Can inclusive business models help us achieve a stronger and fairer economy in a post-pandemic world?

11/12/15 - 15112301 - SCOTTISH ENTERPRISE    GLASGOW    Claire Alexander

Head of Co-operative Development Scotland Clare Alexander explores further.

Along with the Scottish Government, we want to help create a more progressive Scottish economy that contributes to increased prosperity and equity, creating better opportunities for everyone and spreading the benefits of economic success more evenly. COVID-19, with its proven ability to target and highlight inequality, has made this a more urgent task.

This is at the heart of Scotland’s Programme for Government, which is responding to the economic, health and social crisis that COVID-19 has brought, and I believe our business community is key to supporting this. The inclusive business models we promote are great examples of plural ownership, one of the five pillars of Community Wealth Building, which is seen to be integral to effect the necessary change for local communities and national wellbeing.

As we enter this period of rebuilding our economy we recognise the importance of supporting this people-centred approach to economic development which redirects wealth back into the local economy and puts control and benefits into the hands of local people. Our commitment is to support any business interested in developing their model to drive both business success and resilience, while ensuring greater equity for our communities and fairer working practices for our workforces.

While discussions on the social aspects of the economy have become more vociferous in recent years, COVID-19 has undoubtedly fuelled its relevance and urgency. The crisis has had a massive impact on the global economy and Scotland, like all countries, has been deeply affected. Many of our norms have been questioned and there is a desire to change the way we do business. Business leaders have prioritised wellbeing, communities have responded by supporting each other through the crisis, and new and innovative ways of being economically viable have come to the fore. There has also been a focus on a collective, rather than an individual, call to action. We’ve been driven not just to respond in the immediate term, but also to make choices about the sort of economy we want to have and to focus our efforts on ‘building back better’.

With thoughts turning to economic recovery, we are highlighting the critical role inclusive business models, such as employee ownership and consortium and community co-operatives, can play in helping to implement and ensure the creation of a fairer and more democratic economic alternative.

These co-operative business models are collaborative vehicles that play an important role in creating globally competitive businesses, industries and infrastructure. They enable employees, businesses and communities to work together to fulfil shared interests. This unlocks creativity and capacity. There is growing evidence that they increase productivity, innovation and growth – whilst achieving wider societal benefits.

An employee-owned business is one in which the employees hold the majority of the shares, either directly or through an employee ownership trust.  Selling to employees allows owners to manage their exit and achieve fair value while safeguarding the long-term future of the company. Employee ownership gives employees a meaningful stake in their organisation together with a genuine say in how it is run.

Evidence shows employee-owned businesses consistently outperform in terms of improved business resilience during times of economic crisis. They tend to be more productive with higher levels of staff engagement and wellbeing, particularly relevant during a time in which people are spending more time working from home.

Research we recently conducted highlighted significant worries from Scots about job security and closures of local amenities such as shops and pubs. Co-operative models can help to address those concerns through their ethos and structure.

Setting up a community co-operative can be an effective way for people to safeguard public services, for instance coming together to take over a local shop or pub and prevent it from closing, something which could be relevant in the current climate. Community businesses can have a significant positive impact on areas whether they provide a local service, deliver economic growth, or contribute towards the health and wellbeing of the local community – often all three. They are important to the economy because they can retain jobs, bring economic opportunity and retain vital services and amenities.

The economic and social potential of community business is significant, and could be more widely adopted in Scotland. Combined with the greater community spirit that has been cultivated during COVID-19, now is an appropriate time to champion community business models and the wider economic, social and environmental benefits they can deliver.

We’re also advising business owners to consider the advantages of formally joining together via the consortium co-operative model. These are established when businesses come together for a shared purpose; to buy or sell in scale, market more effectively, share facilities or jointly bid for contracts.

We know collaboration has been a vital part of the response to the pandemic, so formalising a consortium co-operative could be an effective, low risk way for businesses to improve market presence and achieve new goals whilst retaining their independence.

Whilst these types of inclusive businesses have experienced many of the same challenges around job retention, cash flow and uncertainty as others during the pandemic, they are often more resilient, putting them in a strong position to weather the economic storm.

The economy needs to have the best possible chance of recovery, with businesses that can be resilient, adapt and offer a fairer more inclusive economy.  We know there is a significant role for inclusive business models to play in helping to build back better and would urge any business owners reviewing their options to consider adoption of these models.

Please click here to find out more about these inclusive business models and the support available: https://bit.ly/3jJVMuf

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