Taking stock at the Phone Co-op

Co-operative democracy, as I predicted, was much in evidence at the Phone Co-op’s AGM in Sheffield on Feb 3rd.  There’s a good report of the event on Toby Johnson’s blog the link to which has been up here on a comment but which I’m mentioning again in case you’ve missed it.

The Phone Co-op’s (rather beleaguered) Board has appointed Jane Watts as their chair, someone whose strong record in the co-operative movement should help steady the ship. The Board has also moved quickly to call a Special General Meeting on April 28th, a smart move since if the Board hadn’t done this themselves then dissident members would probably have called for one anyway.

It’s still not clear to me whether the Phone Co-op’s strategy for growth – which involves considerably more risk than its way of operating in the past – is rooted on a strong business case or on over-optimism from the Board.  But at least all members are being encouraged to scrutinise the proposals carefully. The Phone Co-op remains one of the modern jewels of the co-op movement in Britain and needs to be looked after carefully.


Phone Co-op correction

Let’s try to be accurate in these blogs, shall we Andrew?

The motion I mentioned in my blog a moment ago is from Simon Blackley, not Toby Johnson as I said.  (Toby has put forward a separate motion, on income differentials and CEO remuneration, which is also a significant issue for discussion).

Tut tut, this blogger is supposed to be a professional journalist…

Questions to be asked at the Phone Co-op’s AGM

The Phone Co-op’s AGM in Sheffield on Saturday February 3rd looks set to be an important occasion for the exercise of co-operative democracy and member participation.

I blogged more than a month ago about the Phone Co-op, one of the jewels in the modern British co-operative story. Vivian Woodell, who was the co-op’s Chief Executive since the start of the venture, stepped down during 2017 in circumstances which are, it has to be said, opaque.

As I said in my blog, “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.”

I’m not sure that I know what the Phone Co-op’s Board does plan for the future. There is upbeat rhetoric in the documents I’ve received of increasing profits to £2m in 2021-22, but there is also talk of losses in the interim. I’m not sure I’ve been persuaded that the £2m figure is anything other than wishful thinking.

It is now clear that other members of the society share my uncertainty. There is a long, and important, motion for the AGM proposed by Toby Johnson which interrogates in detail the information the Board has supplied and asks among other things for the Board to specify at the AGM “the upper and lower limits of the range of projected profits and losses for each year of the 4-year strategy, and the assumptions underpinning these projections.” I think members would be well advised to support Toby’s motion.

The Board (who are of course elected Phone Co-op members who receive only a very small allowance for their role as non-execs) may at this stage be feeling a little beleaguered.  They shouldn’t feel this. Member engagement (in the way that Toby Johnson’s motion is doing) is a positive advantage of the co-operative business model. It means that it is more likely, not less, that the co-op follows a strategy which will allow the business to prosper. Any Board of a co-operative that understands the way to tap into the experience and good sense of all its members is a Board that is demonstrating confidence, not weakness.

We’ll have to see what happens in Sheffield.  It’s very unfortunate that the date clashes with another commitment I can’t avoid, but I hope that he meeting is well-attended, that members ask probing questions, and that the Phone Co-op is as a consequence set on a firm footing for the future.

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.

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.