The Co-op and co-determination

The recent Co-op AGM saw the ringing endorsement of Lord Myners’ proposals for rectifying the ailing institution. Myners’ original report made for grim reading. “Lay” individuals were elected to the board who felt unqualified to be there and, therefore, could not contribute to decision-making or participate in the overall management of the company.

Now that Myners’ proposals have been approved, a debate is underway over whether lay representatives will continue to serve on the board – as the FT reported. There are concerns over whether these members are experienced and able enough to contribute to the strong leadership that the institution now needs. However, members worry that they will lose any kind of influence without lay representation.

Despite Myners’ findings, it would be a sad farewell to the UK’s single example of co-determination, (where ordinary workers play a role on boards and in decision-making) if the inclusion of ordinary members ceases, although its governance undoubtedly requires reform. This is a system that has formed part of German management practices since the 1970s. It would be incorrect to intimate that their economic success has resulted from this, but it certainly contradicts accusations that proper representation of employees could be a drag on performance. On the contrary, it seems that there is a moderate business as well as moral case for the representation of “ordinary” workers at senior management levels, to maintain a connection between the shop floor, literally in this case, and the leadership.

The issue with the Co-op seems to be that there was no consideration given to the differing levels of experience of board members, which stood in the way of effective decision-making. A third way may be to adapt the model as many German companies have done, operating a two or three tier model of management so that employees themselves can have an influence in the broad direction of the company, without needing the detailed knowledge necessary to run the operation day-to-day. A workers’ committee will often also sit within this hierarchy for consultation on decisions that affect them directly. Shareholder interests are also directly represented. At a time when the “John Lewis” model of employee engagement is capturing both public and commercial imaginations, the Co-op could lead the way in demonstrating how this system could be adapted for the benefit of UK businesses.

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