What Future for the Co-operative Group?

“This is a radical report aimed at a stuffy, conservative organisation which has fallen badly behind the times. After such a report, no movement could possibly sit back and do nothing.”

One might be forgiven for thinking that the quotation above is contemporary and has been generated by the scathing, hugely critical Paul Myners report on his Independent Governance Review of The Co-operative Group, published last week. But no, the quotation is actually from The Economist in 1958, commenting on The Co-operative Independent Commission of the same year, and used in part by Myners to point out that some of the problems the Co-op is facing are long-standing and indeed systemic.

The Myners report makes for interesting, if depressing reading, especially if you have a soft spot for the Co-op. Pointing out that all businesses need a compelling strategy supported by disciplined financial management, Myners lays the blame for the current woes of the Co-operative Group at the feet of the failure of the Group Board. Now that’s probably not the whole story, but his 182 page demolition of the governance is hugely embarrassing for a Movement that plays so much on its ethical and democratic principles.
Myners’ conclusions are that:

  • The governance was not fit for purpose;
  • There was only a facade of democratic control;
  • The Group Board lacked individual and collective skills to hold the Executive to account;
  • The social goals were not linked to strategic and commercial development.

In one of the more memorable quotes in his report he notes one director describing Board Member priorities as ‘some want a dividend, some want low prices, some want to do social good and some want free range chickens’ (P114). The point is well made re strategic direction, social goals and financial management.

On Saturday the Co-operative Group Annual and Special General Meetings will debate Myners proposals, which are to build a Group Board with the right skills, a new National Membership Council to protect values and to extend/deliver the principle of one member, one vote. Measures against any potential demutualisation are also proposed. Who knows how it will go? Or, if the proposals are passed how soon or how well they will be implemented? The Co-operative has after all been known to procrastinate.

A few concluding thoughts on the report and the Co-operative Movement come to mind at this point;

  1. Despite the problems of the Co-operative Group, there remain a number of sound and effective independent Co-operative Societies. These must not be tarred with the Group brush in a damaging elision of problems from Group to local.
  2. Myners points to two reasons for the governance problems; tensions brought on by scale and an entrenched entitlement culture. In terms of the former, does this raise questions about the limits to co-operatives? Are co-operatives most effective at a local level?
  3. It also struck me on reading the report that quite a lot of the problems stem from the desire to act quickly in the 1990s when under threat from demutualisation. Was enough attention paid then and in subsequent changes to the unintended consequences of the way demutualisation was stopped?

But in one sense, these are moot. If the Co-operative Group is to have a future then it needs to change and address the disastrous consequences of the failure of governance Myners has laid bare. There may be other failings still to come, but the future needs a clear strategy with financial discipline, at this time more than ever. But it also needs the ethics and principles that make co-operatives so important and distinctive. Soft spots are all very well but they won’t keep the business in operation. The Co-operative Group needs to do the right things, well, consistently and convince members and consumers that it can be put back on the right track.

About Leigh Sparks

I am Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, where I research and teach aspects of retailing and retail supply chains, alongside various colleagues.
This entry was posted in Competition, Cooperative Group, Cooperatives, Governance, Retail Failure, Retailers and tagged , , , , , , . Bookmark the permalink.

2 Responses to What Future for the Co-operative Group?

  1. Douglas says:

    There’s more to the problems of the coop than serial misgovernance and hypocrisy! The brand and its positioning is not only tired and confused, its network of outlets is under unrelenting pressure by at least 3 of the retailing majors as the search for margin and penetration intensifies downwards. Nothing new there though. The tagline of community is an expensive indulgence that deserves investment and material presence. I’m reminded of the Gothenburg pub concept of income redistribution.

    • Leigh Sparks says:

      Don’t disagree with your opening statement, as I hinted at in the post and as my previous writings on the Co-op have always said. Not wholly sure that is true of all Co-ops though – as I said some independent co-ops are doing OK and have strong brands.

      Can you have community at the national level?

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