Transparency as a virtue: Coops Vs Unis

Lord Myners has produced the report he was commissioned to write by the Co-operative Group, and a decision has been made to adopt it. A summary of the report and a link to the full report is available. We have witnessed a very healthy debate about the purpose and future of the business that many universities could do well to learn from.

Myners on co-operative discord

Myners paints an unharmonious picture of the Co-operative Group Board, where different people see business problems in different ways, as summed-up by this lovely quotation in a recent BBC article, from an unnamed director at the Co-op:

“some want a dividend, some want low prices, some want to do social good and some want free range chickens”

These caricature positions are not inherently unreasonable in isolation, but they do speak to a lack of strategic focus within the organization’s leadership, and have probably contributed to the spate of bad-news stories about the Group that have featured in the press over the last few months.

Universities can be discordant, too

Discordant and disharmonious views between senior managers have their parallels within universities, where it would not be untypical (to paraphrase the example above) for one Dean to want to keep a larger share of income earned over target within their Faculty, another preferring lower attributed costs, one to want the University to invest in an Arts Centre and yet another to want 40% of academic staff time free for research. However, and importantly, in a University these positions are more likely to be played out at ‘executive board’ level (properly, at Senate, but more likely at the Vice Chancellor’s senior group).  This sort of discordance is less likely to feature strongly at the University’s governing body, which, if the Committee of University Chairs’s (CUC) guidance is followed, is likely to hold the executive to account in a quite a businesslike way. The fact that such diametrically-opposed positions are held at Board level in the Co-op Group calls into question the strategic direction of the Group, and its ability to hold the Executive to account in a meaningful way.

However, whereas discord is largely relegated from university governing bodies (and often from Senates, too), discord is allowed to the highest levels in the Co-operative Group. Does the financial success of UK universities compared to the current financial woes of the Co-operative Group mean that Universities are doing something right by suppressing disharmony, while the Co-op Group is doing something wrong by permitting it to be discussed openly?

Governance, democracy and financial success

Myners diagnoses these differences on the direction of the business as symptoms of a broken governance system. Myners’ criticisms of the Group Board members centre on (lack of) commercial competence, and on the democratic process that delivers inadequately skilled individuals to high office. The proposals consequently offer a vision of a Group Board with the necessary skills to run the business, with the democratic and membership-led part of the organisation encapsulated in a new ‘National Membership Council’.

From a business point of view, the Myners review has a lot to recommend it: the Co-op Group is a big and complicated business, and it ought to be better-run than it currently is. Governance is an obvious place to look for improved results: it is hoped that a smaller board will become less divided and more directive, and the other proposals about the National Membership Council and Nominations Committee, plus extending constitutional rights, are all aimed at improving outcomes through changes to the democratic state of the Group. However, the proposals do seem to decouple, and even sideline the democratic elements of the Group. No wonder not everyone is convinced, despite the balance sheet.

Meanwhile, in Universities, lay-dominated Governing Bodies/Councils, while in-tune with their organizations’ academic missions, firmly have the upper hand in financial, legal and related matters, and (generally) hold their organizations to account quite effectively. While there have been financial disasters, from Cardiff in 1982 to London Metropolitan in 2011, Universities have generally been financially sound, and are now presented as one of the UKs economic success-stories. The sector has developed organisations like the Leadership Foundation for HE and the Committee of University Chairs, and is very open about sharing problems, solutions, and data through organisations like UUK, BUFDG and HESA.

Healthy debate

Within the Co-operative Group we have witnessed a very healthy open and democratic debate about the future of the business, as befits a democratic organisation. The Co-op Group knows it has a big problem, and while it clearly was not as aware of its problems as it should have been, it is facing-up to its challenges in an admirably open way. Reports have been commissioned and published. Everyone involved seems to want the best for the business, but not everyone agreed on the way forward. A debate was going on, and the outcome was uncertain, but now the way forward is chosen, it is publicly acknowledged. The big issues were not permitted to be ‘swept under the carpet’. Too much depends on the business’ success, within the most competitive groceries market in the world.

In recent times, LSE made a similarly impressive move towards openness, with the Woolf report into the Saif al-Qadafi affair, but the organisation was not compelled to act in that way, and could have chosen a different path. LSE deserves credit for handling that affair in the way it did, but while that case was an astute move to avoid further reputational damage, there are other cases where university managements have been held to lower and less accountable standards. Universities have become managerialist without debate. Conversely, Co-op Group has this sort of openness built into its structure, and has now had a very public debate and decided to become a more managerialist organisation at Group Board level.

Transparency as a virtue

It is a constitutional fact that management is held to a higher standard in a co-operative than in an university, and all stakeholders are involved. Universities might consider the organizational benefits of similar forms of openness and democratic debate about management issues, as they find in their own classrooms. Since transparency is universally held to be a good thing, CUC would be well advised to consider building in co-operative-style openness, accountability and transparency into the next iteration of its code of practice. Which University will be the first to openly debate these issues?

 

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