Is the Co-op really ungovernable?

WITH a looming £2bn loss can the Co-op afford to be different?

Lord Myners, the man charged with reforming the group’s corporate structure, has quit the board over opposition to his proposals.

There are fears among the Co-op members that his vision of a simplified plc-style board could damage the group’s mutual ethos and effectively leave it like any large business.

The Co-op has a three-tier system of elected member representation drawn from Co-ops across the UK. This is made up of area committees, regional boards, and the group board. Lord Myners said this system had, “consistently produced governors without the necessary qualifications and experience to provide effective board leadership”.

They did not have the experience to keep senior managers in check, he argued, and had overseen “breathtakingly value-destructive” decisions, like the takeovers of Britannia building society and supermarket chain, Somerfield. Lord Myners wanted a smaller executive team but said elected members would form a 100-strong body to enforce the group’s ethical principles. His comments came weeks after chief executive Euan Sutherland resigned, saying the group was “ungovernable”.

While there has been resistance to change, the Co-op’s members also recognise the structure needs reform. It may have worked for smaller organisations but is clearly not serving a major conglomerate with interests in banking, supermarkets, funeral homes and pharmacies.

But there has clearly been suspicion in some quarters that the organisation is being hijacked by a clique of City executives who want the group to conform to more conventional notions of business – and that this is being put forward as the only option.

Patrick Gray, president of Midcounties the Co-op’s largest independent member, told the BBC: “Most of the independent societies are deeply concerned, as we are. We all support reform, but we want it to be done in a measured way. We don’t want to be pushed into a corner and told either you accept this, or nothing.”

The Co-op has been battered and bruised by the events of the past year and must move on, rather than be torn apart by a civil war between traditionalists and reformers. While Gray and his allies look for other solutions the clock is ticking. It’s no use preserving the ethos and values if the organisation itself is in terminal decline.