April’s National Members’ Council

Spent Saturday at the Co-op Council meeting: where the main focus of discussion was the publication of our year-end results, which were published last week. You can see the full report at https://assets.ctfassets.net/5ywmq66472jr/4Xi9Pw36VOEkmE2yqZhCQT/4d716091dec9e6e8832a357c718ca47b/Co-op_Annual_Report_2018.pdf

Overall our underlying profit result was flat year on year.  But with strong growth in food sales and an increased Profit Before Tax line the reception in the financial press has been very positive.  Food’s performance was outstanding with like for like sales up 4.4% – well ahead of the market – and the addition of NISA taking the Co-op’s total turnover to over £10 billion for the first time since we disposed of the Co-operative Bank. Funeralcare results were a little disappointing, with a drop in market share and profitability impacted by our introduction of lower-cost funeral options.  However, we still have a very strong platform and many opportunities in that sector and I am confident that we will see that part of our business turn around.  

It was very pleasing that the press gave plenty of coverage to other aspects of our performance too, recognising in particular the work we are doing to address crime levels in local communities, the investment by our pension trustees in social housing and the expansion of our network of academies.  This year we published the Co-op Way report at the same time as our financial results – which is something I have pushed for over the last couple of years.  There’s lots more interesting and encouraging news to draw out from that report, which I will cover in a future blog post.

The Council session also spent a lot of time looking at our work on leadership and colleague culture as well as reviewing remuneration policies which are covered in huge detail in the Annual Report.

During the Directors Q&A sessions we were challenged on a number of areas, including:

  • Progress on our IT transformation programme in the Food division (slipping behind schedule which will increase cost and delay service improvements – but we need to take the time required to get it right).
  • Reactions to the Grocery Code Adjudicator’s report and whether we were confident that our house was being put in order now: as previously declared, we had got things wrong but were working hard to make sure we treated suppliers well.
  • Colleague security: a continuing area of concern, in which we continued to invest time and money. 
  • Whether it was easier to report to shareholders or to members: we find Council questioning ranges far wider than that of financially-focused shareholders, and appreciate the fact that members take a longer term and broader perspective 

Altogether a very positive day, and I very much hope that it does not prove to be my last Council meeting, as the next one will not be until after our AGM in May when I hope to be re-elected!

January 2019 Council meeting

Saturday saw the first National Members’ Council meeting of 2019, and as part of my Member Nominated Director role I was of course delighted to be there.

The two main items on the agenda were an update from the senior management team on progress within our Food Business, and a Q&A session around the proposed sale of our insurance underwriting business.

2018 was an amazing year for Coop Food. Sales performance outpaced the market by a considerable stretch, we acquired NISA, opened a hundred new stores and invested in colleagues and testing out a whole range of new initiatives. Questions from Council focused on plans for developing our vegetarian/vegan/organic offerings, and underlined the importance of not using every new efficiency to strip hours out of stores but to enable more time for serving members and customers.

As one might expect there was appropriate challenge offered to the decision to sell underwriting activities to Markerstudy (see picture above and also my previous blog). Mark Summerfield, MD of Coop Insurance, was present to lead Council members through the rationale and provide reassurances – and it was great to hear explicit recognition from Council and Board members of the integrity and expertise he has brought to the negotiations. By the end of the session my impression is that Council members, a number of whom had initially been sceptical about the decision, came round to recognise that it was the right strategic move on the part of the Board.

There were also sessions when we as individual directors were held to account by questioning from small groups of Council members. In my own Q&A session there was discussion of our logistics operations, our investment in improved IT systems, the management of Group debt and the background to our Sustainability Bond offer in the autumn, and the role of MNDS compared with that of independent non-executive directors. Various points were made around our Festival offering in 2018 particularly in relation to displays about the Co-op’s wider purposes and membership, the use of membership cards and a desire to see us consider offering free water at future events.

All in all it was a good and useful day, with questions focusing on important issues and on longer-term opportunities, and answers being full, open and honest: as one would hope! It was also an occasion when we could note that Council Secretary Gill Gardner was moving on to another role within the Group.

Gill has been an amazing colleague, helping the Council to become ever more effective, and she will be a very hard act to follow: though I am told we have number of excellent candidates putting themselves forward and an excellent interim Council Secretary in Andrew Seddon.

Council and Senate

I am getting a little bit behind with my blogging, but ten days ago we had a dinner for Board and executive team members with members from the Senate of the National Members Council, to mark Richard Pennycook’s departure as chief executive.   This was a good occasion, not only because of the excellent food and wine (exclusively Co-op own brand products of course!), and a memorable farewell address from Richard, but also because of the chance to build informal relationships between Board and Senate members.

Co-op democracy

The ten members of Senate are elected from the 100 members of the National Members Council (many shown in the image below), and as well as leading the work of the Council they are a forum to which the Board can refer for guidance on how Council might react to particular courses of action being considered.  To carry out this latter role effectively requires the building of trust between individual directors and Senate members, so that we can speak openly with each other and yet know that confidentiality will be respected.

Co-op logo Council

Role of MNDs

In my role as Member Nominated Director I am fortunate to have had more opportunities than many of my colleagues on the Board to get to know our Senate members and the wider Council.  This is both through attending Council meetings and because I am a member the rather strangely named Stakeholder Working Group (which acts as a point of liaison between Board and the Council President and Vice-Presidents), and last year I also served on working parties relating to the election process for MNDs and the development of the “Co-op Compass” as a way of measuring our performance against key objectives.

Holding the Board to account

The Co-op’s governance give the Council a vital role as representatives of the interests and priorities of our members, holding the Board and individual directors to account, providing inputs on possible future direction and acting in many ways as the “conscience” of the Society – making sure that we strive to hold true to co-operative Values and Principles and high ethical standards.  At times dialogue can feel uncomfortable – when Council challenges a decision or proposal from the Board.  That discomfort is essential and can be creative if we are to ensure that the Board really does steer a course that is in line with what our member owners would like. It can and does have a very positive influence for the good.  But there is always a risk that it can descend into confrontation and misunderstanding if mutual trust is replaced by suspicion or an assumption that either the Board is wanting to undermine our Values or that the Council is just wanting to create obstructions.

The way to make sure that Council-Board relationships add value to the Co-op is twofold:  firstly – clear, open and early communication; secondly – strong personal relationships.  We can always do better at both, and as an MND and member of the Stakeholder Working Group I believe I have a particular responsibility to help make sure we continue to invest in making dialogue and mutual understanding as effective as possible.  Social interaction such as the dinner are a really important way of creating human relationships that will then make more business-focused discussions increasingly productive.