Case Study: Member Input Crucial to Rebuilding Co-op Image

The Cooperative Group
Manchester, England
Year founded: 1863
Number of members: 8 million
Number of staff: 70,000
Total number of retail outlets: 3,750

What it’s like to have local co-ops be a large part of daily life? We look to The Cooperative Group, located in Manchester, England for one answer to that. Their co-op gradually grew over the course of 150 years to be one of the United Kingdom’s largest retail business groups. It is the go-to place for electronics, durable goods, groceries and gas, and their services include travel planning, legal assistance, insurance, and funeral care. The co-op has over 3,750 retail outlets, and boasts 8 million members and employs 70,000 people. Their slogan is “Here for you for life.”

In 2006, the cooperative was named the “most trusted brand” by consumers in England. The Cooperative Group had led the charge on many positive economic and social initiatives, regarding business ethics, fair trade and environmental activities. It was considered one of the best integrated business models in the world and a great example of how cooperation works to benefit local economies and communities.

However, a series of bad business decisions and governance actions not in the best interest of members caused the co-op to flounder, its stellar reputation shattered. In 2013, as a result of bad debts stemming from their Britannia bank acquisition, the co-op lost 662 million in British pounds and The Co-op Bank’s bonds were declared “junk” status. In the resulting fallout, the co-op’sCEO at the time quit because he said the board was “ungovernable.” The Cooperative Group was excoriated in the press, and members were angry.

Their story became a cautionary tale of what happens when co-op governance ceases to be accountable to co-op owners, and democratic process goes awry.

casestudy_quote_0To their credit, co-op leaders at The Cooperative Group have decided to take up important reforms in their cooperative, among them changing the organization’s governance structure to be more inclusive of member input. The new structure includes the board of directors, a membership council, and a senate, elected by the council, to act as coordinators of the board, council, management, and members.

Ursula Lidbetter, chair of The Cooperative Group said, “This is a momentous and defining moment for The Cooperative Group and I am delighted that our members voted in favor of this much-needed radical reform to our governance structure. These reforms represent the final crucial step in delivering the change necessary to return the Group to health.”

In addition to restructuring the co-op’s governance, The Cooperative Group also launched a program called Have Your Say to put the views of members at the center of the co-op’s strategy and purpose. It is part of a three-year rebuilding plan to increase participation of members and local communities. As part of the program, co-op leaders learned that ownership matters to their members, and they have work to do to rebuild trust and loyalty. But they are heartened that a recent survey said that 86% of respondents still feel favorable toward the co-op and that it is trying to do the right thing.

Richard Pennycook, the co-op’s current CEO said, “The response to Have Your Say was overwhelming and the findings give us a great deal of encouragement and demonstrate the resilience of the Cooperative brand. It is clear that the organization has a special place in the hearts of the British public, who want it to thrive. They support our determination to provide a real alternative to big business, championing local issues in local communities.”

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By |January 1st, 2015|Categories: Case Studies, Solutions|

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