Being co-op: How the Co-op transformed its culture

16 May 2022 In-depth

Steve Murrells outlines how The Co-op transformed its culture by redefining the behaviours expected of its leadership.

When I was promoted from CEO of The Co-op Retail to CEO of The Co-op in 2017, I inherited a leadership talent crisis marked by high turnover, including the departure of both the incumbent chairman and CEO within months of each other.

It very quickly became clear to me that we didn’t have the talent of leadership that we needed. There was a very comforting feeling that people had worked for The Co-op for many years, often 20 to 30 years. But the result was that there wasn’t any new thinking, new ways of working, or agility and skills development flowing through the veins of The Co-op.

I knew we had to get the right talent in to make a step-change in our capability, but we also needed to change the culture by redefining the leadership behaviours needed for The Co-op to make good on its basic principles of doing business while doing good.

Peter Drucker famously said: “Culture eats strategy for breakfast”, and he was right. A powerful and empowering culture is a surer route to success than any carefully laid out strategy, which is more likely to go off course.

And therefore, the way that people go about leading their colleagues is critical. So, working with the also newly-promoted chief people and services director, Helen Webb, we partnered with search consultancy the Chemistry Group to redesign our leadership attributes.

We introduced psychometric and behavioural testing to enable us to identify people that had not only social energy, but also skills and experiences that we were missing. We have found this to be hugely valuable when we are bringing people in from outside, as well as when we’re looking to build talent from within.

One of the common threads that we’ve seen from the profiling is that our senior team does like a crisis – where there is a fire, we all run towards it rather than run the other way. What’s important to understand through the data is the make-up of our leaders, how resilient they are, and how we can build psychological safe spaces for them.

Of course, we still get things wrong occasionally but thanks to the profiling, our strike rate is at an all-time high.

Today, I am the lone male on an executive leadership team – as well as Helen Webb, we have chief financial officer and chief executive of Life Services Shirine Koury-Haq, chief executive of food Jo Whitefield, and general counsel Helen Grantham. They’re all there because they are the best at their job. When I look through the next layer of management, over a third of our senior leaders are women. So we’ve got some good things we can lean on around gender.

Doing good and doing well

What’s more, the numbers suggest that our approach is working. The Co-op’s profits after tax rose to £77m in 2020 from £33m in 2019. Around £15m, or 19.5%, was given to community causes. Compare this with Tesco, which gave £98m to good causes in 2020, equating to about 3% of its £3bn in profit.

The money goes towards initiatives such as our Local Community and Community Partnerships Funds, which support causes including getting young people into employment and supporting people with dementia.

The Co-op also works closely with the footballer Marcus Rashford on a number of child poverty and food inequality campaigns, and provided free school meals across its Co-op Academies last summer despite the government’s shortfall.

Inclusion in the round

I’ve always felt that if we’re going to be a reflection of society, then throughout the organisation we must have a far more diverse workforce. Race is very much a focal point, but for us, it’s inclusion in the round.

As leaders, we have to actively listen to the issues, to build our awareness and understanding to then go and do the right thing by putting in place programmes. But we must do so in a way that is not just ticking boxes – these things have to be sustainable.

With such a focus on inclusion, everything is centred on more rounded, more dynamic leaders that are able to adapt in order to run commercially successful businesses, but equally to behave in the right way.

This involves trialling various modules and workshops on areas such as people’s understanding of colour, the way they act and work together, and the things that need to change as a business, as well as how we recruit both internally and externally.

Everybody has it hardwired into their objectives, which is important to galvanise real momentum. But it does take time, making sure that we now go and recruit in places that enables us to gain access to this talent.

And before you even start to look for these people, you have got to make sure that your ways of working and your infrastructure works for their needs. We’ve spent the last couple of years putting those processes in place.

We have a think tank, which is made up of some of the best minds and the strongest activists in this space, including Ruth Hunt, previously CEO of Stonewall, psychologist John Amaeche, activist Simon Wooley and the UK’s chief youth officer Jack Parsons. These people are helping to shape our thinking. So everywhere we look, there are programmes, work and task forces going on.

The road ahead

In January 2020, we published our vision for the next 10 years, under the banner “Co-operating for a fairer world”. We asked ourselves: “How do we make a greater and deeper impact on our communities?” The answer? To make The Co-op’s business across food, legal services, insurance and funerals even more commercially successful, to build on its track record for social action, including supporting local causes, launching its network of Co-op Academy schools, and campaigning against racism.

Then the pandemic hit, and that effectively put our 10-year plan on steroids, requiring both a specific company culture and leadership calibre to navigate the post-pandemic social and business landscape, alongside the often uneasy balance of making money and doing good at the same time.

Two years on, we’re now going into a new phase of leadership, working on what we think we’re going to be needing in the future, given that five years of development has happened in one year.

The next stage of our leadership evolution will be to meet the diversity and inclusion targets the business has set in its race manifesto, namely doubling the representation of Black, Asian, and minority ethnic leaders and managers across the business by the end of 2022 – moving from 3% to 6%, and then to 10% by 2025.

This goes hand in hand with our commitment to social mobility, which we deliver on through our extensive apprenticeship scheme.

Behind the scenes, this will culminate in adapting The Co-op’s human resources model from the “Ulrich” model, which breaks HR down into four key purposes, to the “Gartner” model. Gartner’s seven HR function objectives and 39 key activities are more agile and collaborative, suiting the business better.

In thinking about returning to the office, giving our colleagues a real voice to tell us what they want to do is so important and sets a new drumbeat of leadership in the organisation.

We are also in a strong position to use our psychometric and behavioural profiling to move forward on developing attractive inclusive leadership and internal structures, to become a place where both employees and customers from diverse groups feel represented and at home.

Covid has forced businesses to recognise that they’ve got to put more back in than they take out – they can’t be profit centres in a community because localism is becoming so important again. At The Co-op, we need leaders that understand that value creation and its importance as, for us, it goes beyond corporate social responsibility – this is the way we do business.

Having had 15 years in senior roles in Tesco and then 10 years in management roles in Sainsbury’s, the culture at The Co-op is so different. It’s the sense of putting something back that you feel through the veins of the organisation, and not because it’s expected, but because it’s in people’s DNA.

Steve Murrells is chief executive at The Co-op. He steps down this month.

Embedding values

The Co-op ensures that its values are part of its performance management processes for leaders, says Helen Webb

We have worked hard to embed our values within the business. These are anchored around “the four ways of being Co-op”: show you care, do what matters most, be yourself always, and succeed together. It’s not just about what we do, but how we do it.

When we first sat down with Chemistry Group, we asked crucial questions such as: Why does leadership matter? What sort of leadership structure do we want? How do we want our leaders to behave?

That’s now cascaded down through the entire organisation. Our store managers talk about our leadership behaviours; our frontline funeral directors talk about our leadership behaviours.

They are now woven into how we recruit talent for our organisation, how we performance-manage our talent, and therefore how we promote people from within. So their values, contribution and behaviours fundamentally impact their careers.

The top 27 leaders within The Co-op are held even further to account, and regularly scored on how effectively they demonstrate the organisation’s values. We also work hard to address those who don’t display the right behaviours or values, either by developing them, or, if it calls for it, moving them out of the business.

Baseball cards of scores

Each of our senior leaders now has their own “baseball card”, which has the scores for that individual’s engagement survey, their leadership indicators, how they measure up against our leadership behaviours, what the hiring manager thinks of them, what we think their next role would be, and where they fit on our matrix within the organisation.

We look at where they are in terms of their behaviours, what development we need to focus on, and what their likely next moves will be. And then we’ll talk about who’s going to be next, going into one of our senior roles. This helps us to more easily spot capability gaps across teams, which can then be applied to our recruitment strategy. Chemistry’s individual assessment insights then translate naturally into development programmes that also make leaders who end up “countercultural” – those who don’t live up to the desired leadership qualities – more visible.

Helen Webb is chief people and services director at The Co-op

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