12 December 2013
The Co-op scandal has damaged its reputation and the Group’s latest bid to restore it, in the form of a Governance Review and the appointment of a non-executive director, seems like too little too late.
Lord Paul Myners has been appointed as a non-executive director (NED) with the title Senior Independent Director and will chair the Governance Review, with immediate effect. According to the Co-op Group, Lord Myners will be responsible for looking into the Group’s democracy and consider how the board is constituted and chaired.
However, speaking to Governance & Compliance, Barnaby Fry Managing Director of MHP Communications commented on the beginning of a turnaround: 'Often these appointments are considered too little too late, but in this case, the calibre of the candidate is such that it can only have a positive effect and be seen as the beginning of the end of the crisis'.
He added that ‘strong leadership and a resolve to effect considerable change in the process and ethics of the business is essential. This is the opportunity for the Co-op to lead on the front foot and prove it’s a business with credible leaders at the helm.’
How this appointment and the consequent review will affect and shift Co-op’s reputation as well as public trust for the better remains to be seen. Fry said, ‘the damage to Co-op is very different to the usual story of ‘fat-cat’ excess that emanates from boardrooms. There is no excessive pay, but a story of incompetence and bungled appointments. Of course there is damage to the brand from the revelation of Flowers’ personal antics, but the credibility of the bank and its management was arguably more damaged by the fact that a man who ‘ran’ a bank didn’t even know its balance sheet and was seemingly appointed with little checking of his true banking credentials. It exposes the Co-op as a political organisation, not a business organisation and therefore its ethical image can only suffer as a result.’
Last month saw Len Wardle resign as chair of the Co-op, as a result of the scandal that imploded in the company’s face, initially with regards to its handling of finances but snowballing due to controversy surrounding Paul Flowers’ drug allegations and job incompetency.
Commenting on this development, Fry said that any high profile resignation would help to draw a line in the sand on any crisis – but it needs to be justified. ‘A hasty move to the exit by a CEO or chairman can be more damaging as people understandably ask the question of what else they are trying to hide as they try and draw the fire of the media snipers. In the case of the Co-op, the chairman’s exit did seem to calm the media clamour but unfortunately for the Co-op’s overall brand, it may prove to be too little too late as the numerous investigations and reviews will keep resurfacing the story for many months to come.