Inconvenient truths delivered in a news release

by Ron Wain, Joint Managing Director of Deep South Media

As a company news release goes, this one was right up there in the scale of drama and impact.

One that will reverberate within the top echelons of that particular organisation for years to come.

The embattled Co-op Group, for so long a byword for ethical consumerism but now struggling to regain equilibrium, accepted with “deep regret” the resignation this week of a demoralised chief executive Euan Sutherland.

Hard enough to regain reputational ground when your banking arm recently triggered the largest crisis in the mutual’s 150-year history because of the discovery of a £1.5 billion funding black hole.

But nigh-on impossible unless, in Mr Sutherland’s own words in the news release, “the Group adopts professional and commercial governance”.

Given these febrile conditions at board level, some corporations may have been tempted to issuing a terse one-paragraph statement to the markets, to the effect that so-and so stood down for personal reasons.

Such a tactic would have neatly – but not cleverly – avoided addressing the actual circumstances which led to the high-profile departure of the person who was, in this case, in charge of 90,000 staff, 5,000-plus high street branches and the quality of service to seven million members.

Such a tactic would have backfired because the media abhors an information vacuum on a big story.

Such a tactic is not recommended – you are inviting trouble to your door, leaving the way open for a poorly executed communications strategy made on the hoof and inviting reputationally damaging revelations.

Corporate silence morphs within hours, sometimes less, into the proverbial red rag to a bull.

Journalists, their investigative senses heightened, will dig, ferret and rightly hollow out the truth, or as near as damn it.

It is what they excel in; democracy and accountability are stronger for it.

Fair play, then, to The Co-op. What the news release – in effect a corporate denouement – has done is show what is at stake reputationally. That doing nothing is not an option.

No punches were pulled; Board executives know that the eyes of the City, employees and members are now firmly focused on them to deliver “fundamental modernisation”.

Mr Sutherland has thrown down the gauntlet openly and intelligently, as befits an ethical retailer which is run and owned by members.

He has divvied up inconvenient truths to his now-former colleagues, a final irony given The Co-op’s policy of sharing profits with members.