The Group CEO, Euan Sutherland, said in a statement that without "professional and commercial governance" it would be "impossible" for him to execute the changes he had planned. A 55 page rulebook, for a Group that has six million members, doesn't feel like too much on the face of it for a man with his CV, so I was interested to see what the story behind the story was.
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| "Professional and commercial governance" - Say it twice, say it thrice... |
The boiling point appears to have been the leaking of details around the CEO's proposed pay packet over the weekend, which materialised publicly in a stroppy posting by him on the Co-op Employee Facebook page, pointing fingers at colleagues trying to "undermine me personally". His only-recently-active Twitter went quiet after a bout of February activity, so perhaps his attentions have been on this matter a little earlier...
The Co-op has been as leaky as a porcupine's waterbed recently, with this snippet regarding outcomes of their "top secret" self-commissioned Board review, supplementing other sensitive leaks over the last year reported here and here, so clearly there are plenty of disgruntled paper-handlers in this unique organisation.
Regardless of the well-connected source though, a quick glance across the numbers leaked to the Guardian would be enough to sponsor a sharp intake of breath for anyone in financial services (a £2m pay-off for a HR head leaving after a year? Will Hutton breaks it out in this post, and the mind boggles!). That said, take a look at these terms of reference for the Co-op Remuneration Committee and tell me where you have seen self-perpetuating pay-puffer terminologies before: every other financial services provider perhaps?
The knives were out from early on with regards to the financial arrangements of Sutherland's new team though, with the spectacularly generous relocation package for one of his lieutenants drawn out by the press soon after his hiring. Perhaps he put some noses out of joint with his remarkable show of sartorial disdain on his first day - "...I came in, walked into this brand-new building, and I was not wearing a tie" - but he did say a few other things in that early-days Telegraph interview which appear to have turned around and bitten his kitten, such as;
- “It’s very valuable to have customers in the boardroom. And for the first time I think the group board felt they were involved in strategy.”
- “There have been some very big issues that we’ve worked through [with the board.] Not bank issues, other issues”
The thread that appears to be emerging for this Group is that its uniquely assembled Board is ill-equipped to deal with such manners in a technically professional and rigorous format, whether that be rolling over for the previous leadership while they made a string of horrendous strategic decisions, or the huffy, juvenile leaking of sensitive data when the new team has come in.
This is not to say that using mutual-style democracy to elect a functional Board of Directors can't work, but perhaps it doesn't work in financial services, where the stakes are higher, the jargon is less penetrable, and failure is catastrophic. I could certainly pick through the list of values and principles and find a number of institutionally-appropriate excuses for leaking confidential paperwork
From a pure decision making perspective though, should the shop-floor proles be allowed to mix with the MBA-laden executive class of the 21st Century corporate world in a way that affords this particular entity the luxury of competing against their more cut-throat rivals, while sticking to those core values and principles while paying off their massive debts?
If Lord Myners pulls a solution out of the bag for a quid (and he doesn't sound like he's shrinking to the task), they'll surely have to promote him to Marquis!
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