The Employee Ownership Conference, which took place at the Arena and Convention Centre (ACC) in Liverpool recently, revealed why employee ownership is the future for increasing numbers of businesses to ensure their customers are satisfied with the ethical practices of the companies they choose to patronise.
The conference, which was spread over two days, brought together more than 700 delegates from the employee-owned (EO) sector, including business leaders, employee-owners and professional advisors. It showcased keynote talks and panel discussions from EO experts, provided networking opportunities, and hosted the Employee Ownership Awards at a celebration dinner.
Chris Maslin, who is an expert in employee-owned organisations, says that employee ownership is in its infancy in the UK, currently contributing 4 per cent of UK GDP annually, but that it’s a very exciting time for the model.
According to Chris, who runs Go EO based in Kent, more companies are now investigating how they can better incorporate their customers’ ethical concerns and proportionately reward employees for their contribution beyond a straightforward wage or salary.
“Employee ownership is turning the tide on the traditional model of a ‘face’ at the top of a business who has done very well out of it while not adequately rewarding the employees who helped get them there,” said Chris. “Everyone involved deserves credit for building a business, even though it may just be a business owner in the very early days. Employee ownership is the way to do that.”
Employee ownership is defined as an organisation in which all employees have a “significant and meaningful stake” in the business. This means they must have both a financial stake (i.e. shares, directly or indirectly); and a say in how the business is run, known as ‘employee engagement’.
The best-known model for this in the UK at present is John Lewis, which is the largest employee-owned business in Britain and has 80,000 “partners” — employees who all own a stake in the business and therefore have a vested interest in its success.
John Lewis has struggled financially in recent years due to a rapid expansion between 2010 and 2015 that was then compromised by challenges in the UK’s economy and difficulties competing with the widespread shift to online shopping, but experts have cited the value of the partnership model in the company’s robustness during this period. Retail guru Mary Portas warned the company not to be tempted to dilute its EO structure, describing it as its “heart and soul.” In an open letter to the company, she even suggested the future success of John Lewis relies upon it: “recommitting to the principles John Lewis was founded on: common ownership; the improvement of partner’s lives; collective responsibility.”
Chris Maslin who established his own accountancy firm, Maslins, in 2009, opted to start to exit via an employee ownership trust. When he took a step back from the business in 2021, he transferred most of the company’s shares to that trust. Finding the outcome very satisfying, he went on to establish Go EO, which exists to help other businesses transition to become EO organisations.
“Sure, John Lewis has been owned this way for about a century,” says Chris, “but it’s only in the last decade that legislation has started to make the employee ownership model more accessible and mainstream. I’m keen to see how businesses owned this way develop over the coming decades. Interestingly, it’s also what the younger members of the workforce who will have more and more say over the next few years are demanding.”
Chris says the decision for him to put Maslins into an employee-ownership trust (EOT) was a gradual realisation but that once he heard about the concept, there was no going back to the traditional company model for him.
“As the business became more and more successful, I felt increasingly guilty about my entitlement to the profits, while the people who had helped make the business a success remained purely on a salary. It felt like an outdated model and this in itself contributed to me starting to feel less connected to the business. When I heard about EO, I realised it was a brilliant way to allow me to step away from the business whilst also rewarding the team who had helped make the company a success. I really enjoyed forming an EOT and placing the future of the business in the hands of the next generation. In so many ways it just felt like the right thing.”
Research shows that Generation Z — the generation born between the late 1990s and early 2000s — has a greater focus on a healthy work-life balance and purpose in the workplace. Globally they make up about 20 per cent of the workforce and this is growing year on year.
A November 2023 report by ThoughtExchange found that 96 per cent of Gen Z think ‘it is important to feel valued at work’ and that a key ‘dealbreaker’ in wanting to work for a company is meaningfulness at work, both in terms of how all employees are treated and in terms of the work itself making a positive difference in a wider context.
Similarly, September 2023 polls from Gallup and LinkedIn revealed the importance of corporate ethics in the decision-making of Gen Z around the workplace, with the company’s values, treatment of its employees, sustainable and environmental policies and socio-economic impact rating as the highest priorities.
This does not surprise Oliver Enticknap, who works for Maslins and has his own personal ‘stake’ in the business. He attended the Employee Ownership Conference and suggests that more and more businesses are going to have to adapt their structure in this way if they want to retain the best talent.
“Being part of an EO company feels great! It gives me a voice in the company, which makes me feel valued and part of something big. It also allows me to drive the change I would like to see and makes work that much more enjoyable,” he said.
John Walsh, a trainee accountant at Maslins, agrees and says attending the conference provided him with the opportunity to obtain greater insight into other EO businesses.
“I wanted to bring back ideas for the future of the company,” said John. “The key takeaway for me was the importance of effective employee engagement. The democratic nature of being EO provides a unique sense of togetherness where all employees are involved in pushing the business forward. For me, being part of an EO company gives me a sense of freedom so I can express myself in a way that directly impacts the business.”
The Employee Ownership Association states that companies structured this way not only tend to treat their employees more equally but are actually also “more successful, competitive, profitable and sustainable.” They also tend to have a stronger commitment to corporate social responsibility and positive involvement in the communities where they are located.
“This is a direct link back to showing the value of EO workplaces,” says Chris Maslin. “I predict that so many more businesses will transfer over to this model in the near future and this kind of ownership will become much more commonplace. In terms of doing business for good, in every sense of the phrase, the employee-ownership model will have to be fully embraced, which can only be a good thing.”