Royal FloraHolland - Criticism will lead to better results, as long as we keep working together
April 15, 2021
Our Members' Council will soon discuss the annual accounts. The Supervisory Board did so last week. It’s always a good time to look to the past and the future. Jack Goossens, Chairman of the Supervisory Board, wrote this column.
What really stands out is that our industry showed its best side in 2020. By pulling together, we managed to overcome the historically hard hit we took in the spring. Now, barely a year later, record sales are being achieved and we are experiencing an unprecedented spring.
The second half of 2020 was the prelude to a discussion currently dominating our industry. Parties are attacking one another with one liners, facts, opinions and emotions. Many of these things are relatable and true, some of them emphatically are not. What we're currently really missing is the opportunity to discuss the state of our industry and our cooperative. In the past you could visit the GMM where you could agree with a passionate speech, laugh at the personalities and where you could get incredibly annoyed at what you thought was nonsense. And after drinks, you went home with a good feeling because what needed to be said had been said. In 2019, instead, we had Cooperative Day and all physical regional and international member sessions in which we discussed matters in dialogue. As a result of corona, none of this is possible any more. Which is a pity, because it reduces real contact and mutual understanding.
All at once
What is clear is that the implementation of many decisions is currently coinciding. Everyone, growers, buyers and service providers are affected by this. You may have little to do with one measure, while another means a lot to you. As a grower, I see this, too. We had to adapt our own software to Floriday. This means a lot of extra work at first, but saves a lot of time in the long term. In the past we spent many hours maintaining and continuously updating all kinds of lists. Fortunately, that will soon be a thing of the past.
The nature, extent and/or pace of the changes has led a large group of members to sign a petition to the Members' Council for various reasons. In response to this, the Members' Council has taken the initiative to personally invite both the signatories and other members to special sessions. Many have responded to this. The Members' Council passed on these and earlier signals from the market to the Management Board, whereupon a number of measures were taken to allow for more customisation.
The strategy is in place
The direction of the changes will not be adjusted. The strategy is in place, because the causes have not disappeared. For example, the fact remains that RFH is reaching the end of the traditional business model. Given that growers and buyers are increasingly trading directly, only 40% of product turnover handled by RFH now goes through the auction. While RFH currently has relatively few value-added services on the direct channel and can therefore earn little on them.
This means that if nothing is done, the operational result will become negative more quickly, and will leave RFH in serious financial trouble in the foreseeable future. The Management Board has looked at what needs to be done to make Nationwide Auctioning a reality and what possibilities exist for developing new profitable services for direct flows.
These insights are not new, and thinking together about these structural changes started years ago with the member discussions about Tomorrow's Auction. Studies by Tomorrow's Auction already showed that there were new earning opportunities for RFH in the field of logistics. Logistics is a central and crucial part of the national auction. Logistics therefore has the opportunity to strengthen the auction as well as to create new revenue models for RFH. It works both ways. Floriway plays a central role here. RFH will not organise any transport itself. There will be a transport company adjacent to RFH, run by experienced logistics people. RFH is one of the shareholders.
Floriday did not appear out of the blue either. Collaboration with FX, at the time the leading alternative platform on the plant side, gradually led to Floriday. The steps in which Floriday was subsequently rolled out proved excessively ambitious. The pace has since been adjusted.
Dialogue and balance
In 2018, after a start-up process of 2 years, by a very large majority, the members decided to dissolve the old GMM and to appoint a Members' Council. This required amendments to the articles of association and regulations to which the members themselves contributed. I have read a lot of opinions about this on social media. The fact is that the Members' Council has all the powers of the old GMM and has the right to give solicited and unsolicited formal advice to the Management Board.
The triangle between (member) owner (Members' Council), director (Management Board) and supervisor (Supervisory Board) is all about dialogue. The point is to always be looking for a new balance. The director cannot make all too many decisions without the approval of the supervisor. Approved decisions will fail in implementation if they are not agreed to by the owner. Good decisions can only be formulated if the owner provides valuable input for this to the director.
It's not about power. No one has the authority to issue instructions to any other party. What can be steered is the power to appoint or not appoint/reappoint people. That is the time you can and should really take responsibility.
In 2014, there was also a change in our governance. I myself was one of the growers who transferred from governance by members to the Supervisory Board. A new role in a different relationship with the members and with the Management Board. Truly understanding that role and then fulfilling it in a way that suits our cooperative is not something that happens overnight. It takes time and a few scratches, but you'll get there in the end. It's no different for the Members' Council. The Members' Council boarded a moving train and it certainly wasn't the slow train from Hoorn to Medemblik. It stepped in when the cooperative was already in full development. Corona has not made things easier. Nevertheless, the Members' Council has taken up its role energetically. It is still growing and has the ambition to continue to grow.
Criticising the way in which the cooperative operates is fine, and even necessary to keep everyone on their toes. The multitude of signals that the Members' Council has received has enabled the Members' Council to provide sharper input to the company. The Management Board has taken up the challenge and there is now room for members to participate in the strategy at different speeds. Although it still won't be easy for everyone to make adjustments.
Now it's important to work together again. As a cooperative, division doesn't suit us. It's now time to move forward together. The Members' Council provides the Management Board with relevant input based on its industry expertise. The Management Board can take the right decisions based on this and the Supervisory Board ensures that the interests of all stakeholders are taken into account.