Re-connecting with your purpose – a good news story
We constantly read about organisations hitting the headlines for all the wrong reasons – scandals that range from misapplied technology around emissions reporting, overstating profits, rigging interest rates, unethical investments, inappropriate loans, mis-selling insurance. The list seems to be endless and in no danger of stopping. Are we in danger of succumbing to scandal fatigue – shrug our shoulders (‘not another one’) and be slightly less appalled as we hear about the latest household name to be exposed for wrong doing?
Good to hear how one organisation, which hit the headlines for all the wrong reasons, is now re-connecting with its core purpose and rebuilding its ethical resilience.
In 2013 the Co-op Group experienced its worst year ever since it was founded in 1884, with losses of £2.5bn, a reputation in freefall with the behaviour of the Chairman of the Co op Bank, Paul Flowers, and a Board deemed to be ‘manifestly dysfunctional’ according to Lord Myners.
Since then, Richard Pennycook (Group CEO) has worked with his team to deliver a 3 year programme, covering renewal, rebuild and recovery (they are now in this last stage).
A reminder of what it takes to be an ethically resilient organisation
a resilient senior leadership team who provide a considered response to the unexpected with speed and energy
consistency between personal and organisational values. Employees don’t feel there’s a disconnect between the values of their work life and their personal life.
consistency between ‘tone from the top’ and process (e.g. awarding incentives), including a consistent approach to ethical issues.
consistency across the organisation’s values – ‘what we say we do, is what we do’. Values aren’t thrown off track because of unexpected setbacks.
the organisation is resourceful and has insight. It actively demonstrates that it has learned from experience.
The measures the Co-op have put in place so far
a clear ‘tone from the top’ – Co-operative Group CEO Richard Pennycook has requested a 60% cut in his rewards package – with a salary reduction from £1,250,000 to £ 750,000. He says the business is now back 'in calmer waters' and the reduction reflects the revised demands of the current job. According to Co-op Chairman Allan Leighton, this is ‘the Co-op difference in action’. Leighton donates his fee as Chairman to the Co-op Charitable Foundation
the Co-op goes back to its ethical roots. Pennycook wants to remind people of the Co-op’s ethical values as a reason to choose it over its rivals. ‘ We need to be better about telling stories about why we do it and remind our members about why we are different’. For example, the Co-op is the largest retailer of fair trade wine in the world and profits from its Argentinian Malbec are invested in a local secondary school specialising in agricultural studies
staff salaries were at the low end and around 40,000 front line staff have now had a wage increase of 8.5% bringing them closer to the living wage
the Co-op have stated that they want to be the employer that has most staff who walk to work and who live in local communities. To support this, they have a rental deposit scheme
reinforcing the 'back to our roots' message, all staff will be taking part in a re-induction of Co-op ethics and customer values
These investments aren't just being made because it's the right thing to do - they also make business sense. According to Alex Edmans, Professor of Finance at London Business School, ' there is compelling evidence that purpose is critical for a firm’s long-term success. In particular, purpose “glues” the different stakeholders of an organisation – customers, employees, suppliers, communities, and investors – towards a common mission. A sense of purpose encourages stakeholders to go above and beyond.'
This is still a work in progress, but leaving the last word to Pennycook:
‘We have the wind in our sails at the moment and our energy levels are high.’
I am a founding member of The Stance Partnership, working with organisations to help them build ethically resilient businesses. I am also an Executive Coach and Leadership Consultant, helping leaders set the appropriate 'tone from the top'. Contact me to find out how I can help your organisation.