Tag Archives: John Lewis

Inspiring day to drive growth in employee ownership

Glen DottNearly 350 delegates from businesses of all sizes visited the West Midlands last week for the inaugural InspireEO conference, hosted by the John Lewis Partnership (JLP).

Several high-profile speakers addressed a large audience which included prominent government and business figures. Not only did it motivate businesses – it has set the tone for a Scottish event of its own, as CDS specialist advisor Glen Dott explains.

Sitting among the hundreds of entrepreneurs who had gathered to participate in the first-ever InspireEO conference, you couldn’t help but feel motivated and excited for the future.

Gathering in the West Midlands were representatives from businesses across the United Kingdom, keen to hear the benefits of employee ownership (EO) from one of its most well-known proponents.

In hosting InspireEO, JLP provided a platform to promote employee-owned business models of all types. They used their own approach as an example to demonstrate the benefits EO offers both the company and its staff. EOA0037

Supported by several high-profile sponsors, the event underlined the widespread and growing endorsement of EO to exiting owners, advisors and the public sector.

Productivity in EO businesses grew 4.5 per cent last year while others flat-lined, demonstrating the value of the model for sustainable growth. People who work in such businesses are happier and healthier, taking less time off sick.

Business advisers were also in attendance and helped sponsor the event. Not only does this highlight the increasing interest in EO from businesses, but it demonstrates there is growing recognition among the advisor community of the model.

Sir Charlie Mayfield, the chairman of 80,000 partner-strong JLP, was joined by Francis Maude, Minister for the Cabinet Office. Both addressed the audience and in doing so demonstrated just how important EO is to business and the economy.

Sir Charlie Mayfield

Sir Charlie Mayfield

So inspirational was last week’s gathering that we are preparing to have a similar conference in Scotland later in the year.

Awareness and support for employee ownership is growing in Scotland and we are hoping to attract a large audience.  An engaging programme of activity is being prepared, along with some truly inspirational speakers to demonstrate why EO offers a bright future not just to Scottish businesses, but to Scotland as a whole.

We’ll be announcing full details later in the year. Hopefully I’ll see you there.

2014 is a time for change

Kim Lowe Director John Lewis Partnership

Co-operative Development Scotland recently hosted ‘Embedding a Culture of Ownership’ in collaboration with the John Lewis Partnership – the UK’s largest employee-owned company.

 Kim Lowe, managing director of John Lewis Glasgow, shared insights with an audience of over 30 existing and prospective employee-owned businesses in Scotland. Here she explains why she thinks 2014 is the year for employee ownership.

A new year presents opportunity for change. It is my hope that 2014 will see more businesses adopt the Employee Ownership (EO) model, aided by legislation and by examples of best practice. New legislation will be included in this year’s Finance Act after a period of parliamentary scrutiny and will mean that bonus payments to staff of employee-owned companies will be free from income tax up to an annual limit of £3,600. We hope this will encourage the creation of more employee-owned firms and will also help existing EO businesses – such as The John Lewis Partnership – to thrive. 

Last year, the Government-commissioned Nuttall Review revealed the link between employee-owned businesses and long-term economic success. According to academic evidence, they outperform other companies in job creation, have a lower risk of failure and are more satisfying places to work.

Employee ownership, in my experience, is most often motivated by a desire for a fairer and more responsible form of capitalism. At the John Lewis Partnership, shared ownership means engaging our Partners to deliver more for our customers and the business.  It means adopting a positive culture based on sharing in the rewards of success and creating a business that remains resilient in the face of challenging economic conditions. Giving employees a personal stake in the long-term success of their business is a powerful way of aligning their interests.

While the Government is starting to take forward many of the Nuttall Review recommendations, the playing field is still weighted against employee-owned businesses. The EO model remains relatively rare in Britain, despite evidence to suggest numerous benefits to the economy.

For too many and for too long, ownership has implied the right to sell, when I would contend that good ownership means the responsibility to nurture, develop and sustain organisations for the long term. This requires a change in culture and the way we perceive ownership in the UK. This shift won’t be an easy one to make but if done correctly it could mean a new generation of high-growth businesses, new employment opportunities, greater productivity and an economy better able to cope with the turbulence we will face in the decades ahead.       

Kim Lowe, managing director of John Lewis Glasgow

Kim Lowe, managing director of John Lewis Glasgow

 The article above appeared in The Scotsman on Thursday 9 January 2014.

The PIGS that DO fly

 Glen Dott low resSheffield is a hive of employee owned organisations and the place to embark on a learning journey to see what makes these places really tick.

Here Glen Dott, specialist advisor with Co-operative Development Scotland (CDS), reports back on his findings and offers plenty of food for thought.

 

‘Pigs might fly’ is the sort of cliché that applies to an idea that however well intended is unlikely to ever have any practical application. But when it comes to Pigs in the business world we have a model whose time has truly come and offers Scotland Plc. a dynamic alternative to growing the economy.

My role as a specialist advisor with CDS is to promote business ownership models which are Productive, Innovative, Growth-oriented and Sustainable. Pigs that fly in the commercial world…in other words!

With this in mind I was fortunate enough to be part of a trip to Sheffield to understand variations in ownership and governance models and their impact on performance. Sheffield happens to be a hive of Employee Owned organisations which exhibit diversity in structural and governance options and in their own way exhibit one or more of the ‘PIGS’ characteristics.

Learning Journey attendees: Co-operative Development Scotland advisers and staff, Scottish Enterprise organisational development advisers and Co-ownership Solutions staff. Taken outside the Aston Hall Hotel in Sheffield.

Learning Journey attendees: Co-operative Development Scotland advisers and staff, Scottish Enterprise organisational development advisers and Co-ownership Solutions staff. Taken outside the Aston Hall Hotel in Sheffield.

 First port of call alongside tour leaders Andrew Harrison and Norman Watson from Co-ownership Solutions was Parfetts Cash and Carry. It’s a traditional cash and carry founded in 1980 by the Parfett family. Steve took over from his dad in 1989 and by 2006, when he started reviewing his own succession options, it had six depots and a £250m turnover.

Steve was heavily influenced by his time working as a management trainee at John Lewis which has galvanised him into pursuing an EO exit option. In 2008 55 per cent of the company shares were sold to an employee trust, with an option for the trust to take up the balance of the shares in future. 

Employee engagement activities begun once the deal was concluded. Although it’s a fantastic result for 550 employees our advice generally is to engage with the workforce at the earlier opportunity available. Employees certainly now have their say, the business is growing and local jobs have been preserved.

After a gourmet lunch, courtesy of Parfetts, our next stop was Gripple, a model example of employee engagement and home of their eponymous and ingenious wire tensioning device. Charismatic and straight-talking founder Hugh Facey is one of the UKs foremost proponents of employee ownership and gave a fascinating account of his beliefs and the company.

A company limited by guarantee (GLIDE) has been set up as a holding company and will ultimately be the governing authority for Gripple and other operating companies and hold majority shares in the subsidiaries.

Gripple UK office

Gripple UK office

Employees are required to purchase shares and as demonstrated in the well attended communications meeting the returns, displayed publicly, are highly attractive. In addition to having a strong international focus, innovation and new product development are crucial with some 25 per cent of revenue being generated from products less than four years old.

I couldn’t help admire the way that all staff were immaculately turned out by choice in company uniform – a fantastic endorsement of any business. Fun certainly appeared to be part of the ethos with a screening of a corporate video involving many in the Old West Gun Works and espousing all Gripple’s principles including honesty, integrity, commitment, humour and passion. Gripple is certainly productive, innovative, growth oriented and sustainable.

That evening we were treated to an overview of the Employee Ownership Association’s vision to increase EO contribution to GDP from three to 10 per cent by 2020. David Daws, legal partner at Co-ownership Solutions and part time helicopter pilot, gave an eloquent description of the governance system options within EOBs. The message from David was clear: keep transitions simple and don’t let the tax tail wag the corporate dog.

Next stop was School Trends. The business was founded by Peter Beeby who sold the business to an employee trust in 2004 to preserve the ethos and maintain a community culture.  Employees are also required to buy shares as a condition of employment. The 120 employees are consulted widely on many decisions and have influence within the business, not least on the governing council, board of directors and via trustees.

We then travelled a short distance to a very interesting business. SUMA is a true workers’ co-operative and the largest equal pay organisation in Europe. All workers receive a flat wage of £14/hour and rotate jobs on a regular basis.

Members (shareholders) in the reception of SUMA  in Elland near Sheffield

Members (shareholders) in the reception of SUMA in Elland near Sheffield

But wait for it…no-one is a boss! Sounds crazy? Maybe so, but both myself and my colleagues were impressed since the business has 100 members and turns over £30m annually. Furthermore it is growing and has successfully penetrated the Chinese market.

That’s amazing I hear you ask…how does such a ‘flat’ structure like SUMA deliver growth at a time of widespread economic gloom?

In truth, they are a highly organised worker community with a clear vision of the value they provide. They maintain close contact with their clients whilst and do so in a highly competitive marketplace.

Over tea and home baked cake in the canteen personnel officer Bob Cannell talked us through facts and figures relating to the business. It was set up as a workers’ co-operative in 1975, as an Industrial and Provident Society. Policy and direction is decided by general meeting of members, and an elected management committee oversees the fulfilment of a democratically agreed business plan.

Conventional no, but effective yes, SUMA passes the PIGS test with flying colours. They are productive, innovative, growth oriented and definitely sustainable. Food for thought.

Seafood Producer Serves Up Food For Thought…

Angela Wardrope hi resScotland has a thriving food and drink sector. Employee owned companies like seafood producers Aquascot are reaping the rewards of co-operation.

Angela Wardrope, project manager, Co-operative Development Scotland, shadowed Aquascot’s Dennis Overton when he went before the Scottish Parliament Cross Party Group on Food.

 

I had the opportunity to hear Employee Ownership Ambassador Dennis Overton from Aquascot address the Scottish Parliament Cross Party Group on Food in January. The experience provided an insight into Aquascot’s journey towards employee ownership and a fascinating bird’s eye view of Scotland’s food and drink sector. It got me thinking about the bigger role co-operation could play in this industry. AquaScot Dennis Overton 94

Aquascot is based in Alness and takes its inspiration from the 1920 pioneering profit sharing model of employee ownership set up by John Spedan Lewis. The seafood producing firm began its journey towards employee ownership in 2008, which it will complete 2016. 

AquaScot 02In 2008 the main driver was to sustain and grow the business for the future. The potential was huge: a strong team, accelerating health drivers, expertise in aquaculture and strong market demands. A business owned by the employees was the only solution to create long term value in a fairly remote part of Scotland.

Now, four years later turnover has reached £29m and total staff numbers are up to a healthy 135. Aquascot is also benefiting from a reduction in absenteeism and leaving rates – half that of the sector average. Staff are twice as productive as the sector average and feel they can bring forward ideas that are listened to and implemented.

AquaScot 05So what is the wider potential for this model in Scotland’s food and drink sector? The industry is made up of lots of micro-businesses, a few large family businesses such as Tunnock’s and Mackies and a few giants like Devro. The industry also has plenty of first generation entrepreneurs, who in my view would be a great fit for employee ownership. The challenge is how we ensure other companies take inspiration from the benefits enjoyed by Aquascot, and think about employee ownership themselves.

But back to our parliamentarians. A good debate took place amongst Cross Party Group members following Dennis’s address. They wanted to hear more about the risks when changing ownership structure and how businesses adapt to this change. Dennis responded by pointing out the difference between ownership and management. He conceded the transition process can add complexity to the mix, but a well run business is a well run business, irrespective of the ownership structure. 

A question was also raised around ‘co-opetition’, when businesses co-operate with competitors. At Co-operative Development Scotland (CDS), we are seeing a strong appetite for this. Especially where there is an opportunity for businesses to collaborate to help a sector grow.

For example Food from Argyll is a consortium of nine food producers that came together to sell their produce at events under its singular banner. Overall, the members all saw the co-operative as an opportunity to get into a market that would be really hard to crack on their own. A consortium co-operative allows single businesses to pool their resources in this way without compromising their independence as singular entities. They look at the bigger picture and will reap the benefits as a consequence. 

Best of Food Argyll 2So did the Cross Party Group members feel that co-operative business models were a good fit for Scotland’s food and drink businesses? Overall, there was a feeling that any form of co-operation would be beneficial. And that much more needed to be done to promote collaboration for the benefit of the sector.

CDS supports all businesses in Scotland, irrespective of sector or size. If you like the sound of accessing bigger markets through co-operation we can help you. We have produced a short paper on Scotland’s food and drink sector, so if you want to read more see: Co-operate for growth; Growing Scotland’s food and drink sector.

Co-operative Development Scotland is a Scottish Enterprise subsidiary, established to help companies grow by setting up consortium, employee-owned and community businesses. It works in partnership with Highlands and Islands Enterprise.