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Governance

Governance

Governance failure: the case of the co-operative society

In December 2013, Lord Myners was appointed to the Co-operative Group Board, as senior independent director. He was asked by the Board to lead a comprehensive and independent review of the Group's governance, focusing on the board's effectiveness.

A progress update published in March 2014 identified ‘acute systematic weaknesses’ in the governance arrangements.

The Board had failed to effectively challenge and question the executive, and a number of poor strategic decisions had been made. As a result, competitive positions were lost and capital destroyed.

A key reason for the Board’s ineffectiveness was its composition. The Co-op regions and independent societies elect the board directors. This lead to a lack of the necessary qualifications and expertise amongst the directors, and a failure to effectively monitor, challenge and provide guidance to management.

Myners’ recommendations involve making future appointments on the basis of objective criteria and filling specific skills gaps. A key element to this process is establishing a nominations committee.

Read the Lord Myners' progress report on the Co-op here.

Lord Myners resigns from the board of the co-operative society

On 9 April 2014 it was announced that Lord Myners had tendered his resignation from the co-operative board in the face of growing opposition to his planned reforms of the society's governance. Lord Myners would however continue with his review of governance.

To be adopted by the society, the changes proposed by Lord Myners require a vote in favour by two-thirds of members of the society's regional committees. A number of these committees have already voted against the proposed reforms.

A key part of the opposition to the Myners' proposals is the suggestion that they would turn the co-operative society into a public listed company (PLC) and undermine its long-standing ethical principles. In others the members concerned do not believe the proposed changes to governance are in line with the organisation's culture and values.

Publication of the Co-op's annual results

On the 17 April 2014 the Co-operative Group announced losses of £2.5bn for 2013. This was the worst result in the Co-op's 150 year history. The largest component of the loss (£2.1bn) related to the Co-operative Bank.

As a result of the acquistion of Somerfield supermarkets in 2008 a further area of difficulty was food retailing. A significant number, particularly of the larger stores which had been acquired, were under-performing and would be closed.

The Group's results emphasised the past failures of management and governance at the Co-op, and the need for reform.

 

 

 

For more information about Governance including the Governor Development Programme contact:

Professor Dianne Willcocks CBE
Director for the Governor Development Programme

David Williams
Governance Web Editor

Tori Senior
GDP Coordinator
T: 020 3468 4818

Governor Development programme information repository

To access materials from previous Governor Development programmes click here.

New research on governance in higher education

The Leadership Foundation has commissioned new research into governance in higher education. Three studies on key issues and policy developments, a literature review of published work on governance and perspectives relating to academic and corporate governance are underway. Further information on the studies is available here. The findings of the studies are to be published in spring 2014.

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What does this website offer?

  1. Information on this page introduces interesting and/or emerging perspectives on governance
  2. Resources for governors and those supporting governors can be accessed by clicking on the menu above

Book review: Nonprofit Governance

David Williams the Leadership Foundation's governance web editor reviews the recently published Nonprofit Governance on our blog: Lfheblog.com Read the review here: Nonprofit Governance

Occasional features on governance: Foundation Trusts

The model of governance used by Foundation Trusts was recently dicussed at a recent Governor Development Programme event. Information about the governance model used by Foundation Trusts can be found by clicking here.

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