The Co-op should once again embrace the movement for which it is named

27 March 2014 | News

Peter HuntIt is quite clear that recent events at the Co-operative Group have seriously eroded the relationship between management and the elected representatives of the membership.

The resignation of chief executive Euan Sutherland, following the revelation of the scale and nature of his total remuneration package, carries a stark warning to the remaining group leadership, which now must reflect carefully on what it means for the future.

It was inevitable that new management would arrive with a new CEO, but the fact that they have no experience of the co-operative or mutual sector highlights the critical importance of maintaining strong relationships with the rest of the co-operative movement. There is scant evidence that this has been considered important. Indeed, the swift move to dramatically reduce funding for other co-op organisations will dismay long standing co-operators further, especially now that the hypocrisy of the executive pay policy has been laid bare.

The immediate response to this fresh crisis has been to accelerate the agenda for reforming the structure of the Co-op Group. No one doubts that governance changes are needed, and much has been said of the weakness of non-executives – though few have benefited more from this than the current executive team. However, rather than rushing headlong into irreversible changes, we should calmly reflect on the issues.

Eminent as Lord Myners, who is leading a review of the group, may be, it is not credible to base its future governance on the views of one man. Myners talked of “acute systemic weaknesses” that “have gravely damaged the organisation”; of “a series of costly strategic misjudgments”; and said that “elected directors have simply not been up to their task”. But what has been presented as straight talking has been received as little more than abusive to individuals who, for all their faults, have had the best interests of the Co-op as their guiding principle.

I reject the idea that there is no business experience on the group board – remember, the CEOs of some of our biggest co-ops are there – and I also reject as crass nonsense the suggestion that elected directors are only in it for the money. It does not help Myners’ chances of bringing about real change to polarise views in this way.

So there are three immediate actions that should be taken to steady the ship and set a fresh course that will begin to build trust and confidence between the group leadership and its members. First, there is no place in a consumer owned co-operative business for unearned executive bonuses. How the 100% retention payments came to be requested by management, and then approved by the board, must be explained. Equally, no member of the current executive will carry the membership’s confidence if they do not immediately declare that they will not accept such payments.

Second, an Eminent Co-operators Group should be established to help Lord Myners. The current leadership of the group should reconnect with the wider co-operative movement. The best way to do this is to establish a panel that can provide advice and support as the group goes through its reform process. Ideally, someone like former CEO Graham Melmoth or former chairman Keith Darwin, who have the credibility, experience and ability to provide candid advice to help steer the group to the next phase would chair it.

Third, the leadership should look to cool off areas of unnecessary conflict with members. The leading nature of a number of the questions in the public Have Your Say survey has caused widespread concern. The fact it was not confined to the group’s millions of owners – its members – has further damaged its credibility. Those questions where controversy remains should now be put aside for calmer reflection.

The next few weeks will bring new challenges for the Co-operative Group. It can only succeed through this period if all of its members and managers pull in the same direction, and co-operate.

This article was originally published in the Guardian.