Published 4 years ago.
About a 5 minute read.
Image: Guy Singh-Watson (center) and his family of employee-owners. | Riverford/Facebook
After a year as an employee-owned company, a “new sense of pride and unity” across the business has resulted in a 10% sales uplift for Riverford, and the best sales year recorded in its 30-year history.
The mass employee
at the online furniture firm Wayfair last month is a sign of the times. The
company’s decision to fulfil a large order of furniture headed for the
contentious detention centres along the US-Mexico border sparked a huge
social activist movement — not from within the campaigner movement, but among
ordinary people, increasingly intolerant of what they see as poor corporate
Of course, disgruntlements over exec decisions among staff are nothing new. Most
corporate away-days, water cooler chats and after-work drinks are fuelled by
missives aimed at the top of the hierarchy. Conversations about lazy colleagues,
unpaid overtime and unfair dismissals are commonplace.
What makes the Wayfair case, and others that have gone
so significant is the increasing appetite for employees to make sure their voice
is heard when it comes to their employers’ stance on wider social, environmental
— and in this case, political — issues, using technology to drive action at
speed and scale.
According to research by PR firm Weber
38 percent of American workers have spoken out in either support or criticism of
their employer’s actions on
such as climate change, same-sex marriage, gender equality and pay equity. And
the large majority (80 percent) of Millennials believe they have the right to be
vocal on such issues, even if it means calling out their
But what happens when a company actively gives employers a voice? Further still,
what about when the workers are given control and a real say in how a company
operates, acts and performs?
Employee-owned (EO) businesses — where staff are given a stake in the
company, whether as a percentage of the profits or in the form of shares — are
on the rise, at least in Britain. Today, there are 370 employee-owned firms
in Britain, with 60 percent of those registering as such since 2014. In 2018,
the number of EO firms increased by almost 20 percent.
And they are performing well: The Top 50 EO companies in Britain posted combined
sales of £19.2 billion (US$23.3 billion) last year, up 3.5 percent on a
like-for-like basis, compared to the previous year. Meanwhile, operating profits
jumped 2.5 percent and productivity almost 8 percent.
“Shareholders have no idea what’s happening on the shop floor. So, those
creating the value should benefit from that value,” says David Sproxton,
co-founder of probably one of the most famous EO companies in the UK,
Aardman. He says that the Bristol-based animation
studio, creator of the Wallace & Gromit films, has always had a
collaborative culture: “The employee ownership model fits well with that.”
Audio and TV retailer Richer Sounds is another company that has handed
over to its staff, by placing 60 percent of the company into an Employee
Ownership Trust (EOT).
“To me, the decision to sell the company to my colleagues was an obvious one.
Nobody knew my business better than the people in it and we’d created a culture
founder Julian Richer. “To sell to the highest bidder would have created
wealth for one or two people. Instead, using the EOT model, we will sustain the
value we create for the individual, the business and the economy for the longer
It is an ethos shared by Guy Singh-Watson, founder of the Devon-based,
organic veg-box subscription business,
“The whole exit strategy, adopted by so many tech firms, makes me angry,” he
told Sustainable Brands in a recent interview. “People want to make
something of value, but their whole reason for doing so is to create shareholder
value, so that they can sell it to Facebook or Amazon before it
Image credit: Riverford
Singh-Watson’s decision to sell the business to his staff in 2018 took a long
time. He examined the market to see what models worked before agreeing to the
current model, which sees all staff sharing in the spoils of 10 percent of
profits each year and having a say in all executive decisions. Among companies
moving into employee ownership, Riverford was unusual in selling such a high
initial percentage (74 percent, with Singh-Watson retaining 26 percent) and at
less than a quarter of its market value. The aim is to double the profit share
to co-owners, to 20 percent.
One year in, and MD Rob Haward claims that a “new sense of pride and unity”
across the business has resulted in a 10 percent sales uplift and the best sales
year ever recorded in its 30-year history: “Motivation, ideas and a sense of
ownership are impacting everything, from productivity, to financial
performance.” he says.
And staff turnover has reduced by 15 percent in the last year, thanks to new
initiatives such as a staff council — which consults on issues such as co-owner
wellbeing, culture and pay.
“It’s not a coincidence that we’ve broken all targets for this year. It is down
to people feeling a sense of ownership and rallying around to make improvements
in every area, no matter how small,” says HR director Charlotte Tickle.
While the EO model appears to be stalling in the US, with just over 6,000
employee-owned firms registered, there is plenty of evidence to suggest giving
staff more power, not less, is a successful corporate strategy.
At Aardman, Sproxton says its EO model, which is less than a year old, has
already helped to legitimise its approach to environmental stewardship and
diversity. At engineering consultancy Mott MacDonald, EO “stimulates
behaviours — so
when we make decisions, we get real buy-in and ideas are easier to implement.”
Other UK case studies point to enhanced productivity, ultimate transparency and
giving people a voice in corporate governance.
“Founder-entrepreneurs who sell their businesses to the highest bidder are
typically smug to start with but, as the new owners destroy their creation, they
suffer an identity crisis, ending up rich but bitter,” Singh-Watson added. “By
contrast, over our first year of employee ownership I have grown happier every
day, watching Riverford grow by doing things better, with integrity, while
generating profit, and — on a good day — with joy. I have no regrets; only pride
in what we are achieving together.”
Published Aug 21, 2019 8am EDT / 5am PDT / 1pm BST / 2pm CEST
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