Carole Leslie

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  1. You can’t swap rights for shares

    October 10, 2012

    For many of us in the employee owned and coop sector the announcement of the “trade rights for shares” scheme was a blow.  Is this the Government’s big plan to foster more employee ownership?

    We expected better. Following Nick Clegg’s commitment back in January to “drive employee ownership into the bloodstream of the UK economy” and the endorsement by no less than three Government Ministers (Lamb, Clegg & Maude) of the Nuttall report, those of us in the sector thought – at last – they’ve got it! The very idea that employees should have to forgo employment rights to enjoy the rewards they help create is simply ludicrous.  Where did that come from?

    If only George Osborne had attended an excellent, and busy, event in Glasgow this week, he would have heard Sarah Deas of Cooperative Development Scotland say why employee ownership is so important to a healthy economy:

    • Unlike a trade sale where relocation is often inevitable, the model roots the business in the community.
    • The ownership stake engages the hearts and minds of employees and aligns everyone with the business
    • The wealth created is distributed over a broad base of people.

    Employee owned businesses enjoy a dynamic not often found in conventionally structured businesses.  As in every business, the board is accountable to the shareholders.  In the co-owned sector, these shareholders are largely employees.  This breaks down the “them and us”.  The goals of management and workforce are aligned, reinforced by the transparency and accountability that ownership brings.   The Government’s idea that there would be a two tier organization, with managers who hire and fire, and a subservient contractor workforce rails against the very principles employee ownership stands for.  This is a huge step back to the adversarial industrial relations environments of the seventies and eighties.

    At the core of Osborne’s proposition is that share value in these companies will grow and thus compensate employees for the lack of employment security and weakened working conditions. Just about every employee owned business will tell the Chancellor that this is a faulty premise. Financial gain is not unimportant, but is not usually a priority.  The fairness, the transparency, the accountability are the reasons why most employee owners produce the remarkable results that interest the researchers.

    There is no doubt that the model proposed might fit with a very small number of firms who may be looking for that “flexibility”.  Will this really drive the benefits of employee ownership and create a fairer, more solid and beneficial economy?  I think the response so far has been overwhelmingly that it will not.

     

  2. Employee Ownership – the time has come

    July 4, 2012

    When the EOA first proposed the idea of an employee ownership summit to BIS back in early 2011, we were pleased at the warm reception. We discussed with BIS officials the format, the content and whether there was any possibility of a Government Minister making a key note speech. The objective was to raise the profile of employee ownership as a business model and encourage more business owners to consider this as part of their exit strategy.  How many attendees could we expect?  We guessed 60.  Employee ownership is a topic which elicits positive noises yet not one that’s widely understood or adopted. Yes, it’s a good business model with lots of stellar examples.  But it was still a secret. The challenge was in encouraging business leaders to give up half a day to attend a meeting on something they would be barely aware of. It would be even more difficult to attract advisers e.g. accountants and lawyers to take time off from fee earning to attend..

    July 4th 2012 was the turning point. A summit meeting, held in the City of London, hosted by the Institute for Chartered Accountants of England and Wales launched the Nuttall report on employee ownership. There were more than 200 attendees – from employee owned businesses, from the professions, from financial institutions, from the unions. The event was chaired by BIS Minister, Norman Lamb and attended by the Deputy Prime Minister, Nick Clegg and Cabinet Office Minister, Francis Maude. All three ministers mixed with guests and participated in table discussions. The Department of Business Innovation and Skills did a superb job of organising what was a landmark event. There was media interest across the globe, with column inches in all of the major publications and widespread broadcast reporting.  ”I wish we had a Norman Lamb here” said one of my employee ownership contacts in the States.

    The difference a year makes. In the past year, we have seen a surge of interest in finding new ways of doing business. Tired of the short termism fostered by external shareholders, the unfairness of disproportionate executive pay, the general disenchantment that exists in our traditional commercial world have all created a fertile ground for finding a better way.

    Employee ownership has always had cross party political support but few vocal champions.  Norman Lamb, in his short tenure to date, has made things happen. The Nuttall report will be read with interest, and there is commitment to act upon the recommendations.  The Treasury review into the fiscal landscape surrounding employee ownership is due to report in the Autumn.

    The 4th July Summit is only the start.  The time for employee ownership has come.