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| Co-op needs board with competitors' skills, says Myners | Co-op needs board with competitors' skills, says Myners |
| (35 minutes later) | |
| 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. | 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. | 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. | A separate member-led council should advise on ethical matters. |
| "Radical decisions on governance structure need to be taken very soon - and with resolution - if the Co-op, as my mother knew it, is to be saved," Lord Myners said. | |
| Lord Myners, a former City minister, resigned from the Co-op board in April after his suggestions for reforming the group's corporate structure ran into resistance from supporters of its mutual model. | |
| The report comes just days after the group, which runs a variety of businesses from banks, to supermarkets, funeral homes and pharmacies, was sharply criticised in a review by Sir Christopher Kelly into the near-collapse of its banking arm. | |
| The bank faced near-collapse last year after the discovery of a £1.5bn hole in its balance sheet, and had to be rescued by bondholders in a move that saw the group's stake reduced from 100% to 30%. | |
| "The group has lost half of its net worth over the past four years, circa £3.5bn of erosion of wealth. It is one of the great national business calamities and it is being led by a board totally unable because of a lack of experience to hold them to account," Lord Myners told the BBC. | |
| Smaller board | Smaller board |
| He says the group needs smaller board, which can make quicker decisions, that is made up of members with similar skills and experience to those at competing companies - such as Tesco and Sainsbury's in food and Nationwide in lending. | |
| The report also highlights what he considers shortcomings in the way the Co-op is currently run. | The report also highlights what he considers shortcomings in the way the Co-op is currently run. |
| There is "limited shared purpose among group board directors," as they are elected to the board with differing views on what the Co-op's priorities should be. | There is "limited shared purpose among group board directors," as they are elected to the board with differing views on what the Co-op's priorities should be. |
| One director, who was not named, told the review: "some want a dividend, some want low prices, some want to do social good and some want free range chickens". | One director, who was not named, told the review: "some want a dividend, some want low prices, some want to do social good and some want free range chickens". |
| Members of the board also failed to follow their own rules. | Members of the board also failed to follow their own rules. |
| During the review, one director "appeared to have actively participated in a campaign to reverse a strategic decision made by the group board only days earlier". | During the review, one director "appeared to have actively participated in a campaign to reverse a strategic decision made by the group board only days earlier". |
| That happened despite a rule that directors "support any decision of the board, whether they agree with it or voted in favour of it" and "should stand by the decisions made by the collective board". | That happened despite a rule that directors "support any decision of the board, whether they agree with it or voted in favour of it" and "should stand by the decisions made by the collective board". |
| 48 committees | 48 committees |
| Similarly, the current multi-layered system of group and regional boards and area committees slows down decision-making as "directors claim that they need to get an opinion from their respective region before condoning a course of action" even though they are expected to make up their own minds. | Similarly, the current multi-layered system of group and regional boards and area committees slows down decision-making as "directors claim that they need to get an opinion from their respective region before condoning a course of action" even though they are expected to make up their own minds. |
| 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. | 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. | 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. |
| Skills gap | Skills gap |
| "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. | "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. | 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. | 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. | 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. | Directors should serve for three year terms, and for a maximum of six years in total. |
| The National Membership Council, with about 50 members, will hold the board to account and help decide who is elected to the board. It will also advise the board on ethical matters. | The National Membership Council, with about 50 members, will hold the board to account and help decide who is elected to the board. It will also advise the board on ethical matters. |