Some questions for the Phone Co-op

The ballot for elections to the Phone Co-op has just opened and – as usual, since this is a co-operative which has traditionally had strong member democracy – the election is not a foregone conclusion.  No shoo-in here:  there are seven candidates for two places.

But despite the Phone Co-op’s traditional democratic traditions I think there are questions which this year the Phone Co-op’s members need to ask their board when the AGM takes place in early February.

Some months back, members were advised that Vivian Woodell, who has been the co-op’s Chief Executive since the very beginning – and indeed whose idea the co-op was in the first place – is stepping down. For any business, the resignation of a key person is a moment of greater uncertainty and risk.  If the Phone Co-op were a plc and not a co-op, institutional investors would by now have been interrogating the Board in detail to find out exactly what the strategy for the future would be – to see if really the Board knew what it was doing.  In a co-op, those of us who are the members have to undertake this job ourselves.

In this context, therefore, I am just a little concerned to notice in the statement of one of the election candidates (a long-standing member of the Board) that the co-operative has a plan for growth which involves accepting “a slightly higher level of risk” in the future. Hmm. Utility businesses like phone providers probably do best when they are boring and cautious.

The news of Vivian Woodell stepping down, when it was given to members, was also couched in a somewhat curious way. We were advised that he was to take over the running of a new Foundation, established and funded by the Phone Co-op to promote co-operatives and co-operation – an excellent idea.  But since then all has gone very quiet. There has been no further news of this proposed Foundation or what its endowment will be.

So what has been happening internally in a co-operative which for many years has been a beacon of hope for the British co-operative movement?  Members need to know.  And in the meantime they probably need to choose their Board candidates carefully.

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Board elections at the Phone Co-op

I’ve been casting my vote in an election and it’s not been an easy matter. The election is for three members of the board of the Phone Co-op, and there are ten members of the co-op putting themselves forward, many of them clearly strong candidates.

Not easy to decide, but what a nice problem to have!  What a refreshing change from those fake elections for board places on building societies, for example. The Phone Co-op does not pay its non-exec directors particularly lavish fees (directors received just over £1200 a year, last time I looked), but nevertheless its elections are consistently contested and usually – as this time – attract a strong field of candidates.

Good corporate governance?  Give that co-op a tick.

Co-op capital: the Phone Co-op looks to its own members

I’ve been reading the half-yearly report just published by the Phone Co-op, and see that they report that they now have capital of £5.9m invested in the business belonging to their 10,000 or so members. “As has been the case for many years, the Society has no borrowings and continues to finance all of its operations from retained profits and the share capital provided by members,” the report says.

The Members’ Capital shown on the balance sheet is partly made up of accumulated dividends, but also reflects the Phone Co-op’s proactive approach in seeking direct investment by its members in the cooperative business. It’s an interesting example of Co-operative Principle 3 in practice.

(Can’t remember which principle that is? The answer is here).

The coop brand: a case of blowing in the wind?

I have on my desk details of the forthcoming Co-operative Group AGM, a leaflet from the independent regional Midcounties society about their AGM, and some material that’s come through from the (also independent) Phone Co-op.

But it’s hard to tell the bits of paper apart. All three use the “The Co-operative” national cooperative branding, originally introduced with great fanfare (remember the hype over the Blowin’ in the Wind soundtrack for the TV advert?) as a way of updating British coops’ (collective) tired image. At the time this seemed to me a sign that things were moving forward.

The shared brand raises issues, however. Firstly, if you shop in a branded Co-operative store it can be very hard to know whether you’re in part of the Co-operative Group’s empire, or in a store run by one of the independents such as Midcounties, Central England or Southern that have adopted the brand. Often only the till receipt will tell you. This doesn’t seem a good way of encouraging member identification with their own society. It’s almost as though all building societies had chosen to dispense with their own signs and agreed to share a collective “The Building Society” identity.

Then there’s the problem that the some businesses (Co-operative Bank, Co-operative Pharmacy and Co-operative Travel) which were once part of the Group but which are now owned outside the movement and in no sense are any longer cooperatives continue to use the branding.

All in all, regional societies such as the Lincolnshire which chose to stick with their own logos may be feeling just a little smug.

I see that the question of the future of the brand – the rights to which are held by the Co-operative Group – is one of the motions up for debate at the Group’s AGM on May 16. The motion calls on the Group to recognise that it hold the brand rights ‘as custodian on behalf of the whole movement’. It’s an important issue: I’ll be interested to see how the debate goes.

Cooperatives and the idea of the Living Wage

I’ve written before on executive pay in cooperatives. What about pay scales at the other end?

Look at the list of UK companies which have signed up voluntarily to pay their staff at Living Wage levels (currently calculated at £8.80 ph in London and £7.65 elsewhere) and you won’t see many coops there. The Phone Co-op is an honourable exception, having joined the scheme last autumn.

But the Co-operative Group has not felt able to adopt the scheme. In response to a 2012 members’ motion from Central and Eastern Region, the Group reported back that it had calculated that the cost of adopting the Living Wage unilaterally would be around £52m. “A voluntary unilateral adoption of the Living Wage risks an employer disadvantaging themselves against competitors,” the Group pointed out.

On the other hand, AGM delegates also received a Board statement with the revealing comment that “in relation to the lowest paid members of staff (for example Customer Services Assistant (CSA’s) Food), the Group has, over a number of years, paid an hourly rate at a level above the National Minimum Wage, but often less than the hourly rate paid by the Co-operative Group’s main food retail competitors.” The statement went on to compare Co-op Group’s (then) hourly rate for CSAs of £6.25 per hour with the equivalent hourly rate in Morrison’s, Sainsbury’s and Tesco Express of £6.42.

What of other industries? Workers in the leisure industry are also poorly paid, and regrettably you won’t at the moment find the (normally highly regarded) social enterprise Greenwich Leisure (GLL) in the list of accredited Living Wage employers. One person trying single-handedly to change this is Alan Sealy, a member of the Chalfort St Peter leisure centre in Buckinghamshire (now run by GLL). Alan has contacted me to tell me of his efforts to persuade GLL senior management to think again.

“I have no doubt that the principal argument for GLL not paying the Living Wage is that if they did they would lose out on local government contracts,” he says. But, as he points out, increasingly local authorities are themselves committing to the living wage scheme – so there may well be growing pressure from authorities on GLL to follow suit.

I wish Alan Sealy well in his campaign. Incidentally, there’s a useful resource pack on the Living Wage issue produced by the Co-operative College. As this points out, the idea of paying a living wage has been a central theme of the cooperative movement for more than a century.

Good news: cooperatives doing well

Two good news cooperative stories in one day.

 

The first reaches me indirectly via Le Monde, which ran a major feature in its paper yesterday on the success of the green electricity distribution coop EWS, based in the south German village of Schönau.  EWS, set up by a local teacher Ursula Sladek who had lived through the aftermath of the Chernobyl disaster, took over the electricity distribution network for the community of Schönau itself in 1997 and now has grown to have customers throughout Germany.  Its electricity is 100% renewable and comes from a variety of sources, including wind turbine and hydro generation… but definitely not nuclear. Turnover (2012) was 140 million euros, profits over 4 million euros, and the coop’s members earn a 4% return on their money. The Le Monde article is currently available online here. 

Here, just to brighten up my blog, is a picture of their Board, lifted from the EWS website. (I’m not entirely sure what they’re holding.)

netzkauf_Vorstand_GF

And closer to home an email brings news from the Phone Coop, which has just announced record profits for last year, at a little over half a million pounds.  Dividends on customer purchases are in line to go up from 2% to 2.5%, and I understand that the Phone Coop is also planning to increase the contribution it makes to the development of other cooperatives through its Co-operative and Social Economy Development Fund. The Phone Coop also demonstrates the possibility of utilising capital from members, having now around £4m in members’ capital invested in the business.