"Manifestly dysfunctional": Independence and challenge key to Coop future

Business ethics is simply about decision making. How you make "good" decisions is dependent on the consideration of a broad a range of views, options and diversity of thought. To do this the ideal is to have access to independent thinkers and a culture of acceptable, constructive challenge.

Lord Myners in his report on the Cooperative Group today recommends the Cooperative Group's board needs changing to 6-7 independent non- executive directors with 2-3 executives. With the right skills and experience the independent directors should be able to challenge the executives effectively for the long-term good of the sector. Currently Lord Myners refers to the existing board as "manifestly dysfunctional".

However, none of these recent reports fully address the real problems at the Group ie how to address a board full of egos, set views, emotions, anger, passion and self-righteousness. This is a much harder problem to tackle. A good starting point for this is to revisit the very excellent and most important part of the Walkers Report, annex 4 entitled "Psychological and behavioural elements in Board Performance". To quote:

"Board members need to be schooled in group relations, power dynamics and the behaviours and processes that are required to maximise the intellectual capability of the group. This type of leadership is known as transformational leadership. It requires that leaders have highly-tuned facilitation and listening skills. Transformational leaders satisfy the group’s emotional needs whilst also holding the group to the work of the board. In our experience, transactional rather than transformational leadership is predominant in the financial industry where high risk, high pressure and high rewards dominate."