In recent years, people have become more sceptical of unfettered capitalism.
Tales of fat cat excess, pension black holes and falling wages, have contributed to a feeling of “us and them”.
But what if the “us” was “them”?
Employee ownership puts a business in the hands of those that work for it, making them the direct beneficiaries of the company’s successes. It’s a model that has rocketed in popularity in recent years.
“Worker ownership is enjoying a boom at the moment, with the employee-owned sector doubling in size since 2010,” says Ed Mayo, secretary general of Co-operatives UK, the central membership organisation for co-operative enterprise throughout the UK.
He partly attributes the rise to tax changes that make it more feasible for owners to sell their companies to their employees, as well as moves by the Scottish government to support employee ownership, and a growing tech sector.
There are a range of different employee-ownership models including worker co-operatives, which are businesses directly owned and controlled by their employees, with the employee members holding at least 50% control. The employee trust model has employees as the main beneficiaries, but ownership and control is mediated through a trust or employee share plan. John Lewis operates a trust model.
Food wholesaler Suma which has 160 employees and a turnover of £48m, celebrated its 40th anniversary as a non-hierarchical business last year.
It started life in 1975, in the front room of a terraced house in Leeds, when founder Reg Taylor saw a gap in the market for wholesaling wholefoods. He sold cereal flakes, dried fruits and brown rice throughout the north of England. In 1977, he sold the business to its seven employees and Suma, the worker co-operative, was born. It is now the UK’s biggest worker co-operative and Europe’s largest single pay employer.
“We all get paid the same hourly rate regardless of the roles we do. We multi-skill, so the worker taking an order over the phone one day could be out delivering orders on a Suma truck the next,” says Emma Robinson, who is responsible for marketing.
She says that major business decisions are made democratically by the membership at quarterly general meetings, and an elected management committee meets each week to make strategic decisions and represent the views of the wider membership.
“We have free cooked meals for workers each day and member pensions,” she says. “While members are effectively shareholders – we each give £1 to join which we get back when we leave – we invest a lot of our profits back into the business.”
Jerba Campervans, a North Berwick-based business that specialises in converting Volkswagen Transporter vehicles into luxury camper vans, pursues a different model. Established in 2006, it has recently become employee-owned, and its 15 staff now own 100% of the shares via an employee trust.
Co-founder Simon Poole says: “On a day-to-day basis, we have always had an open-door policy, whereby employees are welcome at any point to bring ideas direct to the management.
“We listen to ideas and have implemented the vast majority. Employees recognise this and have always felt included and recognised for their value beyond simply their individual productivity.”
When a founder wants to step down, making the staff the new owners can be the best solution.
Brighton-based Mooncup started life in 2002, following a chance meeting between Su Hardy – who was touring Australia at the time – and another traveller. They got chatting about menstrual cups and the need to improve them, leading Su to come up with the idea of the world’s first reusable silicone menstrual cup.
A decade later when she decided to step down, she wanted an exit strategy that would suit her values, transitioning the company into an employee-ownership John Lewis-style worker trust model in 2014.
“After a decade of running a flourishing business, succession planning felt prudent,” says Eileen Greene, international trade manager, who joined the fledgling business in early 2004.
“As the founder of a groundbreaking and growing ethical business, however, Su could not simply hand in her notice. Employee ownership provided an exit route aligned with her personal beliefs: ideologically, ethically and as a practical continuation solution for the business.”
Greene says pursuing the current model provided staff with a level of confidence about their future, and also staved off any threat of a takeover, which could have brought with it unwelcome changes.
Mooncup has picked up a number of awards, including The Best Place to Work and Green Business awards in the Brighton and Hove Business awards 2017.
Greene adds: “For Su, as well as offering financial gain, this route promised the personal satisfaction of leaving a legacy, while being able to offer the Mooncup team a sustainable future in recognition of their contribution to helping to build up the business.”
But such models do not necessarily create a workers’ utopia – there are challenges as well as benefits.
Mayo says success or failure can depend a huge amount on the working culture and attitude of staff, and Robinson points out that some of the decision-making processes can also be slower than at more hierarchical organisations.
“Because decisions need to represent the views of the membership, we can be slow to reach a consensus at times,” she says. “But when we do make them, decisions tend to be well considered.”
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