Recently, I was delighted to have the opportunity to interview Richard Pennycook, CEO of the The Co-operative Group, regards his thoughts on the trust crisis in business and how his organisation is stepping up to this challenge. Here are Richard’s fascinating observations:-
JOHN: What does organisational trustworthiness mean to you?
RICHARD PENNYCOOK: I think it means that the organisation has a clearly articulated purpose and set of values that are delivered to a high degree of consistency, day to day, through each colleague. For the Co-op it’s actually significantly easier than it is for many corporates because we have a purpose which is pretty unique in commercial terms; it binds us directly back to our ownership. Our purpose is to champion a better way to do business for you and your communities.
JOHN: How have you gone about rediscovering that purpose in terms of the recent history of the Co-op?
RICHARD PENNYCOOK: We started by re-defining that purpose. Having done that, then the key is aligning all our businesses behind that purpose and enabling our colleagues, through our values, to deliver that purpose. And we are a year and half into that journey. Where we are right now is going through a re-induction of 71,000 people, taking them off the shop floor or away from their desk and re-introducing them to the purpose of the Co-op.
JOHN: Do you think the employees hear it as the new purpose or do they hear it as we’re going back to what we always thought we were?
RICHARD PENNYCOOK: I think they’re celebrating the fact that we’re going back to many of the strengths from the past. What had developed over a long period of time was a schizophrenia in the organisation where the businesses traded in an ethical way but, fundamentally, just traded competitively with other businesses. When I first visited one of our academy schools it was absolutely inspiring and uplifting to see what was going on in that establishment, funded by the Co-op. But when I spoke to teachers and parents about the Co-op did they know that by shopping in the Co-op they were helping their child’s education? No, they didn’t. It just wasn’t joined up. They had no appreciation of that.
JOHN: You mentioned the word values as well as purpose, in terms of your work on values, is there a new set of values that you’ve developed as part of this work on purpose?
RICHARD PENNYCOOK: We’ve got some words which are helpful in terms of the way we all want to work together and serve customers and members. So we have four phrases which define what we call being Co-op:-
‘Do what matters most’.
‘Be yourself always’.
‘Show you care’.
JOHN: ‘Show you care’. I love that phrase because I talk about kindness in the book as one of the big components of trustworthiness; it’s that ability to show kindness, show care, which is beyond great customer service or the usual sort of business metrics.
JOHN: What behaviours does the CEO need to focus upon to build their personal trustworthiness?
RICHARD PENNYCOOK: There’s a lot of commentary about ‘the tone at the top’ and what’s fundamentally important to me is total consistency of behaviour. In my case, I’ve got 71,000 colleagues looking for the time when I let myself down, when I don’t quite do what it says on the tin. So total consistency of behaviour is critical. I can’t walk into the atrium of our building and walk past a piece of litter. If I do that once, every colleague’s got permission to do the same.
JOHN: Yes, in the book I talk about nine habits and one of them is choosing to be consistent, which is one of the less glamorous habits but it’s a critical one in terms of people looking for the exception, rather than the rule, in our behaviour. Anything else that you would highlight as well as total consistency?
RICHARD PENNYCOOK: Visibility is important because otherwise how do you establish that tone from the top? I don’t know what’s in your other nine habits, but clearly a lot of it will be enshrined in those value statements that I gave you – living and breathing those values. And in our context part of that, as you can probably see, is being very human and not being the demi-God that for a time people thought CEOs had to be.
JOHN: If we zoom out and look at the bigger picture of business, how has this challenge been influenced by the global financial crisis and subsequent scandals?
RICHARD PENNYCOOK: I think it’s a very difficult question that people are wrestling with at the moment, because it’s easy at one level to show that post-crisis there has been a plummeting of trust in large organisations and large institutions, therefore everybody reaches for the fact that you’ve got to win that back in some way. And of course one wants to be able to do that. But the question is ‘where is the consumer’s mind-set in all of this?’ The consumer is still happily buying low cost fashion and doesn’t want to know too much about conditions in Bangladesh for example. So I think this question is a huge challenge. On the one hand, businesses need to get it and do the right thing and, on the other, it’s important that we don’t do it in a cynical way.
JOHN: Your recent decision to reduce your own remuneration is an interesting challenge to the popular perception of corporate CEO. How much of this sort of thinking was in your mind when you took that decisions or was it more a personal issue?
RICHARD PENNYCOOK: I think that’s very specifically a Co-op issue. There is a wider institutional remuneration debate to be had but this was much more about what’s right for the Co-op. I’ve talked about re-launching the purpose, re-launching the induction to 71,000 colleagues. It seems to me that for me to stand in front of them and look them in the eye, we had to deal with the fact that I was on FTSE plc remuneration, which was okay for a time, because a small team of us stopped this organisation falling over, but was not okay for the future. I think there is an interesting debate for ‘plc-land’ as to what’s the right level of pay for people who just turn up and do the job. There’s then an incentive level of pay which can be as high as you like for doing outstanding things but I think what we’ve had is a long period of time where turning up and doing the job gets you ‘off the scale’ rewards.
JOHN: The final question, Richard, is looking to the future. What’s your hunch as to what the future holds for the CEO in five years’ time on this topic?
RICHARD PENNYCOOK: I think in five years’ time if this continues to be a minority sport, that would be mildly depressing but I think that is probably the reality. However, where it goes over 15-20 years then I’d be a little bit more optimistic if we have great leadership. But tackling this issue will need an environment where people can again celebrate longevity and 15-year careers with a company not 3. If you’re going to spend 30 years building a business, you’re thinking about what’s right, the trustworthiness agenda, day in day out. If you land for a three-year term, you’re not going to make a dent on the P&L three years out based on this agenda.
JOHN: We’ve got Gen Y coming into the workforce and into the consumer population. Most of what you read suggests that they will have a keener eye for the social impact of businesses that they shop with or that they spend money with. Is that also your view?
RICHARD PENNYCOOK: I think certainly that generational difference is there. Potentially a force for good but what’s not clear of course is as they go through their life stages, do they hold onto those youthful ideals? Or does that get crowded out? Because once you’re a mum with two toddlers, then frankly the free-range chicken for eight quid or the Asda chicken for two quid, maybe it’s not quite as well-reared but I could really use the six quid saving!
JOHN: Great, thank you for your time and thoughts.
John features interviews with other CEOs on the topic of trust in his new book, ‘The Trusted Executive’ which has been shortlisted as the CMI book of the year. Available to order now via Amazon UK.
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