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Commission Paves the Way for Co-operative Success

Delegates to this year's Co-operative Congress in Glasgow heard that significant progress has been made in implementing the recommendations of the Co-operative Commission, launched in 2000 with the endorsement of Tony Blair.

David Pitt-Watson, Managing Director of Hermes Focus Asset Management and former Assistant General Secretary of the Labour Party, who was a member of the Co-operative Commission, presented the review of progress to co-operators. He explained that 43 out of the 60 recommendations had been fully implemented, with a further 14 recommendations well on their way to being completed.

The Commission was chaired by John Monks, Leader of the TUC, and its aim was to ensure that the Co-operative Movement is as successful in the next 100 years as it has been in the last 160.

The central thrust of the report of the Commission was about the need to improve commercial performance to meet co-operative and social goals.

The review showed there had been a clear improvement in the Co-operative Movement's profitability, which has come about, in part, as a result of greater productivity. For example, the decision of co-operative societies to accept one recommendation and to join the Co-operative Retail Trading Group had created a significant opportunity for business improvement.

"We should feel proud that all societies with a food retail business have put co-operation ahead of short-term control and joined the CRTG," says David Pitt Watson.

Another example of business synergy taking place, highlighted by David Pitt-Watson, was the bringing together of The Co-operative Bank and CIS to create Co-operative Financial Services (CFS), now the primary financial services provider for a broad range of co-operative customers.

"But has business success resulted in better social performance?" asks David. "My answer to that would be yes. First and foremost with the re-establishment of dividends."

Today the dividend is being re-established across the Movement, and with it one of the key justifications for co-operatives - a financial return for the owners of the business, the co-operative society's members.

Indeed there is now a lot of work being done across the Movement on the issue of membership. For instance, the Co-operative Group, as part of its membership programme, is building a state of the art solution to accommodate society specific, or cross society schemes, with a shared dividend card.

Since the Commission Report, many fantastic new ventures have been initiated (and a good deal of these with impetus from the Co-operativesUK New Ventures Panel - another Commission recommendation). For example, co-operative solutions to public service delivery (such as social care and co-operatives for recipients of direct payments), are now being considered by over 30 local authorities.

"Commercial success has generated social performance, a dividend both for the individual and the community - progress indeed," says David.

Finally, the Commission stressed the importance of good corporate governance. It is important that co-operatives preserve their democratic structure of representing their members on the Board, but equally the Board needs to incorporate senior executives, or executives charged with driving the business, and expert independent directors.

The Co-operative Group has already taken a step forward by appointing three independent non-executives to Co-operative Financial Services and it has seen the benefits - "each of these directors has added significantly to the effectiveness of the financial services subsidiary," is the comment from the Co-operative Group. The new Co-operativesUK Corporate Governance Code of Best Practice incorporates the issues raised by the Commission.

Since the Commission Report, there has been a profound restructuring in the business of the Co-operative Movement, a large increase in profitability and a considerably greater delivery of social benefit as a result.

"But the Commission could only ever be a catalyst," concludes David Pitt-Watson. "One that could help release the dynamism of the Movement and that would help it rededicate itself to the virtuous circle of co-operation."

A lot has been done but there is much still to do.

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