Ursula Lidbetter on accountability, Edgar Parnell on executive selection

The chairman of the Co-op Group earlier reflected on the way in which members can be protected and co-operative democracy remain robust and meaningful.

Though many independent co-operative societies have a sizable democratic deficit, Ms Lidbetter has written about ‘process’, in particular, the problem of making significant decisions which can have a major impact on the society, but which cannot be decided by the membership as a whole because of commercial confidentiality issues:

  • “Members have elected directors to represent them and should take an interest in their character, capabilities and track record. If members are confident on these matters then to a large extent the directors have to be relied on to look after members’ interests. If members don’t believe this is happening, they should replace them.
  • “Secondly, after a major decision has been taken and members have been informed it is perfectly proper and beneficial to ensure that there is an opportunity at members’ meetings to discuss the decision which was made and the reasons for it; members should take an active part in this in order to judge whether their directors made the decision in the members’ interests” (Ed. and then act accordingly)

She advises that members should be engaged and educated about their society and helped to understand the philosophy, business direction and trends; decisions made should fit into a coherent framework and so be better understood and accepted. (A similar debate is raging in the plc sector about shareholders and their lack of interest in holding to account the companies they own.)

John Gapper asks whether the Group can survive if decisions continue to be made without the necessary scrutiny from the ultimate owners – as has been the case for many years.

Edgar Parnell on selecting co-operative executives

edgar parnellNew readers can read a short account of Edgar’s remarkable range of experience and responsibility on the Plunkett Foundation Fellows’ page.

When people set-up or join a co-op they do so because they want to get a better deal, an organization that they can always trust to do right by them, and to help provide themselves and their families with a better future.

The function of a co-operative is to intervene in a specific marketplace in the best interest of their members; co-ops need to be run by people that are passionate about doing this. Yes, we need to pay executives a competitive rate for the job we want them to do, and for that matter we need to similarly reward our directors too.

However, they must deliver what the members want and not just perpetuate the shoddy tricks and marketing ploys that are the currency of many of the other players in the marketplace.

Time and again, in several different countries, I have witnessed co-ops buying-in such executives only to find that within a few years the co-op has either ceased to be a co-op or it has run into financial difficulties.

Why do so many directors of major co-ops think that they can recruit top executives that have no understanding of, or commitment to, the co-operative form of enterprise and expect them to be successful?

I can only speculate as to why so many co-op directors come to believe that if they pay a big enough salary then they will somehow get a person with no understanding of the co-operative enterprise model or of the specific management systems needed to run a successful co-operative. Of course, it could be that they too fail to properly understand the co-operative enterprise model.

Research by the High Pay Centre reveals that about 80% of CEO appointments in the world’s largest companies are internal promotions. Co-ops need to grow their own top executives and member-directors, and this requires that we invest in developing a pool of future leaders, all of who need to be fully schooled in the co-operative enterprise model. #

To learn more about Edgar’s description of the co-operative enterprise model see: www.m-centerprise.org

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