Shirine Khoury-Haq has resigned as CEO of the Co-op after the group posted £126 million annual losses.
It follows a BBC report in February which aired warnings from senior managers of a “toxic culture” at executive level.
The 180-year-old member-owned food and services group, which has a reputation for upholding ethical values, faced allegations that it created “fear and alienation” among several senior staff.
On Thursday the group said a massive cyber-attack last year cost it an estimated £285m in sales.
Khoury-Haq, who will step down at the end of this week, said it had been an honour to lead the Co-op for the last four years. She has been with the company for seven years.
Kate Allum, currently a member-nominated director on the Co-op board, has been appointed interim group CEO.
Earlier this year, a letter to Co-op board members – seen by the BBC – said some senior managers were scared to raise concerns about the direction of the business.
Lawyers for the Co-op told the BBC they did not recognise these claims and “do not believe that they represent the views of our broader leadership and colleagues”.
A senior manager told the BBC: “You learn to look at your shoes. Nobody can speak their mind in this business – anyone who does has their card marked.”
The board was also criticised for decisions relating to last year’s cyber-attack. They said the Co-op responded to reports of empty shelves by filling them with any product available – such as parsnips in the steak aisle – which led to “rocketing food waste”.
The main criticism, according to the BBC, was a major restructure which merged its retail, wholesale and third-party buying functions into a single unit called Group Commercial and Logistics (GCL).
Experienced staff are said to have warned that this would create confusion with suppliers, but were ignored.
Khoury-Haq said in a statement: “Following last year’s cyber attack, the organisation is now ready to deliver on an ambitious strategy of stabilisation and transformation.
“This extends beyond the timeframe I had planned for my CEO tenure, and now is the right moment to hand over to leadership that can commit to seeing the strategy through.”
Co-op chair Debbie White said: “We thank Shirine for her leadership and for the significant contribution she has made to our Co-op, to our communities and to the co-operative movement during her tenure.
“The board is grateful for her commitment and leadership, particularly during a challenging few years, and we wish her every success in the future.”