Carole Leslie

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  1. “By making the change, we preserve the past”

    August 16, 2012

    Change is good – but some things are worth keeping.  Many business owners decide to move their companies into employee ownership because they want some things to stay the same. They may want to ensure the business stays in the same location, providing current and future jobs in the community.  There may be a long-standing, loyal customer base who expect certain standards of service, which competitors may not be in a position to deliver. Some owners recognise the contribution employees have made to the business, and want to secure their future.  And some companies just have a unique way of being successful, and employee ownership provides a means of continuing to operate in that way.

    I had the privilege of spending time yesterday with one such company.  Galloway & MacLeod has manufactured and supplied animal feed to the agricultural sector since 1874.  It’s a prosperous company, and a significant employer in the village of Stonehouse, South Lanarkshire. It is a highly specialised business; the composition of animal feed is painstakingly complex and the tracking process is rigorous. Every employee I met was cheerful, knowledgeable and appeared committed to their company. Yet, when asked about the move to employee ownership, the response was often, “Nothing has really changed.”

    Many organisational development consultants would shake their heads at such a response. Yet to me, this was a ringing endorsement that employee ownership was the right move for this company. It is evident that the company’s commitment to excellence hadn’t changed. Innovation is a priority, as is sustainable development.  Customers are central to the business and employees are actively encouraged to maintain their expertise.  As well as being a traditional, old fashioned business, Galloway & MacLeod is right up there when it comes to progress, technology and continual improvement of their product and service for customers.

    What has changed is that the issue of succession is gone, the threat of a trade sale and potential relocation has been removed, and the employees now have a real stake in their company, with more control over their destiny.

    With all the talk about employee ownership being a complex, convoluted and a lengthy process, it was great to hear the company’s Chairman, Ralph MacLeod, say that it was an easy transition (which was supported by Co-operative Development Scotland).  He doesn’t see any downside.  Perhaps as the seller, he could have got a few more pounds for the business had he sold out to one of the large conglomerates, but as he says “It’s about optimising the value, not maximising the financial value”.

    Employee ownership doesn’t have to be difficult, and is often the best outcome for business owners who want to secure the long term prosperity of their business.


  2. The myth of shareholder value

    April 15, 2012

    Why do businesses exist?  According to the business schools, the purpose of the business is to maximise shareholder value and I don’t disagree with that. What I do disagree with is that this ‘value” is interpreted purely in financial terms.  What do shareholders value?

    In the world of employee ownership, shareholders value many elements.  it is important that the business runs well; serving customers, engaging employees and making a profit.  Indeed, employee owned businesses tend to excel at this.  Research carried out by Cass Business School in 2010 found that firms owned by their employees tended to be more resilient, more productive and profitable and more innovative than similar businesses with more conventional ownership models.  So yes, to employee owners, the usual business metrics are important.

    Within these conventional businesses, the measure of success tends to be in the share value. And as we all know, what gets measured, gets attention. If the focus is on the quarterly share value, then this drives business decisions.  Will the investment deliver a return?  How quickly will we see that return?  When will we see a financial benefit from that training?  Things are looking tough, what’s our biggest cost? Cut it. Sadly, the response to this last question is often staff losses.

    However, what makes employee owned businesses more successful lies in the value placed on the long term sustainability of the business.   Employees are driven to ensure the business lasts and maintains employment.  Access to information means that employee owners understand the business better, and know what effects the bottom line.  Employee owners know how precious customers are, and why the products and services must be better than the competitors. Leaders of these businesses recognise the importance of the workforce, and strive to ensure a happy, productive working environment .  The robust and transparent governance that is often a feature of employee owned companies means that leaders are sharper, employee relations are healthier, and we don’t see the disproportionate executive pay levels seen in external shareholder business models.

    The value of a business does not merely lie in its balance sheet.  Businesses have a social purpose; providing rewarding employment, contributing to the community, creating long term wealth for society.  The external shareholder model and its focus on short term financial value is not good for the health of our economy. We need to see more plurality of business models, and the ownership dispersed to those who have a real interest in sustainable success of enterprises.

  3. Seller’s remorse: it’s about more than the money

    March 23, 2012

    For most business owners, selling their firm is more than just a financial transaction.  Many describe it as akin to saying goodbye to their child, and indeed, many entrepreneurs will have spent more time with their company than with their family.  There are the customer and supplier relationships, the loyal employees and often a unique culture and way of doing business.

    Yet, when the business owner seeks out the adviser for guidance on business exit, the most likely option presented will be a trade sale. Sell to the highest bidder, and sit back and enjoy the spoils.  If this is the right answer, why do so many business owners regret taking this route.

    At a workshop run by Telos Partners a few months back, we heard from an entrepreneur who had set up a successful recruitment business.  He sold to one of the multinational players, and he remained as an employee.  More accurately, he planned to. He left within the first month.  He told the group that the culture changed almost immediately.  The personalised service was ‘deskilled”, and quantitative rather than qualitative measures were used.  The bespoke consultancy was becoming a CV factory.  He told the group that he had his nice car, the cash in the bank, but wished there had been another way.

    The irony is that there is another way. Employee ownership must be one of the best kept secrets of British business.  By selling a business to employees, the business owner can manage their own exit from the business, to an extent shape the future of the company, and importantly, ensure that as long as the business remains viable, it can remain in the local area providing jobs,  developing skills and retaining much of what made that business special.

    Oxford academic, Will Davies, carried out a comparison of a business sold to private equity investors, and one sold to its employees.  The report can be read here.  The findings were conclusive.  The private equity sale led to decline in quality, in customer relationships, and employee relations. The employee owned business, Gripple, continues to be innovative, profitable and productive. Employee ownership can lead to a sustainable, successful business.  Selling to employees must become a serious consideration for owners looking to exit their business.


  4. Peter Huntley – a life well-lived

    March 4, 2012

    The best thing about my work is being welcomed into so many great companies. They aren’t all household names and not all of them are experiencing the easiest of times right now.

    I had the privilege of visiting one such company this week.  The TAS Partnership is a transport consultancy based in Preston. It’s a small business, under 20 employees, all of them passionate about what they do.  TAS Partnership became employee owned because its founder, Peter Huntley, wanted the business to remain committed to excellence in public transport. He didn’t want to see the company sold to a larger organisation where that excellence might be diluted. Peter recognised the contribution the employees made to that success and he wanted them to take control of the business, and share in the rewards. I had the privilege of working with Peter, the Board and the employees as they moved into employee ownership in 2009.  He was a challenging client, but only because he wanted TAS Partnership to stay true to his vision of enabling accessible, affordable public transport.

    As well as being a well-known character in the field of  transport, he was dedicated to raising funds for charity. Indeed, I first met Peter at a TAS Partnership board meeting where amidst the suits, he was wearing a “John o’ Groats to Lands End” teeshirt which he had worn on one of his fundraising cycle trips.

    Tragically, Peter died while training for a trip to the North Pole. Everyone who knew this vital. passionate man was shocked at his death. It really was not believable. Peter Huntley, with so much left to give, to be no longer with us. How fitting then, that attendees to Peter’s funeral arrived in a fleet of buses.  I use the word attendees rather than mourners, because the funeral was a true celebration of the life of a man who touched and inspired so many.

    Peter was raising funds for Transaid, the charity that works to reduce poverty and improve livelihoods across Africa and the developing world through creating better transport networks. Peter’s website is still open for donations. You can donate here

    Peter Huntley 1956 – 2012

  5. Circle Partnership and Hinchingbrooke Hospital – a test for employee ownership?

    February 12, 2012

    Hinchingbrooke Hospital, described variously as “failing”, a “basket case” “indebted” was under threat of closing.  Yet, the fact that the contract to run the hospital, a contact decided by open tender, was won by employee-owned Circle Partnership, has caused great controversy.  There have been many snide remarks about who actually owns Circle – is it financiers in smoke filled rooms just waiting for the day they can cash in their shares? is it evil autocrats with plans to subvert our beloved National Health Service?  Or is it just a group of people who want to find a way to deliver better health care?

    Because that is what Circle Partnership do – deliver better care.  Circle Partnership believe that clinical decisions should be made by clinicians – not bureaucrats, accountants or politicians.  Circle Partnership believe that those closest to the patient, make the decisions with that patient. Circle Partnership believe that their patients deserve the best; whether that is the best in healthcare, catering, service or surroundings. As Ali Parsa says, “Why settle for good enough, when you can strive to be great”.  The founders of Circle put a lot of thought into how Circle could be structured to achieve greatness, and decided that having more than 50% of the shareholding in the hands of those inside the business – rather than in corporate and external shareholders portfolios- the company could retain their vision of truly patient centred care.

    Yes, Circle also have external investors.  However, with a strong vision of transforming healthcare, there may have been no other way to finance their ambitious strategy.

    I had the pleasure of visiting Circle Bath with some members of the Employee Ownership Association . To hear a theatre nurse say that for the first time in her career, she was treated as an equal in the operating theatre was humbling. To hear how a consultant lost his post because he refused to park in the “Staff” car park, preferring the visitor and patient parking closer to the door was inspiring.  To have a porter explain that the corridor lights were placed on the walls as ceiling lights made patients on trolleys nauseous was educating. Indeed, the doors in  Circle Bath corridors are undamaged, because the porter does not want to bump them with the trolley.  There’s not “them and us” – everything is “ours”.

    I have every confidence that the great team at Circle Health will turn around the performance at Hinchingbrooke. They will do it by involving people, informing people and listening to them. Of course, time will tell. In many ways this is a great test of employee ownership.  Circle Partnership have a difficult task ahead.  Those who know the business are sure they will succeed.

  6. Corporate social responsibility – or a real sustainable social business?

    December 10, 2011

    Someone pointed out a painful truth to me today: the fashion for corporate social responsibility is often a marketing front, masking the true objectives and operations of the business. And yes, when I reflect, usually the responsibility for CSR within a company sits in the marketing department. What a depressing thought.

    That someone was Mark Adams, leader of Vitsœ, an exciting and innovative company which takes the whole matter of sustainable business very seriously indeed. As Mark spoke so passionately about the company’s products – they produce shelving systems – I wondered if he was a designer or an engineer. The attention to detail is incredible. The smallest components are painstakingly designed and custom-manufactured. Customers are provided with everything they need for a smooth installation in an attractive recycled cotton bag. The integrated IT system supports the company’s global operations. The units grace the pages of the glossiest magazines. It’s clever, and it looks good.

    Mark is neither an engineer nor a designer. He told me he was a zoologist. And it all fell into place. Mark views business as you would an ecosystem. No waste, just find another use. Don’t recycle, reuse. Get it right, and it will last. Evolve. Every stage of the business process has been considered to ensure that it is sustainable, customer focused and efficient.

    And Vitsœ mean it. It’s not empty words. Rather than using polystyrene, starch pellets protect the products in transit. A notice is pasted on the package to let customers know they can compost the pellets. The cardboard box packaging has been designed to minimise waste as far as possible. Even in the staff canteen, bottled water is banned and filtered water from the tap is kept cool in glass bottles in the fridge. A jar sits on the worktop with milk bottle tops ready for recycling. The array of bikes lined up in the workshop demonstrate the company’s favoured mode of transport. Even the workforce are sustainable. Two of the employees are returning to their homelands, Scandinavia and New Zealand, and Mark has given them the option of continuing to be part of the Vitsœ team. The company has locations in New York, Tokyo, Munich, Los Angeles, Melbourne and Sydney.

    Mark is now looking at how this sustainability can be anchored into the business for the long term. How can his vision, and the company’s very special ethos, be protected for the future? An admirer of John Lewis Partnership, Mark wanted to explore whether employee ownership might offer a potential solution to this. John Lewis Partnership is not owned by individual or corporate shareholders. It is owned by an Employee Benefits Trust, and the 80000 employees of the company are the beneficiaries of that trust. This ensures the company is protected from future sale – as far as possible – and free from external influences. A similar model would allow Vitsœ to continue to do business their way, and not be forced to compromise their ethics for short term gains.

    Sustainable business is about more than getting the product out the door and putting a marketing gloss on it. It has to be real. It would be an injustice to say Vitsœ produce shelving. No, Vitsœ produce the best shelving in the best way. Like the natural world used as the model, it’s the honest and ethical way to do business.