Anthony Murray

Governance of Large Co-ops

Big in co-operative news right now is the troubled leadership of the Co-operative Group. Controversy has consumed the group’s management and led to the resignation of its leader, Euan Sutherland. One of my favorite reporters on the topic, Anthony Murray, has been following the developments closely for Co-operative News. He reports that fault lies with the directors, described in an analysis report. But doubt has been cast on the governance of large co-ops in general, and some have questioned their sustainability.

How does governance of large co-ops work successfully? Without knowing how widespread the co-op model is, one does wonder. But there are a variety of successful solutions. Murray has some answers in an article showing that co-operative governance works at scale. The article links to a very interesting report by Professor Johnston Birchall called The Governance of Large Co-operative Businesses. Birchall points out in the introduction that 1,465 co-operatives worldwide create over $100 million in annual revenue (or turnover).

The answers to governing large co-ops, Birchall explains, are diverse and difficult to define in discrete categories. To begin with, worldwide co-operatives have many different ownership structures. In general terms, the sponsor of the report Co-operatives UK, has developed some general quality standards in a “Corporate Governance Wheel,” the hub of which is: A. Focus on the purpose of the co-operative. Then in a continuous circle around this purpose is: B. Carry on the work of governance in an effective way; C. Perform effectively in clearly defined roles; D. Ensure appropriate and effective member participation; and E. Develop the capability of the governing body to be effective.

As for the Co-operative Group, Murray reports on how the future board may look. The new management structure being considered could consist of a Vorstand model. This is a structure that includes a supervisory board that oversees the management board. Supervisory boards can be found in successful large co-operatives that Birchall analyzes including the Zen-Noh co-op in Japan, the Fonterra co-op in New Zealand, and the SOK co-operative group in Finland.

Co-operatives — large and small — are ubiquitous and governed successfully worldwide, as Birchall’s report makes clear. More research like this will build a broader understanding of co-operative models, as diverse as they may be, and build their reputation as practical business solutions.

Co-ops and Political Change

Co-ops could and should affect political policy. This is the thinking that I’ve read from several perspectives recently. And in a recent Co-operative News article linked here, the word manifesto is used to promote change.

Anthony Murray, a co-op focused journalist who also works with the International Co-operative Association (ICA), wrote the Co-operative News article which focuses on a recent meeting (in Britain of course) to address co-operatives being part of a social movement.

What happened at the meeting suggests that co-ops are part of a large social movement. The meeting was led by the the Social Economy Alliance. Six papers are outlined in the article that aim to modify government policy. Each paper offers co-ops as part of a solution. Central to what the government must do is address social concerns — a strong theme throughout, rooted in socially-based business models. Here’s a quote from proposal 4 called The Bare Necessities: Making Markets Work: “Social, co-operative, mutual and community owned enterprises are the key to the solution, sidestepping the struggle between statist intervention and private profiteering through real people power. This is good old-fashioned entrepreneurship grounded in a genuine connection and commitment to the community.”

In the US, others are discussing a larger change, too. Two notable experts come to mind: Gar Alperovitz and Marjorie Kelly. Alperovitz is author of America Beyond Capitalism. He suggests some kind of systemic  alternative is needed to the system of capitalism. Kelly is author of Owning Our Future who has a great term for a new kind of economy called a generative economy, as opposed to standard capitalist markets that are extractive.

The group in the UK is trying to tackle these issues, and its efforts pose something very significant by appealing to government. Richard Wolff, an American economist, says there is an inevitable political presence co-ops will have as they start to scale up. More about him in my next post.

Co-ops linked with policy and government present a real solution for society. Time will tell what kind of broader acceptance, and challenge to them, will take place.