for the Co-operative Group’s board are a key co-operative safeguard, according to the president of Midcounties Co-operative, Ruth FitzJohn. In a shared president-to-chair letter to Allan...

Contested elections for the Co-operative Group’s board are a key co-operative safeguard, according to the president of Midcounties Co-operative, Ruth FitzJohn.

In a shared president-to-chair letter to Allan Leighton, Ms FitzJohn criticised the decisions made over the Group’s board to select three out of six candidates, who will all receive automatic places on the board without contest subject to member approval at its annual meeting next month.

Ms FitzJohn said it was the lack of this safeguard that initially made Midcounties sceptical of proposals submitted by Lord Myners last year to reform the governance of the society. But Midcounties, the largest regional co-operative, supported a revised plan “on the basis they included contested elections”.

She added that “legal opinion” as part of the proposed governance changes “relied strongly on contested elections as reason why members should feel reassured”.

“These changes were made to address the deep-seated concern that an organisation whose makeup involves no member choices would struggle to call itself a co-operative,” she commented.

The president told Mr Leighton that it was “deeply disappointing” to learn that at the first test of these new arrangements it “appeared that credible members had been removed from the list of candidates despite going through a detailed scrutiny process involving elected members”.

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In an article for Co-operative News, Allan Leighton said it was his role to create a board that has “commercial acumen, accountability and the eclectic mix that is the Co-op”.

He wrote: “The board has been absolutely clear and consistent throughout the reform process about the need for member-nominated directors (MNDs) to demonstrate a high level of skills and experience and we make no apology for wanting this.

“I believe fundamentally in MNDs and it is great that three high-calibre candidates have emerged – not three picked so three slots could be conveniently filled as described by others, but selected because they are fit for purpose.”

Ms FitzJohn added: “This undermines the core democratic values and principles that lie at the heart of what it means to be a co-operative, which is why the issue is causing such disquiet both among Midcounties directors and the Group’s membership.

“As a long standing member of the Group, Midcounties needs to have confidence in your democratic governance structures as well as in your commitment to ensuring a competent and high quality Board. Gaining the latter at the expense of the former is not an option for a co-operative. The new arrangements promised a fresh start to delivering both but seem from the outside to have been derailed at the first hurdle.”

Ed Mayo, secretary general of Co-operatives UK, warned co-operators to talk in private rather than through the media. “Over the last fortnight, despite a return to profit, the Co-operative Group has once again hit the headlines for the wrong reasons,” he said. “The Daily Mail puts this down to the criticisms of a ‘livid old guard’, while the Guardian has picked up the cause of political affiliations. We should perhaps expect the media to treat us as if we were soap opera, but when talking in public becomes more automatic than listening in private, it is not just painful for colleagues who work across the business. Co-operation and mutuality suffers.”

He added: “There are substantive issues, of course. Member choice around elections, fair pay, a strong member voice for the Group council, all these are right to expect over time. But there is also a fundamental need to focus on the commercial reality and strategy of the Group as a retailer. Otherwise accountability ends up being about everything other than the challenges of commercial survival.”

The Co-operative brand is not just at risk of being damaged, but “the very idea of democratic, mass customer ownership is opened up to question,” he commented. “The only thing that the ultimate owners, the member shoppers, hear little about is the vital work that needs to go into recovery of the Co-operative.”

Mr Mayo said co-operators must also focus on the positives: “We must also remember that for the first time next month, individual member shoppers of The Co-operative have a direct vote not just for the board, but also on major strategic issues for the business – including on support for the heritage of Co-operative Party representation in political life. The AGM will be a watershed moment for the Co-operative Group’s members.

“A well-performing co-operative combines quality leadership and vigorous participation and debate, both of which we have seen the Group exploring over the last year. It is a new democratic structure and there will be more debate and contest to come with the elections to the members council and to a strong new board. If we get this right, this could be the close of a chapter of self-harming and the start of new story of renewal.”

  • Correction: This article was corrected on 22 April 2015 to amend the statement that Ruth FitzJohn sent an open letter to Allan Leighton. It was a president to chair letter shared with boards.
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