The benefits of moving a business to an employee ownership scheme has been widely publicised and boast of many characteristics that encourage good corporate governance. These benefits have been highlighted in the first stages of The Ownership Effect inquiry, which aims to glean new evidence on the performance of employee-owned businesses from industry leaders, and some key challenges were brought to light, none more so than supporting employees through the process. Considering that the very nature of an employee ownership model is to put a business’s people at the very heart of its makeup, owners must understand the differing employee concerns in order to facilitate a system that works for everyone.
A key theme recurring throughout many of the inquiry hearings was the challenges for the senior management teams in embracing the changes that come hand-in-hand with adopting an employee ownership model. To be clear, this isn’t necessarily focused on ‘age’, but more the range of worries tended to differ depending on the level of seniority; highlighting the need for different approaches to reflect the concerns of diverse groups of workers.
While empowering the workforce to have a greater voice can only be a good idea, it can strike fear into some management teams, particularly if they have been used to making decisions in a more autocratic way. Therefore, it is essential that businesses thinking about employee ownership options secure management team buy-in from the start.
A key element to bear in mind is that employee-owned businesses will still need a strong and effective management team to guide decision-making. Appointing an employee director to the management board can help represent the voice of the masses while ensuring decisions are still made in a timely and effective way.
Senior managers, largely those just below board level are often used to getting on with the job at hand, and the move to employee ownership can make them more accountable to stakeholder groups, mainly the wider employee network. Being held more responsible is no bad thing from a business point of view, but senior managers can feel under more scrutiny than they once were.
Although coming to terms with the changes that an employee-ownership structure can bring is often most feared by senior management, Gen Y talent at the beginning of their careers must not be overlooked either. The ongoing debate about how businesses engage and retain Gen Y employees continues to rumble on, with many stereotyping this cohort as ‘flighty’ and ‘disloyal’, however this just simply isn’t true.
From research conducted by Shakespeare Martineau, 84 per cent of graduates rate employee ownership as a main influencer to career choice. The firm’s research reveals that graduates are increasingly looking for more than just a job that they can clock in and out from. The prospect of having real ownership, responsibility and influence within a business is far more important to them than salary and reward packages and now is the time for businesses to act.
It seems that some businesses are failing to keep their finger on the pulse of what this group of future employees are looking to get out of their careers. Adopting an employee ownership model, where possible, could help to narrow the skills gap, enhance innovation, productivity and stimulate business growth. Creating business structures that continually involves and rewards employees is a very real possibility and may give organisations the competitive edge when it comes to recruiting candidates of this nature.
For an organisation with a long-term view and whose main assets are the skills and knowledge of its employees, choosing a corporate structure that improves employee engagement and retention can keep the business on a positive even footing.
As Brexit looms, market uncertainty is inevitable and employee ownership could provide business leaders with the answer to employee retention right when they need it the most. Providing support to those most resistant to change, while engaging those that embrace it, the right balance can be achieved and businesses will be able to reap the rewards provided by an employee ownership structure.
Gary Davie, head of employee ownership at law firm Shakespeare Martineau.