Octobers National Council.
This blog was written not long after the Octobers meeting, and then I forgot to post it. So apologies for the late report.
There were several very interesting speakers at Council. Alan Leighton and Ian Ellis the Chair and Finance Director gave an update on the first half year trading performance. The results can be found here. Alan said that he was comfortable that we were on plan and Ian sounded confident. So far so good. But as one of my colleagues on the Council pointed out an underlying profit of £14m on revenues of £3,4bn leaves room for improvemnt.
Alan mentioned two things I thought were significant. He praised our apprentice scheme that was on track to take 1000 young people, pay them a wage and train them. So far, we have a retention rate of 80%. We were informed 20% is more the norm. He also saw a greater role for our school Academy programme, linking in with our apprentice scheme and then taking them onto full-time employment. The Co-op making a real difference to our communities and lives of young people. He has an aspiration for more Academies and I for one would welcome that.
We had an interesting update from Alyson Chadwick and Rob Bulmer on the rebuilding of our Co-op. This is planning and thinking about new business ventures. Clearly at this stage, these remain confidential, but I was pleased that they shared their thoughts and asked for members to be a sounding board when the plans come into focus.
Finally, we had an inspirational update on our Funeral and Legal businesses by Robert Maclachlan, the CEO of Funeralcare. Things were going in the right direction for both businesses. New digital offers were working, and we were seeing the average age of those who bought online being 4 years below our walk-in customers. Digital is part of the future and the Co-op in both Funeralcare and Legal Services is starting to be cutting edge.
Alan was asked a question on Dividend. When would it return? He replied that 2018 is when we had agreed. He then threw a question out to the Council to consider. Was an individual dividend the most appropriate mechanisms for distributing profits.?
I think it was in 1965 when the Co-op started the Co-op stamp, a move away from true dividend, as all customers and not just members could collect them and redeem them in store. It was some 40 years later we re-introduced a true dividend which paid out to members a share of the profit. This was based upon the trade the members had with the Co-op and the level of profits we made. The average pay-out, even in a good year was around £10. So, for forty out of the last fifty years we have not operated a true dividend scheme.
Should we automatically go back to a dividend scheme? One of our principles is member economic participation. Can we fulfil this principle by another means? Let me start answering that question by thinking about what is membership. Members pay a £1 to join for life. Then they can access the 5% members discount and hope to get a dividend if we make a profit. I think we give our membership away too cheaply. Most people don’t view it as being a member, with all the rights and responsibilities that come with membership. Have a look at our voting figures. A turnout of less than 3% at the last AGM. Most people see out membership card as a loyalty card, nothing more and mothing less, a very good loyally card to boot.
If you give something away too cheaply, it becomes worthless. My co-op bookshop charge £10 to join. Football Club United of Manchester charge £15 per year to join. Perhaps it’s time to redefine what we mean my membership. If we charge a meaningful rate then we would then have to redefine our membership offer, to ensure it is worthy of its name. Members should have access to better and more relevant training. They should be involved in our local trading outlets, with regular events held locally, working with their stores, not waiting for event to happen to them.
The dividend must also change. We simply do not make enough profit to make a sizable return to our members. An average pay-out of £7-10 will not redefine the Co-op as a Community retailer. Whilst we must protect our Independant Society members, I think an individual dividend dilutes our message.
I would like to see the creation of a social dividend fund, where our surplus can be pooled collectively into a mutual fund. The fund could either be an endowment fund, where over time we accrue sufficient capital, so we can spend the interest, or a fund that we spend year on year. The purpose: to support our communities in Co-operative projects, one that is large enough to make a substantial difference.I for one would invest it in education and training of our members. Educating members why the Co-operative buiness model is the way of the future.
I welcome your thoughts.