What coops want from Europe

The Euro elections are looming, and in preparation Cooperatives Europe has launched a Cooperative Manifesto.  A very cheerful document it is too, complete with photos of a cooperative orchestra, what looks like a cooperative stained glass studio and – inevitably – a cooperative grocery store.

The manifesto presents a four-point vision of Europe:  one focused on a real economy which serves people’s needs and aspirations rather than financial markets, one which allows a diverse range of business models to flourish, one in which young people are equipped to realise their entrepreneurial aspirations and one which supports the start-up and growth of people-centred businesses.  This gets my vote, I think.

The manifesto is here.

The legal costs of incorporation a coop

I’m participating later today as a panellist in the online discussion being organised by the Guardian, linked to the theme of my current series of articles Can coops compete?.

Three of this series are now up on the Guardian’s website, the latest being an assessment of whether coops are held back in comparison with conventional business by legal constraints. You’ll see that the assessment back from those I interviewed for the piece is generally an upbeat one.

I do have a residual concern, however, that it is still much more expensive to register a new cooperative or community benefit society under the Industrial & Provident Societies Act (IPSA) than it would be a  company under the Companies Act. (When I used company legislation recently to register a community-run development trust for the town where I live, I was able to do the incorporation for almost nothing by adapting the Charity Commission’s model Company Limited by Guarantee rules).

Co-operatives UK uses its management fees on new IPSA incorporations as a revenue generator, a practice it took over from the old Industrial Common Ownership Movement. (ICOM’s practice meant that many new workers’ coops joined for their first ‘free’ year and then had nothing more to do with the organisation, which didn’t really help build a strong movement.)  Even though many newly incorporating coops can get their legal fees grant-funded (for example through the Co-operative Enterprise Hub) I would prefer to see Co-operatives UK move away from ‘front-end loading’ costs on new coops in this way.

At least Co-operatives UK is now reviewing these charges. I understand that the cost of registering a new IPSA through them is about to be standardised at £250 (£500 if significant advice is required).  If incorporation is done through a cooperative business adviser, the cost will be £150.  This is a useful reform, even if IPSA registration will still remain more costly than Companies Act incorporation.

Hey there, coop members

British coops need to have a much better understanding of how coops in other countries do their member engagement and democracy,  so let me tell you about the email which came through to me yesterday with the interesting title “Hey there, voter…”

The email is from Canada’s long established Mountain Equipment Cooperative (MEC), a chain of outdoor shops across the country. It’s a pure consumer cooperative, in that it sells only to members – or in other words, if you want to buy something in their shop you have to sign up first and pay your $5 membership.  As a consequence among MEC’s several million members are some people like me who have stocked up on the odd bit of outdoor kit when we’ve been in Canada.

It’s election time for MEC, and fourteen members have put themselves forward for the four places available, a sign of a pretty healthy level of democracy. MEC being MEC, the candidates’ addresses combine information on their financial and business skills together with their outdoor credentials (“this passionately outdoorsy paddler/hiker/cycler/explorer will apply her all…”).

For the first time this year MEC’s existing Board is ‘recommending’ eight of the fourteen candidates (a change agreed by the membership last year).  As MEC explains: “the Board, with the help of an independent consultant and the Nominations Committee (which includes non-Board members) assessed each of the nominees against this year’s priority areas and MEC values.” For 2014 the Board was looking for skills in relation to the retail sector, the supply chain, and IT.

I think this is a legitimate process in cooperative Board selection, always provided that the number of ‘recommended’ candidates exceeds the number of places.  The danger otherwise is we end up with the sort of cosy club for the chaps which has been a feature of the UK building society Boardroom for so long.

Who shall I vote for?  I haven’t quite made up my mind…

Getting energy the cooperative way

I mentioned in a blog a month or so ago the green electricity distribution coop EWS, based in the south German village of Schönau.

I want today to say a little more about energy cooperatives. Britain has, of course, a number of small-scale community-based cooperative generating enterprises, most notably the much-vaunted Baywind.  We also have the national energy distributor Co-operative Energy (a subsidiary of Midcounties Co-operative Society), which is trying to provide a more ethical alternative to the big six commercial suppliers and generally I think making a pretty good fist of it. But in general, Britain is a long way behind many other countries. In the US, for example, cooperatives provide power generation and transmission for 42 million people in 47 states. Or another example: in Argentina, coops provide 10% of national energy production.

The lack of engagement by coops in Britain may because of history: early in the development of local government, gas and electricity generation and supply were usually taken into municipal ownership, later to be switched into national state ownership.  But now power has been privatised, it’s clear that we need to be looking more closely at possible cooperative models.

The examples of the US and Argentina I mentioned above come from a recently published report from the International Labour Organization, Providing clean energy and energy access through cooperatives. It’s an interesting overview of what is happening worldwide with some useful case studies;  it’s available here.

Co-ops UK suffers funding cut (and loses Chair)

We need a campaigning organisation which links together all the disparate parts of Britain’s coop sector, and therefore we need a strong Co-operatives UK.  It’s highly unfortunate (even if it’s not surprising) that Coops UK is now suffering a reduction in funding from its chief supporter the Co-operative Group.

Quite what the implications will be are hard to know at the moment. Co-ops UK’s Board revised its operational budget on Feb 5th, but Co-ops UK went over all coy on me when I asked for details of what this will mean in practice. The line is that cost savings will be found by “working in a smarter, more agile way”… which is what everyone says on occasions like this.

Co-ops UK has also just lost its Chair, Chris Herries (the organisation’s first ever woman Chair in however-long-it-is-since-1869 years). Chris has stepped down after less than a year in post.

Hmm. I’ll admit it, I’m a little worried at what may be ahead at Holyoake House, Co-ops UK’s head office in Manchester. Any reassurance on offer?

Good governance in the Group

I’ve mentioned a couple of times the Co-operative Group’s current member survey Have Your Say.  I now want to draw your attention to another – unofficial – online discussion forum and questionnaire which has just been launched to encourage debate on the way forward for the Group.

The Manchester Area Committee of the Group (area committees are the lowest tier in the Group’s current complex structure) deserve congratulations for establishing Co-operative Springboard (http://springboard.coop).  As they say, they’ve done this as their response to the Group’s current corporate governance review being conducted by Lord Myners.  I think they’re right to see the review potentially as an opportunity to strengthen, rather than diminish, good cooperative governance structures within the Group – though this outcome is by no means guaranteed, and there are strong contrary pressures which would move the Group further away from its democratic roots.

The Manchester Area Committee stress that the Group’s membership structure is potentially a real advantage which competitors would be delighted to have: “We are missing an opportunity to show how different we are… We must open up. We need to make membership meaningful for the many who don’t take part in elections and meetings,” they say.

Myners is operating on a very short timeframe, so it is important that as much debate as possible about the future governance of one of the world’s largest cooperative businesses takes place now.

On business culture, cooperative-style

Why do I think that the Co-operative Group still has some significant management problems to overcome?  Partly because it has so far failed to develop an effective corporate culture (let’s say, an effective cooperative culture) which reaches right down to all its employees, in all its stores.

Customers in Co-op Group stores are currently receiving with their till receipts an extra slip inviting them to participate in the Have Your Say survey.  The last two times I’ve shopped in a Co-op Group store this slip hasn’t been proffered to me, just put to one side by the staff as if it will be of no interest.

There remains a fracture between what gets decided in Manchester, the Co-op Group’s head office, and what happens at shop level.  You have only to contrast the difference between the Group and, say, John Lewis/Waitrose to draw the conclusion that the Group is still struggling to communicate its values and its strategy to those of its staff who meet its members on a day-to-day basis.  To be honest, I think Sainsburys and Asda do staff engagement better than the Co-op.

It’s not easy to change a business culture, but it can be done.  (If you want an example from the cooperative sector, I’d suggest you look at what the cooperative insurer NTUC Income has recently been up to in Singapore).

So there’s a challenge ahead for the Co-op Group.  What would be an indicator of success?  A sense that shopping in a coop store really was a significantly different, and significantly more rewarding, experience than shopping elsewhere.