MAY 2018

REVIEWS
Review: Johnston Birchall on co-operative governance
Johnston Birchall
(Co-operatives UK,
s.coop/26coa)
The second edition of Professor Johnston Birchall’s
The Governance of Large Co-operative Businesses
takes a look how the world’s 60 largest co-ops
“ensure that their customers, employees and
suppliers have meaningful influence”.
It follows a renewed focus on governance in the
movement, prompted by high-profile crises such
as the demutualisation of the UK Co-op Bank, and
challenges such as volatile global markets and the
rise of big data – although, the report says, co-ops
have “a relatively good track record in governance”.
Prof Birchall says this is an important moment for
governance for another reason: “More people are
beginning to appreciate the co-operative difference,
and to see member-owned businesses as an
alternative to investor-ownership.
“This makes the occasional co-operative failure
even harder to bear, because with it go the silent
hopes of people who had a suspicion that there
might be a better way but who now feel let down.
For these reasons, it is imperative that we make sure
co-operatives are as well governed as possible, and
that we learn by our mistakes.”
With that in mind, the report offers “a more
systematic and analytical account of comparative
governance ... to present practical considerations
for the design and redesign of good governance in
co-operatives”.
Prof Birchall considers the merits of membercentred
and multi-stakeholder approaches to
governance and stresses the importance of giving
equal weight to member voice, representation and
expertise. He goes on take a sector-by-sector look at
the world’s biggest co-ops.
It’s also vital to adapt governance as a co-op
changes, he says, pointing to regular reviews of
regional representation in US agri co-op Land o’
Lakes to match changes in the number of members,
or the way Arla Foods adjusts its governance to
represent new members as it expands.
He advocates member councils to ensure effective
representation in large co-ops, with “authority
distributed so the member council and the board
can each get on with doing what they do best”.
“There should be some tension between the two
bodies,” he adds. “The council should have some
powers, such as having places on the nominations
committee, being able to approve annual accounts,
and endorsing strategic plans.”
And he suggests holding meetings between
expert boards and members to ensure effective
communication of members’ wishes.
MAY
The Fall of the Ethical Bank: how
a large group of decision makers
believed their own hype – and got it
spectacularly wrong.
48 | MAY 2018