6 MIN READ
Reflecting on our Employee Ownership Trust journey
As an employee-owner of Team Consulting (following its transition to a trust ownership business in December 2016) I was encouraged by two recent events:
• One of our contemporaries in the Cambridge cluster announced it had become employee-owned trust
• The publication of an independent report outlining the benefits of employee ownership in the UK
Having heard about the Ownership Effect Inquiry last year, I was intrigued to read the findings and recommendations in the report ‘The Ownership Dividend’ published in June 2018. An independent panel of UK business leaders and industry experts reviewed evidence from over 100 employee-owned businesses, to assess the impact of employee ownership (EO) on the UK economy.
The summary of their report was that increasing use of the EO model would deliver a combination of improved productivity, “resilient regional economies” and “more engaged employees”.
Reading the outcomes of the inquiry made me wonder whether Team is a ‘typical’ EO company. I was also keen to look for additional benefits for individuals, the business and the wider economy that we at Team have yet to unlock.
One of the key messages from the report is that owning a stake in the company for which you work increases engagement, motivation and wellbeing (are we healthier?!).
There is a sense that because we are committed to the partners, the partners in turn are committed to the business.
Employee-owners appreciate that as a shareholder they have a ‘voice’ and that open communication between executives and staff is often seen as a central pillar to the running of the business.
Additionally, it was revealed that companies committed to EO principles have a long-term view of employees. This prompts investment in individuals, such as providing training and development opportunities, which results in mutual loyalty.
Qualities like these seem to appeal particularly to millennials, who may consider the benefits of working for an EO company more desirable than other generations. As someone who (just about!) falls into the millennial category, these findings struck a chord.
Having a ‘voice’ in an organisation and a sense that the company is committed to my development in the long-term are aspects my contemporaries and I might look for in any employer. They are definitely attributes favoured in those that are a little younger. They expect to be offered more responsibility, flexibility, honest and open communication and opportunities for career development.
As employees in an EO business, we can also expect to benefit from a share of the profits we have worked hard for. Hopefully, the monetary reward is not the only driver for working hard but is the result of being an engaged and motivated employee, working towards a common cause.
Naturally, it’s easier to be positive about our business when things are going well. However, if tougher times come, the existing transparency and open communication will hopefully help us to build resilience and a sense of ‘we’re all in this together’ to ride out the storms.
I was surprised to read that 42% of family-run businesses do not have a succession plan and should the owner suddenly be unable to work, it will likely to cease trading within a year. This was the original impetus for Team’s staff buyout in 2014, when we transitioned to a direct-share ownership model. Our move to an Employee Ownership Trust in 2016 ensures that succession is secured and that buyouts should be avoided. This provides stability and a more sustainable business model.
Improving corporate governance – another theme of the employee dividend report – already has government attention; in part due to the negative impact this has had on the UK economy of late (for example, the collapse of high street stalwart, BHS). Mechanisms for improvement include improving transparency and increasing the presence of the employee voice in the boardroom.
The degree of business transparency in Team is something that has surprised many new joiners. Staff are presented with the yearly budget and monthly P&L figures – not something that happens in every private company. We benefit from a culture that encourages questioning across all levels, which is a good thing for enquiring minds like ours.
We continue to find new ways of ensuring that the employee voice is heard all the way to the boardroom. We still have a way to go, but we’re on the right track.
We hope that the positive features EO businesses seem to have (increased performance and productivity, increased retention rates, improved efficiency and innovation) continue to have a positive impact on our company’s bottom line.
Another clear message is that increased productivity for individual businesses benefits the wider economy; in our world, our clients’ and trusted suppliers’.
Up to 70% of the UK’s long-term economic growth is driven by innovation, and innovative SMEs are best equipped to survive industry changes.
Be the Business, a movement from the UK’s Productivity Leadership Group (PLG)
EOs are typically more agile as the shareholders work within the business, know it well and can react promptly to change. They are also more able to think and plan for the long-term, not driven by the worry of share price falls or being bought out.
Playing the long game can reduce the pressure on external relationships. That lack of pressure for short-term profitability can allow for a dependable partnership with trusted clients and suppliers. It feels like we, at Team, have seen this in practice, but it would be interesting to know whether clients or suppliers see any link between our behaviour and being EO.
All in all it was encouraging to see that Team’s ownership model, although not the right fit for all organisations, has the potential to unlock many positives not only for our business itself, but for the wider economy and for those who work within it.
As we continue our EO journey, it’s also heartening to see more companies like ours take the bold step towards employee-owned trusts.
Rhona is part of our mechanical engineering team where she applies her mechanical design and analytical skills across various client projects. Prior to Team Rhona has been involved in the design, development and analysis of orthopaedic devices through various research projects.