Three years on from the Co-op Bank scandal the group has reformed, writes Allan Leighton
Business is in danger of ignoring the public mood. Amid all the recent debate about workers on boards, executive pay and the politics of profit, one truth stands out – trust in business is not where it should be.
Many in the UK feel alienated from big companies and those that run them – business has to find a way to bridge the divide.
What the recent debate also shows though is that there might not be a one size fits all approach here. Mandating a blanket solution won’t necessarily fix the problem. That’s why we should welcome the government’s decision to consult on how to move forward with reform of corporate governance and why we at the Co-op intend to play our part in that debate.
After all, we know more than most the importance of getting governance right. It was three years ago last week that the Co-op Bank, and by association the Co-op Group, avoided collapse after persuading the Bank’s bondholders to back a £1.5bn rescue.
There were many reasons why the two organisations got into such a mess, with poor governance perhaps the most fundamental. Many of the board directors at that time lacked business experience and had also lost touch with customers, members and colleagues.
Thankfully we’ve come a long way since then. Today our businesses are once again performing and our governance is something to be proud of.
One of the silver linings of the crisis was that it allowed us to reshape our governance structure. We worked through how best to create the foundations for a successful business whilst remaining close to our communities and staying true to the original values and principles set out by the Rochdale pioneers who founded the Co-op.
The governance structure we have now is more complex than that of listed businesses but it also minimises the risk that those leading the organisation become alienated from those we are there to serve and represent. That’s certainly worth adding a little complexity for. The Group now has a board comprised of executive directors, independent non-executive directors and member-nominated directors, directly appointed by our 5m members whose voices they represent.
Crucially each of those board members has to have the right skills and experience to sit on the Board of a major commercial organisation and play an active and valuable part in the debate. The board in turn is held to account by a 100 strong member council, 16 of whom work with us at the Co-op and ensure the colleague voice is heard right at the top of the organisation. The council challenge the board’s views and present new perspectives via regular meetings.
With that structure in place I’ve adopted a pretty simple approach to chairing the board – testing decisions against the three C’s – commercial, colleague and co-operative.
Is what we’re doing commercial and will help our businesses thrive? Is what we’re doing right for our people? And is what we’re doing enhancing co-operation and right for our members?
Clearly we have a different ownership structure and a different way of doing business at the Co-op and we certainly don’t get everything right, but I do believe our governance structure now helps keep us close to those who matter.
As the government consults on the way forward, and company boards discuss how they will navigate competing demands, perhaps they could consider their own version of the three C’s.
Allan Leighton is chairman of The Co-operative Group