Member Article

Will the Co-op Group's results provide a wake-up call for members?

Professor Micheal Mol of Warwickshire Business School looks at what the Co-op Group’s results mean for the future of the organisation.

I would like to think that this is a wake-up call for the members, but I am not entirely sure that it will be. There has already been a lot of resistance to Lord Myners’ proposals. He effectively asked the regional members to remove themselves from power, like asking turkeys to vote for Christmas. They don’t seem particularly keen on that, I like to call them the angry birds of the Co-op and from my point of view they have overseen this destruction in value and that is what needs to stop - they really need to reform that board.

They need to adopt many of Lord Myners’ recommendations. The mutual is a very strong form of organisation, and the Co-op has more than 100,000 employees, so it is important they get this right. But I am very worried about the angry birds not taking the right decisions and that will endanger the future of the Co-op Group.

This is the best time for the Co-op to try to turn things around; I think it would be very unwise to get rid of Richard Pennycook. You can say he is a Plc man, but that is just symbolism and that is not what this is all about. It is about having a board that is competent and small enough to effectively oversee what the executives do.

The AGM coming up is important, it is time for radical governance change and hopefully after that they can change the strategy.

I believe in the medium to long term the Co-op is looking to get out of the banking business altogether. There are some restrictions, though, as they sold off 70 per cent of the bank and it is difficult to get out of the remaining 30 per cent because of the deal they have struck with the hedge funds. There are some legal issues there as well, for instance about the use of the Cooperative name, so it is not straight forward.

This was posted in Bdaily's Members' News section by Warwick Business School .