Ownership of Bristol-based film company Aardman transferred to its workforce

Visitors to this site sometimes open the worker co-operatives directory which gives a few examples of co-ops financed by employee buyouts. On rare occasions the owner has given the company to its workers, for instance the company now known as the Scott Bader Commonwealth. Read more here. The supportive work of the Baxi Partnership should also be mentioned.

For 40 years, Bristol-based film studio Aardman have made movies and television shows featuring its stop-motion clay animations Wallace and Gromit and Shaun the Sheep. 

Founders David Sproxton and Peter Lord have now transferred 75% of Aardman’s shares into an employee ownership trust, which will hold the shares on behalf of the140-strong workforce. The aim is to ensure that Aardman remains independent and to secure the creative legacy and culture of the organisation.

David Sproxton, who is currently managing director, says the question of what would happen to Aardman when he and Peter retired had been raised a few times by staff. For eight years he investigated various options before they decided in April 2018 that it was the right time to take the first step towards retirement.

Aardman’s senior management team will remain in their existing roles and will form the organisation’s executive board. Sproxton will continue as managing director and Lord will stay on as creative director and focus on the company’s feature film output, including a second Shaun the Sheep movie and a sequel to Chicken Run.

Peter Lord and David Sproxton: cropped from the Bristol Post

Law firm TLT advised on the transfer. Ben Watson, partner at TLT and leader of its employee ownership team, commented: “[We] are delighted to have been able to support [Aardman] in the move to employee ownership. The employee ownership model not only helps to ensure independence for the business, it also shares the rewards with the people who contribute to its success. With Aardman’s co-founders looking to the future, giving control of the business to its highly creative and long-standing workforce was clearly a very suitable and positive way to move forwards.”

The employee ownership trust, effective from 5 November 2018, is run by a trustee board, made up of independent appointments and representatives selected by the workforce and the organisation’s board. David Pester, TLT’s managing partner, has been appointed as chairman of the trustee board.

From this website: http://employeeownership.co.uk/resources/reports/

A joint statement released by Lord and Sproxton, ended: “The statistics show that employee owned companies are significantly more successful than conventionally owned companies. So we are very excited by the prospect of seeing Aardman roll far into the future under this arrangement and can rest easy that those four decades which have slipped by have paved the way for many more years of great creativity.”

 

 

 

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Contract workers, freelancers and consultants are joining or setting up co-operatives

The combined annual turnover of co-operatives in the UK increased from £35.2bn in 2016 to £36.1bn in 2017 while a record 13m people are active members, according to news of the latest annual report put out by Co-operatives UK.

Earlier this month, Michael Pooler reported in the Financial Times, that contract workers, freelancers and consultants are joining or setting up co-operatives – companies owned by their workers or customers, rather than by outside investors. He gives two case histories:

Open Data Services

Kadie Armstrong was a freelance worker who had the opportunity to join a co-operative earlier this year. She joined Open Data Services, a prosperous business of analysts and IT professionals that provides services and develops software promoting open data resources. Her comment: “Being able to voice opinions and help shape the work and working environment without concern for hierarchy and powerplay is just great”. Its co-founder Steven Flower said: “We were all contractors and freelancers beforehand. We wanted to pool our knowledge and resources and form a company”.

Open Data Services is part of a network of co-operatives founded in 2016 called CoTech that sell technology and digital services. CoTech’s members employ some 250 people in co-operatives that have a combined revenue exceeding £10m.

Care and Share Associates

Stephen McKay has worked in social care for many years but since joining Care And Share Associates (CASA), an employee-owned limited company, for the first time has felt properly valued and listened to by his managers. As a staff representative on the company’s consultative body he can put forward views and ideas from the staff to joint meetings with the board, and hold them to account.

Despite restraints on funding for the care sector, Mr McKay says he is paid better than counterparts at many other private sector companies or charities, including support workers from other organisations who work in the same care home. He earns £8.35 per hour, compared to the national minimum wage of £7.83 for over-25s. Co-operatives are not insulated from difficult decisions. When managing director Sharon Lowrie took over earlier this year Casa was losing money. Redundancies were made and the company is now back in profit.

Michael Pooler writes: “A longstanding barrier to becoming a co-operative has been the ability to raise capital, whether for big investment projects or to use in times of financial distress. One way around this that has taken off in recent years is community shares”. His reference to community shares, which local service users or customers can buy, as a recent development is surprising – but perhaps this is just a change of name – shares in co-operatives have been sold for many years.

He comments that in an age of populism fuelled by discontent over economic inequality and the perceived failures of globalisation, those in favour of co-ops say they offer a more inclusive way of doing business and fairer distribution of wealth.

 

 

 

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Act on early warning signs of co-operative failure and increase the chance of survival

The international co-operative movement has seen a series of catastrophic failures of large scale co-operatives in recent decades, such as the Saskatchewan Wheat Pool, retail co-ops in Germany, France and Atlantic Canada, banking in Austria and the near meltdown of the Co-operative Group in the UK.

‘When Big Co-ops Fail’ is a 2016 study by Peter Couchman (the Plunkett Foundation) and Professor Murray Fulton (Director of the Centre for the Study of Co-operatives, University of Saskatchewan).

It indicates that co-ops which fail present similar early warning signs. These include:

• falling silent on co-op identity,
• having managers with no interest or belief in the model,
• over-confidence
• and lack of board oversight

The paper suggests that the root of failure is being unable to understand the nature of a co-operative.

“The earliest sign is a co-operative which sees being a co-operative as a problem, not a solution”, they warn.

The research is based on analyses of crises at big co-ops. It found that directors who fail to understand their role in a co-op are likely to appoint managers who are not supportive fi the movement’s values and import mainstream solutions rather than adopt a co-operative one.

It ends by presenting the antidote to the problem

Acting on the earlier signs rather than waiting for the inevitable can dramatically reduce the loss of member value and increase the chance of survival. It can also reduce the damage to the co-operative movement of yet another cooperative going down in flames.

It is everyone’s business to raise the alarm when these signs are visible (Ed: as several of our readers did well before the 2013 crisis). Co-operatives do fail, and this should be acknowledged and discussed in a serious and thought-provoking way, in every context from day-to-day conversations to global conferences. 

 

 

 

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The Bank answers questions about its 2017 Values and Ethics Report

An August Save our Bank Facebook entry highlights a new survey from ClientEarth, which says: “The British public said quite clearly they want their banks and pension funds to avoid investments in fossil fuel projects and were surprised to learn that this might be the case.” The Co-op Bank is the UK’s only high street bank to exclude finance for fossil fuel extraction. That’s NO to coal mining, coal power, oil and gas extraction, fracking, tar sands pipelines…

Save our Bank is a campaign mounted by the Customer Union for Ethical Banking –  a co-operative, democratic member organisation that can hold the bank to account, campaign for a larger co-operative voice and buy shares in the bank to help build up the co-operative stake.

The Co-op Bank provided the following response to the four questions put to it by Save our Bank after reviewing its 2017 Values and Ethics Report. The bank has a good record of engaging with the Save Our Bank campaign as a representative of ethically motivated customers, and we appreciate them taking the time to respond. 

Response from the Co-operative Bank to the Save Our Bank campaign, 17th September 2018 (edited).

Thank you for taking the time to provide this feedback on our Values and Ethics Report and for your supportive comments. The continued success of the Ethical Policy is built on the support of informed stakeholders such as yourselves and your contribution as representatives of customers’ views is important as the Bank moves forward to a position of strength. Taking your points in turn:

1. In 2011 and 2012, before the bank’s recent financial problems were revealed, the percentage of finance opportunities declined by the Ethics team averaged 10% of those reviewed. This year, around 3.5% of business opportunities reviewed were declined, and the average in the five years from 2013 to 2017 has also been around 3%. Can the bank comment on the reasons for this change, and can it provide details of the percentage of ethical policy applications received and declined by type over this period, e.g. for small business banking vs larger corporate loans?

This change is driven by our renewed focus on small to medium sized businesses as the key focus for our business banking -, including credit unions, social enterprises, charities and co-operatives. The size, type and nature of these businesses mean that while all business application are screened, there are fewer referrals for a higher level of Ethical Policy. Of 648 business customer referrals to the Ethical Policy Unit 2015 – 2017 89% were SMEs.

2. The Values and Ethics Report notes that an existing customer was declined as it was involved in the fur trade. This indicates the Ethical Policy was breached in this instance – although this has been rectified, and we understand that no system can be 100% watertight. Can the bank provide more information about how long this business had been a customer of the bank, and when the businesses moved into a position of breaching the ethical policy? Does the bank consider that changes to process are needed to avoid such breaches occurring in future?

Although not a regular occurrence, it is possible for customers previously assessed as compliant with the Policy to move into a position of conflict if the nature of their business activities changes. Customer screening takes place at various times during the operation of their accounts, for instance as a result of a request for additional facilities, and not just at the account opening stage. We can’t comment on individual customers but can confirm that it during a subsequent screening that this issue came to light and the account was closed.

3. Can the bank consider providing more detail in next year’s report on customers turned away for reasons of risk management, particularly those reviewed by the Exit Forum? For example, type of business or organisation, type of issue raised, type of reason for account closure.

While we will consider this recommendation, it is important to understand that when accounts are closed for reasons of fraud and money laundering there are legal reasons why this type of disclosure may not be possible.

4. The report’s auditors, DNV, provide a ‘limited level’ of assurance, rather than a ‘reasonable level’ of assurance. Can the bank comment on whether a ‘limited level’ of assurance is sufficient to reassure stakeholders that the ethical policy is is being implemented to the highest standard, and on the implications of requesting a ‘reasonable level’ of assurance in future?

We believe the level of assurance provided is robust and sufficient to provide the right level of assurance for our customers.

See the replies in full here: https://saveourbank.coop/BankResponseValuesEthics2018

Save our Bank Gathering, Saturday 24th November

The annual get-together will be held in Manchester. It will be an opportunity for Save Our Bank supporters and members of the Customer Union to get together to discuss strategy for the coming year. The main theme for this year’s gathering will be ownership, and the practical steps which can be taken to campaign for and work towards returning the Co-op Bank to co-operative ownership, in whole or in part.

Details on the venue and how to register will be given in the next newsletter and on this site.

 

 

 

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Co-operative Funeralcare Band ‘in crisis’ as the Group withdraws funding and premises

The Co-operative Group has sponsored the Glasgow Co-operative Funeralcare Band for 100 years. The band was formed in 1918, drawing its players from the then CWS factories in Glasgow.

http://www.theco-operativefuneralcareband.co.uk/

The band has won the Scottish Championship a record 32 times, the National Championship of Great Britain title twice and All England Masters International title twice. They were runners-up at the European Championship, three times a podium finisher at the British Open (most recently as 2013) and claimed the Grand Shield. It has also won innumerable domestic honours — including five Scottish Open successes.

But though the Group announced better results with Funeralcare revenues growing by 3% and market share increasing for first time in five years, it has announced the withdrawal of a century of financial support, requiring the band to vacate its rehearsal premises in Newhouse in North Lanarkshire “with immediate effect”.

The Co-op CEO said: “The matter has since been brought to the attention of Co-op Chief Executive Officer Steve Murrells, who explained that the Co-op was, ‘…in the process of re-assessing our entire expense base, from bottom up. This is the only way we will establish a model of operating that ensures that our Coop is sustainable and we can continue to invest in both our colleagues and the communities in which we operate’.”

Former Band Chairman Ronnie Tennant, told 4BR (Four Bars Rest, said to be the world’s most visited brass band website) that he and other high profile supporters were made aware of the situation in the last few weeks, and have since undertaken a determined effort to find a solution to what could be a potentially terminal outcome.

 

 

 

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Were activists or imported executives responsible for the Co-operative Group’s ‘management and governance’ failure?

A few years after the event which eventually triggered the setting up of this site in 2011, a group of  co-operators concerned about the ‘corporatisation’ of the large societies, involving loss of members’ control, began to correspond. Several had been concerned about the Co-operative Group’s failings in management and governance.

After going through the usual channels to no effect they had no option but to express their concerns in the Co-operative News letters column.

The general message was that active members were being sidelined, ignored and even removed from committees and boards. Executives were being recruited from mainstream business with all the conditioning that entailed. Their brief induction at the Co-operative College failed to have the intended effect.

Sir Christopher Kelly (right), a Senior Non-executive director of the Board, whose 2014 report was also about ‘Failings in management and governance’, came to a very different conclusion.

He said:

“The composition of the Co-operative Group Board, and the limited pool from which its members were drawn, made a serious governance failure almost inevitable.

“The current approach to the election of non-executive directors has conclusively shown itself incapable of producing a Group Board with the necessary governance competences or the business and technical skills required for successful stewardship of the Group’s assets.

“It promotes activists with concerns about issues important to those who elect them, not individuals with skill sets relevant to overseeing the business.

“Nor is it realistic to expect these shortcomings to be rectified by training, even if the training is more effectively delivered than appears to have been the case here.

“The Regional Representatives may be well-qualified to represent the views of members and customers or to be guardians of co-operative principles. But Boards of major organisations have responsibilities which go much wider.

“Many of the individuals put much time and commitment into their role as Board members; but without appropriate skills and experience they are unlikely to be able to exercise appropriate oversight of a £13 billion conglomerate comprising such a disparate set of businesses”.

The general message from activists was that active members were being sidelined, ignored and even removed from committees and boards and that executives were being recruited from mainstream business with all the conditioning that entailed. But Sir Christopher Kelly, on the other hand, asserted that activists with concerns about issues important to those who elect them were being selected, not individuals with skill sets relevant to overseeing the business.

As Graham Bober asked in the comments section following another post: “Was it our commitment to our ideals that led to the bankrupting of our model, or the exploitation of our values by executives who had, and have little perception of our great cause?”

 

 

 

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The Co-operative Group is under formal investigation by the Groceries Code Adjudicator

The FT reports that since March, the Groceries Code Adjudicator (GCA), Christine Tacon, has been investigating alleged mistreatment of suppliers by the Co-operative Group, her former employer.

There were complaints that the Co-op dropped suppliers without fair notice, levied unfair fees on them, delisted products and changed quality control procedures. One in five suppliers of the Co-op did not agree that trading relationships were conducted in “good faith and without duress”. The Co-op admitted failures and said it had taken action:

“We acknowledge that we have fallen short and have been discussing the two issues raised with the GCA for some months. We have already taken decisive steps in line with our commitment to ensure the fair treatment of all of our suppliers.”

The Group has strengthened systems and processes, retrained 450 staff and written to its 1,500 direct suppliers to seek information on delisting decisions that they believe may have been taken without appropriate consultation. It has also reviewed every case where a supplier was charged for benchmarking and quality control and refunded 110 suppliers approximately £500,000.

Jo Whitfield, chief executive of Co-op Food, said: “We care deeply about our relationships with our suppliers and we are very sorry that in these two areas we have failed to live up to our usual high standards. We are already addressing the issues with the GCA and our suppliers and we hope the investigation will help bring to light any additional cases so that we can put these right as quickly as possible.”

This is the second inquiry undertaken by the adjudicator and the first since it was given the powers to fine supermarkets up to 1% of their annual sales in 2015. In the case of the Co-operative Group, such a fine would amount to about £70m.

It remains to be seen if Christine Tacon (right), will be able to improve the behaviour of giant retailers. James Hurley in the Times refers to her ‘scant resources’, earning more than £75,000 for a three-day week, with ten regulated retailers paying a combined £2 million levy to fund her office’s activities and a team of six is seconded from other public bodies.

The most important cogs in the chain, food producers, cannot access GCA services or any comparable means of obtaining redress.

 

 

 

 

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