Compromise on the cards at the Co-op Group

“Take my proposals in their entirety or you’re doomed.”  I am exaggerating Paul Myners’ ultimatum to the Co-operative Group’s Board on corporate governance reform earlier this year, but only slightly.

We now know that Myners’ proposal for a Co-op Group board full of the usual sort of independent non-executive directors is likely to be sweetened by a small number of places left open for representatives of ‘ordinary’ members (… as I predicted here at the time of the Co-op Group’s AGM).  Whether a handful of ‘democrats’ can adequately prevent the Group for heading off in the same direction as all those building society boards notionally accountable to their members is debateable, but my prediction this time is that the compromise will be accepted.

What’s disappointing is that the presence of ‘ordinary’ people on the Co-op Board’s has been seen (pace Myners) as a problem.  It could and should be seen as just the opposite – as potentially giving the Group a competitive business edge over non-cooperative competitors.  (Admittedly, I accept that that word ‘potentially’ is necessary in this assertion).

I think we can now start to make an early assessment of Myners’ contribution to the Group during his short time on the Board. I fear that my verdict would be a negative one. I think Myners was too hidebound by his experience of traditional finance sector Boards and their way of doing corporate governance, and too autocratic in the way he approached his task at the Group.  This is a pity: a leader with more sensitivity to cooperative heritage and culture could have led the movement towards taking a historically momentous step towards a more accountable and democratic way of operating.

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Governance and democracy in the Co-operative Group

Friday’s conference in Manchester, Ways forward for the Co-op Movement, was well attended and valuable, I thought.  I have just filed a piece about it for the Guardian’s Social Enterprise pages, and will draw your attention to it when it appears.  Well done to Co-operative Business Consultants for organising the day.

There was much discussion at Manchester of ways to improve the Co-operative Group’s governance and internal democracy including a number of quite radical ideas. It’s perhaps worth mentioning, therefore, that last Thursday (the day before the conference) saw the terms of reference published for the corporate governance enquiry which the Group itself has commissioned,  chaired by Lord Myners. You’ll find the press statement here.

Myners will be looking first at the Board structure, before moving on to consider ways to strengthen links with members.  Some people at Manchester thought that this is a back-to-front way of doing things:  shouldn’t you begin with member democracy, they asked?  So Myners’ eventual recommendations may well be contested territory.

My prediction on what is likely to emerge from Myners includes (a) a smaller Group Board (generally considered a good idea) and (b) much more use of non-elected non-executive directors, an altogether more controversial proposal.

I have argued before that,  following the Bank crisis last year, we’ve seen a growing attack (led by some MPs and some newspapers) on the very idea of cooperatives as member-controlled businesses.  Potentially the coop movement could be at risk of losing not just its Bank but the very core of its being.  The  Myners enquiry is as important as that.