Where did it all go so terribly wrong for the Co-op?

Charles Cowling

Co-op Logo 001

 

The GFG is relentless in its criticism of Co-operative Funeralcare for two reasons above all.

First, we believe that Funeralcare does not operate in accordance with the vision Rochdale Pioneers, who would be dismayed, at a time of rising funeral poverty, to see the way Funeralcare treats the poor. Instead of focussing on its core purpose, namely, to enable working people to buy what they would not otherwise be able to afford, Funeralcare’s latest utterance was a trifling press release, billed as “new research”, about the use of mobile phones at funerals

Second, we fail to understand how a business can apply economies of scale (hub mortuaries, car pools, peripatetic funeral conductors) and come up with a standard funeral price several hundred pounds more than most independents. 

Despite this, The Co-operative Group continues to be held in great affection — so the bad news about the Co-operative Bank, whose debts have been downgraded to junk status, was not greeted by Occupy protesters and the sort of howling vilification reserved for other banks in trouble. 

I had an email the other day from Edgar Parnell, onetime Chief Executive of the excellent Plunkett Foundation, which was so helpful to us when we were developing our community funerals initiative. Parnell, whose life has been dedicated to the co-operative movement, has long deplored the errant ways of some co-operative societies, and he is clear in his analysis of where so many of them have gone wrong. His analysis of the regrettable state of The Co-operative Group is, in our opinion, persuasive. This is what he said: 

Many will have been shocked by Friday’s news that the Co-op Bank chief had resigned following the downgrade of the bank’s debt, this as a sequel to the abortion of the Bank’s plan to takeover 632 branches from Lloyds Bank.  Ostensibly, the causes of these events have their origins in the financial downturn, problematic loans and the increases in the sums of capital that will be required to be held to meet new regulations in the banking sector. However, the underlying issues run much deeper than this. 

The management of the Co-operative Group appear to believe that they are running a conventional business, with the aim of profit maximization, that just happens to be owned by members rather than by investors. Whereas they need to be clear that the function of all co-operatives and mutuals is to intervene within the marketplace in the best interests of their members. The Group’s management either do not  fully understand, or choose not to adhere to, the underlying essentials of the model of enterprise required for any form of co-operative or mutual to be successful. 

Chasing growth to the detriment of the real interests of the membership has proved to be the downfall of major consumer co-ops in many countries in Europe*. Executives often seek to pursue a growth strategy because it means a bigger empire, more status and higher pay for them. The correct response to expansion proposals, including merger proposals, should always be to focus upon what is best for the membership and most likely to result in the achievement of the purpose of the enterprise. When co-operatives grow, in terms of the number of members and/or turnover, they are frequently beset by multiple problems. They lose sight of their original purpose, are prone to switch towards serving the interests of senior executives or cliques rather than those of the bulk of their members. As a consequence, they come to be regarded as irrelevant to the lives of their members and in the worst case they are hijacked by self-interested groups. 

If co-operatives and mutuals are to carry out their function and achieve their purpose then it is vital that all involved have a clear understanding of:

  • ·         The member-controlled enterprise model
  • ·         The organizational risks inherent within the model
  • ·         Their economic basis
  • ·         The specific requirements of MCEs in terms of their leadership, organization & governance, management & accounting, financing, human relationships, and the public policy framework required 

A video (12 minutes) explaining the ‘Member-controlled Enterprise model’ can be viewed at: http://s.coop/1myuo 

More information is available at the Member-controlled Enterprise website at: http://s.coop/1bcyi 

Examples:  two European consumer co-operatives that failed to understand the nature of the risks involved in following inappropriate growth strategies 

Dortmund-Kassel, Germany: Coop Dortmund started in 1902 with 349 members, one shop and two employees; following successive mergers it became Dortmund-Kassel, an enterprise with 500,000 members, 350 supermarkets, 16 department stores and 74 business centres, employing 15,000 staff and with a total turnover of DM 2.5 billion. In 1989 approximately DM 45 million was invested in shop modernisation, 31 new shops with a surface of 25,000 sq. m., and the expansion of 12 shops. In 1998 Coop Dortmund-Kassel collapsed and was eventually liquidated. The reasons for this failure are attributed to the management seeking to follow practices and methods more appropriate in investor-driven organisations, i.e. the exclusion of members from goal-setting and policy decisions; full autonomy of the professional board; measurement of success by growth, market share, volume of turnover, profit and shareholder value; and corporate methods of fundraising to attract investor-members (promising high return on invested capital in the form of share dividends). One result of this strategy was to reduce members simply to passive shareholders and ordinary customers. 

Konsum Austria: In 1995 Konsum Austria became bankrupt. It had slipped from being known as the ‘Red Giant’ on the retail scene and having 25% of the Austrian population as members. In 1978 the process of merging all of Austria’s consumer co-operatives into a single national society commenced. Unfortunately, the management was left to run the new super-co-op, which began chasing market share with little regard for its position as a member-controlled enterprise.

Enerprise Diagram

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whistle blower
Guest
whistle blower

Firstly how hood winked some people are. Sadly having worked for this company for 5 years. Until I could no longer take there lying. Only interest in profit and not at all interested in the deceased or the family. When having the despicable ways uncovered. The top management seem to think they can pay people of and keep them quite. The general public have a right to no freedom of information act. Don’t be fooled. You would not believe what goes on behind the scenes. Chan al 4 undercover undertaker. Was nothing compared to what goes on behind the scenes

Urban Design Flowers
Guest

The problem is that the Co-Operative are simply in it for the money rather than caring deeply about the family. The time they spend with the family all revolves around how much the funeral will cost, rather than the person being laid to rest.

It’s a shame, but big industries will always be the same.

andrew plume
Guest
andrew plume

thanks ‘UDF’

part of my argument too, I’m afraid

regards

andrew

(PS Funeralcare are imo nothing other than ‘a quasi Corporate’, they may have a different legal structure with their holding Company than the other three Corp’s, but they act in exactly the same way)

andrew plume
Guest
andrew plume

Hi James I should also have added that I have scant time for the other large Corporates, Dignity, LM and FP, they’re all way too expensive, they do all however resist in constantly blowing their own proverbial……………….. imo, families are far better served by the Indy’s (and I appreciate that they’re not always 100% spot on, either) I do wonder if we’re not all the victim of what went on in the “greed is good for you 1980’s”, prior to that there certainly weren’t any Plc funeral holding Companies around, but then, Hodgson Holdings, Kenyon Securities and Great Southern decided… Read more »

James
Guest
James

An interesting blog followed by many comments, a shame they are all so negative.

andrew plume
Guest
andrew plume

yes, well, James

what else is there to say regarding these issues with Funeralcare?

andrew

james
Guest
james

There is a lot to say Andrew.

That there are 1,000’s of dedicated funeral professionals working for co-operatives across the country who care for bereaved families.

Just as there equal numbers of co-operative members who are passionate about co-operative values, believe and practice them.

This seems to be forgotten in the comments on the GFG blogs.

Good Funeral Guide? Well co-operatives can and do carry out very good funerals.

Regards
James

andrew plume
Guest
andrew plume

thankyou James

with no disrespect at all, you (may) have missed the point(s) that I’ve been making, I have no issue at all with any of the dedicated professionals that work there, my disappointment is with the management per se

regards

andrew

James
Guest
James

Thank you for your response Andrew. I do appreciate the point(s) you have been making and to some degree agree with some of them. My concern is that there does not appear to be a balance, rather a focus on all things negative. Even when a positive co-operative story or comment is placed on the GFG blog it is followed quickly by cynical and critical comments. I did not mean to challenge your points in particular it was just you have perhaps been more vocal than most on this particular thread and I felt a response to the whole blog… Read more »

andrew plume
Guest
andrew plume

……and more good cheer (NOT) regarding the Coop banking division:

http://www.bbc.co.uk/news/business-22651713

it’s clearly time to tap into Funeralcare for a “supporting Loan”, that will no doubt mean that F’care will have to up their prices again, one just has to support the new branch opening programme and gawd knows what else, of course, too, doesn’t one………………….?

andrew

Gregory Michael Taylor
Guest

Charles, thank you for the kind words.
Andrew, my comments are my own views, some like me for speaking my mind and some dont,
You havent offended me I just find certain words not nice in public, have a nice weekend.

Charles
Guest

A very happy birthday to you, Gregory Michael Taylor!

Gregory Michael Taylor
Guest

point taken, its just the wrong word to use, may be im just getting old. it is my 47th Birthday today, feel free to raise a glass, I will be very soon.

Andrew Hickson
Guest

Seconded GMT. Not just ladies and children.

But, it’s also a good illustration of differing opinions which have been evident over the last few days. Whilst some see home funerals as the way forwards, others think they’re a lousy idea. Neither is right probably, it’s all about choice and what is right for the individual isn’t it?

Equally, what some see as acceptable words to use on this blog, others are offended by, and others see as unnecessary.

Gregory Michael Taylor
Guest

Jonathan,
Many ladies can view this and children as well, we all have repeated now and then something we have heard from Morticians in the past, but do please refrain from useing the C word, its horrible and very Inappropriate.

Kathryn Edwards
Guest
Kathryn Edwards

I think it’s important to notice that Jonathan was quoting an offensive remark, not making one.

Jonathan
Guest
Jonathan

Thanks, Kathryn, nice to be heard.

james showers
Guest

Besides being very grateful to the Co-op for showing me how things are done (ie. how they do things) when I worked as ‘the man in the back’ in one of their branches, I was astonished at just how little their operatives are paid; it was then that I then managed to find it less shocking at how they (mostly) regarded their jobs.
What shame this all brings down on the once deeply important Co-operative movement.

Jonathan
Guest
Jonathan

How they regard their jobs, James, may be hinted at by one of their mortuary workers who told me; “I wouldn’t trust these cunts with a fucking dog’s funeral.”

James
Guest
James

I think full quote is unecessary.

It says more to me about the mortuary worker than their employer. I certainly wouldn’t trust that worker with a deceased person and regardless of management that is the actual person doing the ‘caring’ as they handle the deceased.

What was your response to the mortuary worker Jonathan?

Jonathan
Guest
Jonathan

Since I worked on building sites for thirty years, James, and encountered and used such language casually and routinely with my colleagues, and learned to respect it as the valid and honourable form of communication it is in its native context, I’m taken aback by some of the unconscious prejudice, against people I hold in high regard, that my quote has revealed. I suspect that quoting my own response to this good man, sadly, would give rise to similar disdain on this blog. Suffice to say, understanding his employer at first hand as I do, I supported him in his… Read more »

James
Guest
James

Afternoon Jonathan, I am not saying that it is not a valid form of communication and I am sure it can appropriate in the right context, my point was that I thought it unnecessary to quote it in full on this blog. I did not mean that the use of the language by that individual was my concern rather that it if that co-operative was really that bad and they were playing such an important role, rather than moaning about it to a third party, what were they doing about it? Maybe they were actively challenging what was such a… Read more »

andrew plume
Guest
andrew plume

unfortunately, James, it’s simply the way that it is

regards

andrew

andrew plume
Guest
andrew plume

actually Charles

and as we all know…………….

“it’s gone terribly RIGHT for those at the top of Funeralcare”

the public face being George T, Collingwood D, Kershaw Sam and gawd knows how many other ladder climbers

they’ve done very very well financially out of this, yes I’m sure that they certainly have

andrew

Gregory Michael Taylor
Guest

How can I beat all of the above remarks, To be honest I cant but when I hear another local Pub is soon too close and make way for Tesco, Its a sad day for drinkers and yes I do drink, mainly real ale, sometimes a brandy, and now and then guiness……………or 2.
But what does put a smile on my face is knowing a Coop is next door to the proposed new Tesco,
Every Little Helps.

andrew plume
Guest
andrew plume

thx Greg

I too do “real ale” and not in a small way

I actively seek out those pubs that support micro breweries Nationwide and they’re on the increase too

best

andrew

andrew plume
Guest
andrew plume

Charles, said: “……….we fail to understand how a business can apply economies of scale (hub mortuaries, car pools, peripatetic funeral conductors) and come up with a standard funeral price several hundred pounds more than most independents………….” err…………Charles as you will almost certainly have appreciated, there is imo absolutely no, definitely no, intention at all to pass “these economies of scale” on to anyone, instead the vast profits reaped from this go towards: (1) the unnecessary media advertising campaign(s) and the one that you’ve highlighted is laughable; (2) a seemingly endless feeding/gorging frenzy of opening (yet) more branches (just to keep… Read more »

andrew plume
Guest
andrew plume

and I also said: “…..3) daft investments in a brand new fleet (simply to keep up with everyone else)…..” I could also have included unnecessary branch renovations just to keep up with the “everyone else” too just to illustrate this small tragic comedy (sic), it’s well accepted that I have “anorak status”, there is this:- http://funeralcarenews.co-operative.coop/branch-news/grantham-funeral-home-unveils-silver-fleet.html#.UZx5mkoZzIo ……………drum roll, please…………………. I’m sure that this will be part “of a hub fleet” however I follow local trends (to include Grantham). Very quickly and from ‘notified’ Grantham deaths for this month, this is how it stacks up (in terms of funertals):- (1) Funeralcare… Read more »

andrew plume
Guest
andrew plume

and here’s another one:-

http://funeralcarenews.co-operative.coop/branch-news/new-funeral-home-for-tilehurst.html#.UZyAO0oZzIp

yes guys and girls, we have to be, simply have to be, in the same street now as Dignity, we’re at No104, they’ve been at No21 for many years

andrew

andrew plume
Guest
andrew plume

Charles also said:-

“….we believe that Funeralcare does not operate in accordance with the vision Rochdale Pioneers, who would be dismayed, at a time of rising funeral poverty, to see the way Funeralcare treats the poor…”

yes indeed, let’s run their address through the ‘credit control database/pre-vetting IT set up’ first, shall we??? Let’s turn away “the undersirables”

andrew

Kathryn Edwards
Guest
Kathryn Edwards

This is a fabulous stream of energy, Andrew! I wish we could bottle it and hand it out at street corners! It would be great if Joe Public would pay attention to what’s under their noses.

andrew plume
Guest
andrew plume

thanks Kathryn, much appreciated fwiw, my main gripes with Funeralcare are ‘threefold’: (a) the constant media campaigns resulting in the enormous amount of spin that they’re putting over, in convincing their target market that they simply have to instruct them: (b) their reliance on their long term customers and that it must be right to instruct them, after all they will receive an increased dividend etc etc, when of course the truth is, is that the dividend in real terms is worth nil and that the cost of F’care funerals way way exceeds that of the local Indy; and (c)… Read more »

Richard
Guest
Richard

The Co-op should stop pretending to be something it’s not. It’s capitalist like any other retailer. Flawed though capitalism might be, no other economic theory works.

andrew plume
Guest
andrew plume

exactly Richard, exactly

they insist on the attitude “….that we’re all great for the community….” dah de dah de dah, it’s total bull****, they’re an out and our capatalistic organisation, nothing else

regards

andrew

David Forder
Guest
David Forder

Just three comments following you Andrew and Richard. I am an ex (very ex) banker with substantial knowledge of lending. When I worked internationally as a VP I occasionally took a break from controlling the bank’s lending to sell some of the paper generated, mainly stuff the sales people could not move. A prime target was the Cooperative Bank because they had no idea how to evaluate a loan and were therefore an ‘easy touch’. When I saw the light and left banking I spent some time helping cooperatives and set up a few. I visited the Coop in Manchester… Read more »

David Holmes
Guest

They ARE running it like a business. The question is; who asked them to and how could this be changed in the interest of consumers? My local co-op supermarket competes with Sainsbury’s. They are winning the battle, despite higher prices. The reward for this ‘success’ seems to be the desire to build an even larger store in our village – to ‘offer consumers a larger range of products’ says the planning application and PR puff. In reality this will mean bigger profits for the Co-op. Curiously, they just opened a new branch of their funeralcare business in our village too… Read more »