Sutherland’s Clearance
Some random thoughts on Euan Sutherland’s departure…
Too Big to be a Co-op
There’s a review of nearly every aspect of the Co-operative Group in one form or another, but what isn’t under consideration is how the Group’s current size and scale relates to member benefit. The approach to de-merging is limited to what cash could be freed up from long-held assets.
If you take it as axiomatic that you’ve got to keep the Group united at a national scale, then certain decision flow from it, not least having superhero executives on superhero salaries. There’s a strong case that the Group can’t be an effective democratic co-op at its current scale and scope, but if that’s true, then to fail to consider how to change that scale and scope somewhat dictate what the answer will be to the question of how democratic this business can be at the senior level.
The asset base of the Co-operative Group has been built up over generations and placing it at the behest of the current senior executives to try and save an ship which many think too ungainly to be seaworthy is the height of folly. Better managed demergers, using co-operative societies in ruder health to take on businesses that make strategic sense to them, and enabling new co-operatives to be formed based on those assets where they’ve outlived their useful purpose in their current incarnation.
There’s a deeper question that co-operatives have to engage in, which is their ‘why’ (in the sense that Simon Sinek uses it). Co-ops make most sense to consumers the more they can utilise their collective power to correct market failures and where the importance of the business to them and their lives makes exiting their relationship either difficult or tragically ruinous. The politics of food which underpinned the co-operative movement all those years ago are now very different. I can make a case for a consumer-owned co-operative funeral business, a pharmacy and so on, but I really do struggle with mass consumer-owned food business.
Will the Real Way to be a Board please stand up
I wonder if the Co-operative Group Board being slated today for not backing their CEO on existentially important issues is related to the one kicked round the block for not doing so to Peter Marks or the executives at the Co-operative Bank? Heaven forfend business analysts are like the armchair generals who can suggest suitable foreign policy on the basis of an incoherent set of prejudices masquerading as received wisdom.
Have Your Say and Eat It
As an aside, I’ve always had real problems with the phrase ‘have your say’. Part of this is aesthetic; it’s a hoary staple of reporting about consultation. I also don’t like the notion that the issue is about you having your say, as if the issue of who does the listening, reflecting and acting isn’t as much part and parcel of the problem an institution faces as the disconnect with the public from whom the institution solicits views.
But the final reason was that it was mostly nonsense. I used to work for Rochdale Council’s press office, and we’d send out press releases which solicited comment from the public, and we knew that the real decision was already made, the frame in which consultation would take place was fixed and the rest. This is replete through the ‘Have Your Say’ issue, which looked like an effort to garner opinions to justify decisions already taken, rather than a genuine way to engage the ordinary members who are so disconnected to the actual governance.
Show me the Money
Sutherland shot his bolt with the pay stuff. Will Hutton’s piece on the subject acted as a cri du coeur and Sutherland was very foolish to leave himself open to the attack, and enabled the governance opponents to make cause with the people who found his salary (and bar bill) simply untenable in an organisation where managers have consistently rebuffed efforts to implement a living wage policy whilst inflating their own pay to 240 times the lowest paid. Some are saying that you’ve got to pay what the market dictates, completely missing the point that this market is rigged by pay consultants who ratchet the market constantly.
A better pay policy for any co-op is a multiplier approach which links top and bottom pay. People at the top complain it restricts what they can earn, when it does no such thing. It just means that in order to get a pay rise, you have to have made the enterprise more profitable in order to give one to everyone in the same proportions. Which is to say, executive pay is thusly linked to enterprise performance, and at the same time a co-operative does it bit to put its money where its mouth is on the issue of equality.
The Co-operative Group has a lot of negatives against it, and so squandering one its core assets enables employees, customers and members to feel that it is now just the same as everywhere else, which is generally worse than on such conventional terms, like price, quality, range etc. But my 5-year old daughter gets that co-ops mean fairness, and so should a board of one and its senior managers.
Myners’ Strike
There was always deep, deep scepticism about the Myners’ governance process. The secretariat chosen to advise it didn’t include people with serious academic understanding of international efforts to reform co-operatives like Johnston Birchall but instead favoured people wit track records within the PLC environment.
The real challenge is to reflect the co-operative ownership status through governance mechanisms that genuinely engage people, not the 3% of members who vote at present. Part of that is the ridiculously closed nature of the electoral process and its absurdly long time horizons.
But even here, a constituency ready to follow him — the vast majority of elected members kept in the dark and pretty powerless — were sidelined because of the way they did the review. Myners was looking at the Board first, then the wider democratic structures. But if you’ve sorted your board out, then the answers to the second part are pretty finalised too.
What Sutherland forgot — and what all those analysts who don’t ever spend any time to get to grips with the subject — is that the Co-operative Group, like most co-ops, is as much a political community as a business enterprise. Its novelty and strength comes from the double helix of how these are bound together.
Sutherland’s approach to reform was to get a clever chap like Myners to be his Royal Commission/Consultant type to independently suggest what you want. That needs approval by the AGM, so I expected some terrifying and judicious leak of portentious info to Robert Peston about how the Banks owed money by the Group for the (completely stupid) Somerfield deal would take rejection as some totemic symbol of bad faith, and thus put the Group into Receivership.
What Sutherland didn’t seem to wish to do was craft a policy which was based on genuine listening, genuine reform which was calibrated to actually do better democracy, rather than just less of it. That would have been clever, sound, necessary and popular. He was running a sprint in a middle-distance race, and for all his talents, seemed to think he could make the other runners in this middle-distance race start sprinting.
Presenting a political syllogism — something needs to be done; this is something; therefore we must do it — was never going to work, and nor should it. We’re not that stupid to believe it’s your way or the highway.
The Next Generation
Where he was strong was in being a good communicator with staff. The previous executives didn’t really do engagement. Lots of staff liked him, not least because he was apparently very different to his predecessor and was out and about as a leader of the troops.
Whomever the Group pick needs to be someone with that vital ability to genuinely lead and engage and encourage the group’s staff in a way that has been sadly lacking for far too long, leaving the Group with a staff turnover and staff happiness rate more becoming of an Amazon than an ethical business.
They also need to not alight on whoever they pick as the next messiah; I recall former Chair Len Wardle being jolly pleased that Sutherland represented a much better fit with co-operative values than Peter Marks, and look how that turned out.
Instead of holding out for a hero, they need to search for the hero inside themselves (sorry — I watch too many adverts), which is to say that they need to commit to pretty radical processes that assess what it is that the Group should do for its members, and then work out everything from that. That’s what’s essential if they are to be a co-operative in practice as well as name, but it’s been a long time since genuine engagement was the order of the day.
And these democratically-elected parts of the Group need to not see the recent developments as a victory for democracy, but a space where those who genuinely want democracy to connect with members and to add value to the group’s activities need to recognise that the ossified, degraded and, frankly, barely legitimate structures inherited from, seemingly, the medieval Catholic Church, are in need of reform. The Board need to pick a Pope Francis — a humble man who’s fidelity to the core tenets that unite the political community leads them to trust that person as they lead the journey to the long-overdue reform.
