The Phone Co-op Limited Perspectives on Governance E3M Seminar - - PowerPoint PPT Presentation

The Phone Co-op Limited

The Phone Co-op Limited

Perspectives on Governance E3M Seminar London, 18 Setpember 2014

Vivian Woodell Chief Executive, The Phone Co-op

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The Phone Co-op Limited

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A personal perspective

• Some reflections on what makes for effective

governance and what can go wrong, after 30 years of experiencing both good and bad

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What does governance in a co-

• perative need to achieve?
• Co-operativesUK recently said governance

needs to provide the right balance between:

– Voice – Representation – Expertise

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How can that be made to work effectively

– Several iterations of a corporate governance code for consumer co-ops – They mainly focus on having the right Structure and Process – The problems we have seen recently underline the equal importance of having the right People and Culture

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A personal perspective

• First experience of governance was local

consumer co-op in 1983

• I put a motion on South African goods
• Someone talked to me and got me interested in

standing for the board

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Early experiences

• A number of us formed a pressure group aiming

to take the Co-op back to its original values, reinterpreted for the 1980s

• We raised awareness of the Co-op and its

potential

• Two years later, we started to win board seats.

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Early experiences

• At this time, the local Co-op was losing money

and had no membership strategy or overall vision

• Corruption was common across the Movement
• Management was openly cynical about

membership

• The Co-op was a microcosm of the left

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Members taking real power

• Progressive members became the majority over

a number of years

• However long before that we were able to

change the management

• We appointed a new CEO who had vision for the

Co-op

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Members taking real control

• After turning the business around he started to build a

real co-op

• Putting the values into practical action, making stores

reflect them

• Worked with Canadian, Tom Webb, to introduce concept
• f “MOCA”, Marketing our Co-operative Advantage.
• The new CEO (Bob Burlton) became a Movement leader,

and as Chair of Co-operativesUK introduced the first governance code

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Member pressure leads to business transformation

• The “MOCA” concept stores and brand

contained many seeds of the new Co-operative Brand.

• Business was turned around. Membership taken
• seriously. We took in another failing society that

had been run by a despot.

• Eventually, another merger created Midcounties

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But it was still hard for elected members

• Management (especially the traders) often didn’t

take board members’ ideas seriously

– “Yes, I’ve read all the textbooks too”

• I wanted to prove them wrong and demonstrate

that you could make a business more successful by being more co-operative.

– A key motivation for starting The Phone Co-op

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So what was it like on the other side

• f the table?
• Realisation that people act into roles more than I

thought

• Despite wanting to do things differently I

sometimes found myself getting into some of the same dynamics I’d wanted to change.

• There is a risk that governance structures can

foster adversarial behaviour

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So what does governance at The Phone Co-op look like?

• A consumer co-op – members elect the board

– Size has changed a couple of times but settled at 7 – 3 year cycle. Chair can’t serve for more than 9 years – Restriction on number of employees and materially dependent suppliers – 10 meetings a year approx, 4-5 face to face, 5-6 by telephone conference.

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Other stakeholders get a look in too

• Although we’re a consumer co-op we want to

engage other key stakeholders

– Employee Council, 5 people elected by staff – Ethical Policy Committee (staff and board)

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Engaging members

• We try to make our meetings accessible to as

many members as possible and involve them in a genuine dialogue

– Half-Yearly meeting was used to develop engagement – Members can join by phone – Extensive reporting – Surveys, consultation on big decision

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Governance challenges

• Not that many members will get deeply engaged

in something that only affects one area of life (but 30% turnout in board election)

• Employees haven’t always rushed to stand for

Employee Council

• Board-Management relationship goes through
• phases. Not always straightforward

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Governance challenges

• Sometimes honesty with the board can feel like

a mistake (I don’t think it is though)

– But I do understand why other CEOs have sought to “manage” their boards.

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Governance at Midcounties

• At my first members’ meeting, 39 votes needed

to be elected

– Now typically 15,000 (50,000 vote out of 500,000)

• Board is active and engaged
• Unitary board – regions abolished
• AGM can have 500+ people
• Half-yearly meetings more

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Governance at Midcounties

• Business is regional in character but Energy

and Childcare businesses present a challenge

– Exploring idea of specialist elected forums

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Key relationships

• CEO/Chair
• Other directors/CEO
• Board/Management
• If these aren’t working well you have a problem

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Perspectives on the Group’s problems

• The recurring theme in consumer co-ops in

recent decades

– Inability or unwillingness of boards to rein in dominant CEOs – There were many scandals

• President and CEO in prison in one

– Many more unreported ones

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Perspectives on the Group’s problems

• 3-tier structure was flawed

– Led to a route to election to the main board which eliminated many good candidates – Resulted in a weak board, mostly unwilling to challenge the CEO – In fact no one wanted to challenge what was happening because it was difficult and could endanger their position.

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Perspectives on the Group’s problems

• In the Group, eventually all 4 components were

wrong:

– Ineffective structure – Process made directors weaker than they should be – Culture was cynical and complacent – Wrong people were in office, both in management and board.

• How the CEO came to be there is a lesson in itself.

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Perspectives on the Group’s problems

• New model draws on “supervisory board” type

structure

– Successful in Germany and elsewhere

• Good points: clarity about what each

governance level should be doing

• Bad points: may be just a management putsch

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Perspectives on the Group’s problems

• Under the new structure, if it goes well we could

have

– A workable structure – A much more transparent process that’s trusted – We turn a new leaf and the culture feels genuinely co-operative – Highly qualified co-operators take the reins

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Perspectives on the Group’s problems

• But if it goes wrong, there’s a risk that we could

end up with

– A structure that bakes in conflict – A process that is easily manipulated behind the scenes – A continuing culture of cynicism – People who don’t understand co-operation running the business

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Perspectives on the Group’s problems

• I’m not saying that will happen
• Just that there’s a risk which co-operators need

to guard against

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Conclusion

• Governance is about how groups of people get

good at organising their affairs together

• Often Structure and Process are presented as

way to guide the People and Culture

• Arguably People and Culture eat Structure and

Process for breakfast…..

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Questions/Discussion

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How to contact The Phone Co-op

• Contact details:
• www.thephone.coop
• Tel 0845 458 9000
• Fax 0845 458 9001
• enquiries@thephone.coop (general)
• vivian@thephone.coop (Vivian Woodell)

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