Co-op needs board with competitors skills
Co-op needs board with competitors' skills, says Myners
The Co-operative needs board members with experience to match their competitors, says the report
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The Co-operative Group should adopt a much smaller board and focus on being profitable in order to survive, according to Lord Myners' review of the organisation.
The Co-op has a "manifestly dysfunctional group board", says the report.
There should be one, smaller board made up of people with business experience, it recommends.
A separate member-led council should advise on ethical matters.
BBC Business editor
Lord Myners has decided that attack is the best form of defence. Over 186 pages he details a litany of failings not only in the governance structure of the Co-op but in the very culture of the organisation which he describes as "corrosive". If the Co-op does not vote for reform at its annual general meeting on 17 May, then critics of the organisation will say it was not for lack of warnings.
Lord Myners' report sits four-square with that of Sir Christopher Kelly, the former civil servant whose report on the near collapse of the Co-op Bank last week used similarly strong language.
Lord Myners also makes a brief but vital mention - on page 97 - of the Co-op's banks. This is the syndicate led by the Royal Bank of Scotland which is supporting the Co-op's debts. Sources tell me they want to see reform and may well decide to make some noise publicly about the issue.
The danger in the reform push is that more traditional members who fear the democratic structure of the Co-op is at risk could feel they are being bullied into submission. A second major report detailing the failings of a board that is still largely in place could receive a very negative response from at least some of its members.
Currently, the Co-op has 48 area committees - the grassroots of the organisation - which each have 10-12 members. They elect members of seven regional boards who in turn elect 15 members of a board that can be as large as 23 members.
There are also boards for the food business; the bank, which the group no longer fully owns; and specialist businesses, which include the pharmacies and funeral care. The Co-op calls these subsidiary boards.
"The group's bottom-up, competitive election process provides no rigour for assessing the commercial capability levels of candidates as there is no meaningful competency bar in place. Similarly, it provides no scope to balance the capabilities and fill skills gaps," says the report.
Lord Myners proposes a board with six or seven independent directors and two executives as well as a separate body to handle members' concerns, called the National Membership Council.
Current members should stand for the board if they have the requisite experience, says the report. But the organisation needs to shun directors from competing societies from being on the board. They can instead sit on the council.
While the board will have more or less the same powers commercially as it does today, it will also have the powers the subsidiary boards had.
Directors should serve for three year terms, and for a maximum of six years in total.
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