I was beyond chuffed to be invited to speak at the 2015 Meaning Conference. The topic was Where Does Power Belong Within the Organisation of the Future. I was to give a summary of my position and then take my place on a panel discussion.
I’m clear on this. Power is inextricably linked with ownership and control. Much of the inequality in our society can be traced to the imbalance of ownership. Power is increasingly concentrated in the hands of the few, to the detriment of the many. This is particularly pertinent in business. Employee rights are increasingly eroded, we de-skill and outsource until we are left with little of value and the multinationals play the tax system of the countries. Power sits with ownership – whoever owns the business has all the power.
It was a lively debate. The first speaker, Jack Hubbard, is CEO of award-winning marketing agency Propellernet. He kicked off his slot with a description of a fab company where ideas and energy abound and the culture is one of love and freedom and fun. Kevin McCoy, co-founder of Next Jump, employee incentive and engagement experts, talked of power as embedded in the company’s ecosystem. Their proposition was similar; ownership doesn’t matter, it’s culture that’s important. The fourth panellist, Dave Boyle of Community Shares , was closer to my view; we need more ownership in the hands of the people. I feel we got into a bit of Entrepreneuralism vs Employee Ownership spat, when in fact our economy needs both.
A company doesn’t have to be owned by its employees to be a good company – of course not. There are superb companies out there who provide great employment, cherish their people, love their customers. Employees are “empowered” to deliver great customer service, invent innovative products and manage their day. But empowerment is not power. In these high performing companies, employees are “allowed” to act within certain parameters. A great boss hires good people and lets them get on with the job. But let’s not pretend we are giving people real power.
The focus on culture is a red herring. Of course, a key component of a successful business is a high performing, inclusive, innovative culture. But that’s not an indicator of power. The power remains with the owner. And that’s not always wrong – we need plurality of business models (although fewer offshored PLCs might be better for the economy!). Family businesses, entrepreneurial-led companies, values driven corporations, cooperatives, university spin outs, social enterprises; they all have a rightful place in our commercial landscape.
I’d go further and say we need more entrepreneurs – we need brilliant people who take an idea, turn it into a business, and create something magical that adds value to people’s lives. Not everyone is willing to take the risks that entrepreneurs take. We need these entrepreneurs who value people’s contributions, offer fulfilling work, provide a place for people to display their talents. But – what happens when the owner wants to exit? Where’s the “power” of the “empowered” employees then? These cherished and empowered individuals are commodities to be sold with the business.
And that’s where the employee buyout comes in. Mainly employee ownership is a succession option for entrepreneurs and family businesses who recognise that the people who helped them create the company are the ones to take it into the future. By selling to the employees, the vendor has a buyer who will use their ownership power to preserve the legacy, protect the culture and work hard to ensure this is a successful and sustainable business.
Entrepreneurs create and nurture the magic; employee owners have the real power to make the magic last.