In theory, that right of members to hold the organisation’s executive body to account still exists, much as it ever did but, in practice, it is usually impossible for members to implement it. Two legal changes and the advice following from solicitors has put an end to it. The concepts which have been harnessed, either constructively or as a side effect, to silence such rights are simple: privacy and a misuse of democracy to deny democracy. Both were implemented in 1984 under the government of Margaret Thatcher, who also championed “management’s right to manage”.

Privacy, and how it denies corporate member action

During the 1970s as computers began to be used to collect data in an easily searchable format, the public began to express concern about the power this might give governments and companies to understand and control their lives. It was understood the ability to escape surveillance was a bedrock of democratic freedom, the reason the State must fear the citizen rather than the other way round. It was possible for the police or the security services to watch individuals of specific concern, usually with permission from a court, but general mass surveillance was seen as a much more sinister trend. Freedom of Association would be threatened, people thought, if ones associates were known to authority. People whose personal habits or other embarrassing characteristics were known, might be vulnerable to intimidation or abuse. Public concern led to the adoption of the idea of laws to curb excessive aggregation of personal information. The Data Protection Act was on its way. It first arrived in 1984 (although company registers of members were exempt until 2006 when a new Companies Act reduced the right after political activists began targeting members’ homes).

It is perhaps ironic that the Data Protection Act and its successors have been ineffective at curbing the mass surveillance which led to their existence. That is because they contain a loophole which permits data to be processed as much as desired with the subject’s consent. All that is necessary to obtain that consent is to insert a condition on service provision that such consent is given. No consent, no purchase. No consent, no service. Such compelled consent rapidly became the norm in all contracts, along with a notice explaining how the data could be used by the possessor for a wide range of purposes which amounted to anything the possessor might wish to do with it. I understand modern cars contain microphones to transmit and record all conversations which take place in them, accompanied by the necessary clause in the small print of the sales contract. There is no public outcry against that because Social Media has long transformed people’s fear of exposure into a desire to live in what previous generations would call a goldfish bowl.

However, if the Data Protection Acts have not achieved the purpose used to justify their existence, they have been very effective at enforcing “management’s right to manage” against the shareholders or club members. Whilst there are many bases on which data might be lawfully processed, the only one which lawyers will advise is beyond question is consent. Moreover, despite the loss of the concept of privacy in areas of life where it really matters, the Acts have been very effective in promoting the idea that basic facts such as contact details or memberships are strictly confidential between individuals and organisations and unauthorised disclosure is a very serious matter. This allows the organisation’s management to claim that they cannot let members know how to contact each other because it is against the law to release such information. If the members cannot contact each other they cannot act in concert or share information of mutual concern. Hence, the management are in complete control and the ability of members to challenge them as laid down in the rules is defeated before it can begin.

It could be argued members have what the GDPR calls a “legitimate interest” in accessing each others’ details unless a particular member has a specific need to keep such details private and it is even possible many lawyers would agree such an argument would make sense. However, because it has not been tried in court the matter cannot be known for certain and therefore is not safe until such a trial has occurred. Such a case would probably have to go all the way to the Supreme Court, given its wide-ranging effect, and who, not in a position of management, would have the wealth to take a case that far? There is certainly no incentive for the management to bring such a case as their current interpretation is so useful at suppressing accountability and maintaining their “right to manage”.

Disenfranchising the AGM

There was a time when Annual General Meetings were a serious business. They were the occasion directors or trustees had to face the members and give account of their management over the previous year. If motions were to be adopted there would be an opportunity for the members present to consider their merits and raise objections before the vote were taken. An AGM was a meeting at which anything untoward might emerge and where the members could assert their control.

Of course, not everyone could attend an AGM and if they did not have a knowledgeable friend who could attend in their stead as a proxy many members would lose the opportunity. Only a fraction of the actual membership could be present on most occasions and that meant in practice decisions were taken by a minority of members, especially if the meeting took place during the working day when only corporate members whose work included being present might be there.

Giving members an effective postal vote by using a formalised proxy procedure in which the Chair acted as proxy and could be directed to cast a vote according to the member’s wishes therefore looks like an extension of democracy to include those unable to be present, but is actually a very hollow form of democracy.

Good governance requires those voting to be well-informed about the issues in order to take good decisions. Although a minority, those present at a meeting have heard and quite possibly taken part in the debate. If anything contrary to the directors’ recommendation emerges in that discussion those present have heard it and might well change their minds. They might be a tiny minority, but they could be the only people taking part who are actually in a position to understand the full implications. They might vote overwhelmingly in response to something revealed at the meeting, but with postal votes from the absent majority in the Chair’s pocket, their response is unlikely to make even a slight difference. The people who voted at home have heard none of the debate. They have simply been guided by the recommendations coming from the board to vote in favour, and they usually outnumber those present by a factor of thousands. No more do the directors walk into the meeting hoping to get their way. Now they walk in knowing they already have. The meeting is a mere formality, an endorsement of what the board recommended. It cannot hold them to account. Widening the franchise to include the uninformed has effectively disenfranchised those in the know. The same would apply even if a group of members succeeded against the odds in requisitioning an Extraordinary General Meeting. Such a meeting would still be dominated by absentee voters who had not heard the arguments and had only the board’s recommendations to guide them.

The Professionalising of Management

When the Co-operative Bank got into trouble over its attempt to take over another organisation, one of the criticisms made of it was that not all its directors were bankers. One of them was actually a nurse. This was seen as highly inappropriate by other financial institutions and by the media. They apparently failed to appreciate the nature of the Co-operative movement as indicated by its name. Whilst a bank clearly needs to be run by people who are competent in banking, it does not follow its board should not include people with other interests alongside the qualified directors. Of course, if the CEO or CFO were not a banker that would and should raise eyebrows, but having a few representatives of ordinary members on the board to keep it in touch with the ordinary members of the organisation should not be scandalous. That is how we might expect the broader organisation and members to maintain a say in what might or might not be acceptable to them.

This reflects a trend in management during the post-war period which has accelerated into the present. In fact, it is remarkable that the bank’s board was expected to consist only of banking professionals rather than management professionals, as has more often become the norm. In recent decades the idea of management as a profession in itself, separated from the things managed, has grown into a self-promoting industry to the detriment of productivity and the real purpose of management, which is to get things made and distributed and services provided as efficiently as possible. Instead of getting the job done, by which I mean the actual front-end goods and services, professional managers are more likely to take an interest in management good practice, in ensuring everything is done correctly according to the latest theory.

It is to be expected that if managers are more concerned with complying with what is considered good organisational practice than in the actual function and purpose of the organisation effort will be put into the former with the result that less effectiveness will be achieved in the latter. Low productivity and poor efficiency is to be expected even as compliance awards and ideas of meritorious principles are accrued, for the organisation is no longer being managed to do its job, but to achieve ideological expectations. It will become an idealistically well-run failing institution achieving ideological objectives at the expense of its core purpose.

Interested parties, such as shareholders or ordinary members must not be permitted to interfere because their understanding of what really matters might conflict with that of the professionalised managers. Fortunately for the latter, sham democracy ensures they never can.

The complexity of Compliance

Professional managers might counter it is dangerous to let ordinary members have real access to the levers of power because there are too many regulatory mistakes to be made by the unwary. Management is now a highly technical business requiring experts in good practice and regulations who can ensure the organisation is not jeopardised by well-meaning but misguided policy ideas from ignorant members falling foul of requirements. They would have a point. Modern rules around organisational behaviour are extremely complex and it would be easy, even for those who do know what they are required to do, to overlook something. How much more likely would this be to happen if people who are not used to such things had control? Mistakes could cause the loss of not just contracts, but approvals and licences to operate and, in extremis, result in compulsory winding up.

There is no doubt organisations must take care to stay within the law, but that is best achieved by ensuring decisions are taken under advice from someone who is well-versed in such matters or even giving such a person a power of veto to be used under clearly-defined circumstances. There is no need to exclude members from overall control simply because they might not be experts. Moreover, while members might not be experts on management issues they do have collective expertise in their field of interest, which is likely to be the basis on which they have associated with the organisation, for which they would wish to see it governed. Putting safeguards in place to protect the integrity of the organisation need not extend to excluding the members from their legitimate control.

Such an argument therefore does not stand up to scrutiny, but is a convenient fall back for those wishing to preserve the (relatively new) status quo.