Tag: Scottish Enterprise (Page 4 of 5)

A new generation lighting the way…

June 2, 2014 /

Sarah Deas resizedLeaders from across Europe came together recently in Brussels to discuss all aspects of co-operative development, including how to engage with young people looking to collaborate in business.

Fresh from the insightful conference in the Belgian capital, CDS chief executive Sarah Deas reveals some of the different approaches being taken by various countries.

Across Europe the next generation is eager to create new endeavour – young people wanting to start their own businesses.  Many are talking about doing so together – championing a co-operative approach to match their values.

Recently I attended an event at which this message was loud and clear. I joined leaders from Flanders, Finland, Italy, Sweden and the UK in Brussels to share our approaches to co-operative development.

We heard from Gordon Hahn, chair of Sweden’s Coompanion, on how his organisation is tapping into this growing desire to collaborate. They recently launched ‘Generation Kooperation’, a campaign targeting 20 – 35 year olds.kooperation

I explained how here in Scotland we are also supporting the growing interest in the younger generation by developing teaching resources and a toolkit for use in universities and colleges. Following a successful pilot, we are now working with the Scottish Funding Council to support the roll-out of these resources across the futher and higher education sectors.

Other insights from our day in Belgium included recognition of the role that strong national bodies play in promoting the adoption of co-operative models. We were all impressed to hear how Coompanion, which operates 25 co-operative development centres across Sweden, has supported 5,000 new co-operative entrepreneurs over the last fiveyears.

Niina Immonen and Mirja Taipale, from Tampere Region Cooperative Center, also described the important Finnish initiative upskilling 820 business advisers – ensuring co-operative models are considered as mainstream options. Their contemporary campaign – ‘Enterprising Together’ – was designed to stimulate public interest in working with others. It involved radio broadcasts, mass distribution of brochures and events across Finland.  Together these initiatives resulted in a 10% per annum increase in co-operative start-ups.

enterprising

All the nations identified emerging opportunities for co-operatives in:

  • creative industries
  • tourism
  • social care
  • renewable energy
  • broadband

Consortium co-operatives are becoming increasingly prominent in the tourism and creative industries as a vehicle for business collaboration. Italy’s distinct legislation has resulted in 15,000 social co-operatives. The UK’s community shares initiative has enabled over 200 communities to invest in local enterprises. And, in Sweden, co-operatives provide 20% of the broadband infrastructure.

Our host, the Flemish Government, in its commitment to co-operative entrepreneurship is calling for ‘proposals’ for new co-operative business models – a refreshing and pioneering approach.

The increasing relevance of co-operative models in modern-day Europe was evident throughout the day – driven by changing societal values and the need for innovative solutions to local issues. A big ‘thank you’ goes to Kristof Welslau for arranging such a valuable day.

It is over 50 years since President Kennedy spoke of the torch being passed to a new generation. “United, there is little we cannot do in a host of co-operative ventures”. It may be our young people who will now take forward that torch and drive the adoption of co-operative models, not just in Scotland but world-wide.

Starter for six – top tips for those considering EO

May 7, 2014 /

????????????The first of five CDS employee ownership events took place last week at animal feed manufacturer Galloway & MacLeod’s HQ in South Lanarkshire.

Here, CDS specialist adviser Glen Dott takes a look at why employee ownership can be the ideal solution for businesses thinking about succession.

Plan for the future

It’s essential for business owners to be planning for their eventual exit. By providing certainty for the future, company value can be maintained. When Ralph MacLeod decided to sell to his employees he shaped the future of his organisation and more importantly dictated the speed and terms of his exit. Furthermore, it meant that the MacLeod family’s desire for the business to remain in Stonehouse was honoured.

Value extraction

An employee buyout offers an incredibly flexible way for owners to extract value from the business. Not only did Ralph strike a deal at a reasonable price but the sale process was simplified without compromising on due diligence.

Tax efficiency bonus

The Galloway and MacLeod deal was designed to ensure the maximum tax efficiency for the family, the business and also the employees. New tax regulations – which came into force in April this year – can ensure that a sale to an employee owned trust is essentially tax free. Businesses controlled by an employee owned trust are able to pay a tax free bonus to employees of up to £3600 annually.

The owners at Galloway & MacLeod

The owners at Galloway & MacLeod

Trust, individual or hybrid share ownership?

Galloway and MacLeod has designed a structure in which the employee trust will ultimately be the majority shareholder. Employees can also buy or earn shares, which allows them to benefit from share value increases and dividends when the company does well.

Marathon not a sprint

The transition to employee ownership can take place over a number of years – 15 in the case of Galloway and MacLeod. The MacLeod family have taken the long view and the employee trust will buy 1/15 of the shares annually using an option arrangement which provides leeway for both the family and the employee trust.

Turbocharging effect

It’s essential for employees to understand and be involved in the buyout process. If everyone is an owner their objectives will be aligned and it is likely there will be a performance uplift. All available evidence confirms this – employee owned businesses where employees have a significant equity stake and an influence on governance are more productive than other business ownership forms. In many cases this can positively affect the ‘earn out’ for exiting owners.

To view the CDS guide to a successful succession, click here.

My personal journey to employee ownership

April 22, 2014 /

Nick Kuenssberg ICAS photoIn 2012, industrial textile manufacturer Scott & Fyfe – a fourth-generation family business – made the transition to employee ownership (EO).

Non executive chairman Professor Nick Kuenssberg explains how lessons learnt in Germany, Peru, Chile and the UK led to the introduction of EO to the family behind the Tayport-based firm.

 

Germany, 1967

  • Representation and trust are paramount
  • Social welfare is necessary in the wake of mass redundancies

germany

I helped with the restructuring plans of a Hamburg manufacturer. Its acquisition proved to have been a major strategic mistake (the first bank con that I came across) and the textbook solution was to transfer the rump of the business elsewhere and close down the balance.

What struck me forcibly was that it proved possible to close it in an orderly way without headlines or hysteria – not only was there a social welfare plan for those made redundant but there was union representation on the supervisory board which meant that the employees believed the management story.

Peru, 1971

  • The profit motive is critical if investment is to prosper
  • Expectations for EO must be managed realistically and sympathetically

peru

The left-wing military government introduced the concept of an industrial community, a form of co-operative within each industrial company, which gained ownership up to 50 per cent of equity through the allocation of 15 per cent of annual pre-tax profit. The greater the profit, the faster the original shareholders were diluted, undermining the normally acknowledged capitalistic profit motive. Incidentally, there was also a profit share to be distributed on a per head basis.

This novel regime undermined the industrial sector within a few years because the profit motive was eliminated – investment dried up and any actual investment made saw surcharges on imports deposited outside the country – and the trade unions which dominated the industrial community board also had representation on company boards.

There were ways round this to be exploited involving transfer of profits but these routes di little to promote industrial development generically.

Chile, 1974

  • The rigid communist state planning controlled price model does not work

chile

In the post-Allende era, I worked to recover a company that had been sold to the Chilean Government (but never paid for). The company was comprehensively bust and 23 per cent inflation per month made normal life difficult.

Real demand collapsed and government price control meant not only that costs could not be recovered, but that the product was resold at a black market premium. Staffing was excessive and there was no cash to cover the payroll – other than via a government bank that charged interest at inflation plus.

Radical restructuring was necessary to recover the situation and price freedom was vital to make this possible.

Since then both economies have recovered and flourished under the Chicago School of Economics model with open frontiers, low duties, realistic exchange rate and promotion of investment and exports.

UK, 1975

  • The relevant parties did not listen to each other
  • Determined people will beat most governance systems unless board, management and employees are working to the same agenda

gb

The Bullock Report on employee representation appeared, recommending that employees be represented on the boards of UK companies with directors to be selected by the trade unions.

The bosses rejected this (in the light of the state of play in the late 1970s) and the unions did too, as they interpreted it as undermining their pay bargaining rights.

UK, 1999

As a non executive director of a large engineering company owned by the workforce through a trust, I resigned. The combination of an ambitious chief executive and a self-aggrandising chairman persuaded the company to embark on a reckless path to European leadership.

This transaction needed short-term finance of an aggressive acquisition which could not be refinanced, ending with a fire sale to private equity at a fraction of its market value.

Scotland, 2014

scotland

Many of the above lessons were applied to the transfer of ownership at Scott & Fyfe, ownership that is both indirect via an employee benefit trust and direct in that it provides opportunities for employees to acquire shares in the business.

The benefits have been real, wide-ranging and surprising; greater flexibility of labour, improved productivity, enhanced understanding of the business, an end to company politics and genuine trust in management. The move from employee to owner is well under way.

Employee ownership provided an exit route for shareholders and has contributed to a much better business – one committed to its local community, less exposed to takeover, sustainable in every sense and geared to a long-term strategy.

Going against the grain has led to success for Galloway & MacLeod

March 31, 2014 /

Donald Harvey, MD at Galloway & MacLeod

Galloway & MacLeod has roots dating to 1872, and is now one of Scotland’s most successful employee owned companies.

Here, Galloway & MacLeod’s managing director Donald Harvey explains the benefits the business model has brought to the agricultural firm.

Selling the business to the employees is the best succession option Ralph MacLeod could have chosen – for the company and for the employees. It can be an uncertain time when a business owner begins to think about exit from a business. When Ralph started to speak with me and thereafter the management team, his first concern was that we were kept informed and involved in whatever choice he would eventually make. It was the opportunity of a lifetime – owning the company!

The company began in 1872 and Ralph MacLeod was the third generation of the family to own the business. When the time came to think about handing over, Ralph was not clear on the options open to him. He did have strong views on what he didn’t want to do. Galloway & Macleod is a unique company, which is an important feature in the local community. Ralph wanted to find a succession route that protected that.

Agriculture is a fiercely competitive business, dominated by large players. As an example of this domination, there are now only two main players in grass seed supply worldwide. None of us wanted to see Galloway & MacLeod swallowed up by a large conglomerate. We pride ourselves in the strength of relationships we have with our customers.

Ralph MacLeod took the firm down the employee ownership route

Ralph MacLeod took the firm down the employee ownership route

If Ralph had chosen to sell to a trade buyer, then the danger was that the business would have become product driven rather than customer driven. To me, the move to employee ownership allowed us to maintain our independence and preserve our customer-centered focused approach, without a noose round our neck and an overdraft which would have had a big impact on the business.

There have been other benefits in the move to employee ownership. We now have 34 owners who all have a stake in the prosperity of this business. This means that most of the people come into work thinking like owners. They want the business to do well, and they know that they will share in the rewards of that success. We don’t have issues with absence or staff turnover; people enjoy being here. We are able to attract the highest calibre of recruit, and will always promote from within.

Alongside these benefits are challenges, particularly for the management team. How do we make sure that these owners understand how the company works and where our revenues and costs are? How can we ensure everyone has the information to enable them to make the best contribution possible? We had to take a very close look at how we communicated with our people, and how we make complex information accessible. We had to ensure our management team had the skills and support to do their job well. We don’t always get it right but we are quick to acknowledge and address our mistakes.

The owners at Galloway & MacLeod

The owners at Galloway & MacLeod

As Managing Director, I’m accountable to the 34 owners of this business. As these owners are the employees, they see and understand the process from prospecting to order fulfillment and the relationship we have with our stakeholders.  As our management team is running a business in an accelerated growth plan with high expectations, we meet challenges which can be hard to overcome. However, I’m sure we have the skillset and understanding to make these decisions, ensuring our values, sustainability and environmental impact are exceeded. Every day’s a schoolday!

The flip side is that I’m leading a team of people who have a stake in the future of this business. It’s in their interests to do as good a job as they can to ensure the company prospers. I’ve first-hand experience of the evidence demonstrated in the research: employee ownership is the most effective route to true employee engagement.

And it all seems to be going in the right direction. Sales are up 39% since 2010. We keep our customers and have won several new ones. Our employee satisfaction levels are extremely high.

As for Ralph, I’m delighted to say he’s still there for when we need him. He knows this business and its people inside out. It’s good to see him have the time to spend on his other passions of sailing and hill walking. Ralph MacLeod did a great thing for the employees of Galloway & MacLeod. The current owners know we have a lot to live up to, and we are all working to ensure we continue the legacy and deliver a prosperous future for our business.

 

Time to learn from the experts…

February 14, 2014 /

CDS Employee Owner Managers Event 21Last week we hosted the first of our expert adviser breakfast briefings, with Baxendale’s  legal director Ewan Hall delving into the world of employee ownership.

Here, CDS specialist advisor Carole Leslie reflects on the key learnings from the session.

At CDS, we have been working with professional advisers on building knowledge of employee ownership (EO) over the past 18 months.  We uncovered a real appetite amongst lawyers, bankers and accountants to learn more so we organised a series of expert breakfast briefing sessions, each one led by a respected specialist in their sector, covering an aspect of employee ownership.

Our first event took place last Tuesday (4 February), with Baxendale’s Ewan Hall – one of the foremost legal advisers in the field of EO in the UK. He has managed more than 20 EO transitions directly and been involved in many more.

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Ewan Hall, Legal Director, Baxendale

 The company itself is a major player in the EO field across the UK, with an impressive 50% of their projects in Scotland. They offer specialist advice and investment to help support the creation of sustainable and growing businesses.

During the session – which was covered exclusively by BusinessScotland.com – Ewan spoke about the key decisions and elements involved in an EO transition and talked the audience through the process of an employee buyout (EBO).

 Breaking the subject matter down, Ewan touched on many important points during the 90 minute presentation – here’s a snapshot of the key learnings:

  • An EBO deserves every bit as much consideration as a trade sale or management buyout. The vendor can expect to get open market value for their business, which can be hugely attractive to them.
  • Having a stake in the business doesn’t just motivate people as the new owners of the business; the stability of the EO model safeguards the future of the firm, sustaining local jobs.
  • The vendor also retains considerable control and influence over both the process and the outcome, and can help to put the post transfer structure in place.

20090316131940.m2ts.Still001

  • Vendor financing is a major feature of today’s EBOs and is often the favoured source of funding – many businesses are conservative about taking on external debt.
  • The sector is incredibly supportive, with CDS providing adviser support in the initial stages. CDS will introduce potential EO companies with established EO firms, so they can share their experience  of the process.
  • Scotland is seeing more EO transactions than the rest of the UK – this is possibly due to the amount of support available.
  • EO doesn’t end with the completion of the legal transaction. It is a constant process, with engagement and communication key to driving the benefits of the model.
  • The EO model gives a long term solution to the issue of succession, but it doesn’t mean the owner has to leave the business – they can still be involved post transfer, often in a non-executive capacity.
  • The key to success for the EO model is flexibility, as it can be adapted to suit the vendor and industry.
  • EO is growing and there is a high level of interest. Upcoming changes to tax legislation are likely to make a major impact on encouraging new EO businesses and rewarding employees of existing ones. The changes will enable businesses to pay out bonuses free of income tax.

If you were interested in attending one of our breakfast briefings, we have four more throughout 2014 – for more information, click here.

And for those of you who couldn’t make it, you can watch Ewan’s full presentation on our website or watch a short teaser below:

Co-operative Development Scotland is the arm of Scottish Enterprise working in partnership with Highlands & Islands Enterprise  that supports company growth through collaborative and employee ownership business models.

Shining a spotlight on finance

January 31, 2014 /

Jaye Martin 03At the most recent CDS Advisory Board meeting, some of Scotland’s key industry figures gathered to discuss how ‘stakeholder banks’ can be the ideal solution for co-operatives looking to raise capital.  

Jaye Martin, a Specialist Advisor at CDS, shares her experience of the day.

As January comes rapidly to an end and the weather shows no signs of improvement, like me, you are probably longing to get away from the soggy grey skies.

But at the recent CDS Advisory Board session, we refused to be cowed by the January blues and instead presenting an eclectic mix of speakers to throw some light (and shade) on the topic of Financing and Capitalising Co-operatives. 

James Graham 2323 - 008

James Graham of SAOS

Insights gained from the session will help inform our thinking over the coming year as we consider in sharper detail the financing issues affecting the businesses we work with particularly relating to employee buyouts and consortia of scale.  This is of course in the wider context of Scottish Enterprise’s ongoing work in the Access to Finance arena and the Scottish Government’s Sustainable, Responsible Banking strategy, published last year.

 Attendees from CDS, our Advisory Board, Scottish Enterprise and the Scottish Government heard from James Graham of SAOS on the challenges of capitalising a typical agricultural co-op and the potential need for a farming and rural financial intermediary to serve that community, and Angus Waugh and Gerry Sweeney from First Milk on the challenges of raising capital in a 1,700 member strong dairy co-operative. 

New Economics Foundation’s Tony Greenham gave an in-depth analysis of the UK’s banking system and the benefits of ‘stakeholder banks’ with Rod Ashley of Airdrie Savings Bank, the UK’s last remaining independent savings bank, highlighting the benefits of local banking.

Trying to summarise the rich learning and discussion from this jam-packed session is probably an injustice. However, as a taster let’s consider on the top five financing facts:

  • The UK, and particularly Scotland, lacks diversity in its banking system as compared to other developed nations.  In the UK, local banks comprise just 3% of the sector as compared to 67% in Germany and 34% in the USA. 

Fact 1 image

  • Co-operative (and employee-owned) business models by their very nature make capital-raising difficult due to the ownership structure.  In the USA, there are special provisions supported as a necessary counterbalance to other types of enterprise.
  • Collaboration is the name of the game in Germany. Local banks co-own central services (for example, back office, regulatory and marketing functions).  This collaboration (rather than the consolidation seen in the UK) allows them to remain locally focused, with sophisticated systems.

    Rod Ashley, chief executive of Airdrie Savings Bank.

    Rod Ashley, chief executive of Airdrie Savings Bank.

  • Airdrie Savings Bank was founded on 1 January 1835 and is the only institution now operating under the auspices of the Savings Bank (Scotland) Act 1819.  Customers have ready access to bank managers and staff with knowledge of the local area and local businesses.  The Bank faces an ever increasing scrutiny from the regulatory landscape. 
  • There are comparatively higher levels of lending to co-ops, social enterprises and charities as well as local SMEs by local banks.  For example, the German government-owned development bank KfW has specific funding available for family businesses to help the younger generation to buy out the older (retiring) generation. 

Although, like the January sun, this is just a brief account of the topics, the discussion will help us to put finance in the hot seat in 2014.

CDS is here to help businesses considering the adoption of co-operative business models.

The Wee Agency hopes collaboration will bring big results

January 23, 2014 /

Eilidh Marshall headshotLast year, for a second consecutive year, CDS ran the Collaboration Prize – an opportunity for three businesses from across Scotland to each win £10,000 worth of cash and support to get their consortium business idea off the ground.

Working with Creative Scotland, CDS crowned Highland-based The Wee Agency with the creative sector prize. Eilidh Marshall from Muckle Media talks through the benefits of being part of a Scottish consortium.

It’s an exciting time to be part of The Wee Agency. Having just launched, we are delighted to have won the Co-operative Development Scotland Collaboration Prize.

According to Co-operative Development Scotland, there are 578 registered co-operative businesses in Scotland, and no doubt many more businesses collaborating behind the scenes. These businesses play a major role in driving economic growth with a combined turnover of £4bn and providing employment to 28,600 people.

Collaboration can have significant benefits – increased productivity, creativity and greater influence are just some. Working with different people outside your own agency can spark new ideas and give insight into the other specialities. All the while, individual businesses can retain their own brands; collaboration simply allows them to be part of something with greater impact.

Collaborating and combining skills makes things a lot simpler for clients too. There’s no need to brief different agencies or companies, no more juggling projects, reading through multiple proposals or duplication of tasks or costs. Clients are reassured that everything is taken care of by one company.

Compare it to say, building a house. Imagine one project manager presenting you with the options on how to achieve your ideal home – you don’t need to find an architect, builder, decorator, bathroom fitter, electrician or spend your time coordinating how they work together. You choose the end result you want and the team does the rest. 

And that’s how we work.

In an increasingly digital world, it’s important that companies have accessible and interesting websites that are marketed effectively – therefore increasing their chances of being seen by consumers. At The Wee Agency, we bring this together with 2bcreative providing the design, Alchemy+  bringing the IT and Muckle Media providing PR and marketing.

David Massey, managing director of Alchemy+, Nathalie Agnew MCIPR, director of Muckle Media and John Young, director of 2bcreative, represent the three firms that have formed The Wee Agency.

David Massey, managing director of Alchemy+, Nathalie Agnew MCIPR, director of Muckle Media and John Young, director of 2bcreative, represent the three firms that have formed The Wee Agency.

So how do projects with The Wee Agency work? 

  • After being briefed by the client on their needs and wants, we brainstorm to find the best creative idea that will sit at the centre of the campaign
  • We plan the project utilising the best channels to reach the audience
  • The design team then produce the creative material
  • Once approved, the web developers and IT team build the website
  • During this process, the PR and marketing team plan for the launch
  • The PR and marketing team reach out to media and run social media to drive people to engage

When working in the creative industries it’s important to be able to bounce ideas off each other which can then spark bigger and better solutions. The consortium approach enables us to do this efficiently.

Our multi-channel team condenses the workload for our clients and working together allows us to provide big results. Without the need to liaise between different agencies, our clients are able to concentrate on other aspects of their business. So whether it’s a start-up or an established organisation we’re working with, we can help make it a success.

Find out more about The Wee Agency at www.theweeagency.co.uk or follow us on Twitter to keep posted on the latest trends and news in the digital world @theweeagency

2014 is a time for change

January 10, 2014 /

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.

New Year Message

December 30, 2013 /

Sarah Deas resizedFrom Sarah Deas, Chief Executive, Co-operative Development Scotland

The eyes of the world will be on Scotland in 2014 as we host the Commonwealth Games, Ryder Cup and Homecoming. It’s a fantastic opportunity to showcase our country on the global stage.

Whilst we wish our sportsmen and women every success, 2014 is much more than medals – it’s a catalyst for regeneration, innovation and sustainable economic growth. An opportunity to build international business relationships, demonstrate our capability to host major events and present Scotland as a leading tourism destination. 

Commonwealth-Games-2014For Co-operative Development Scotland it’s an opportunity to shine a light on the positive contribution that co-operative and employee ownership models are playing in the Scottish economy. Working with the Supplier Development Programme, we’ve been helping businesses to tender together to compete for Games related procurement contracts – capacity building that will have long term legacy benefits. 

One co-operative that will play a key role in helping visitors discover the best places to stay, eat and drink is the Merchant City Tourism & Marketing Co-operative. The Merchant City will be a hive of activity during Games time, including hosting the venue for high profile business events. 

Another co-operative that should benefit from the growth in tourism is the Scottish Mountain Bike Consortium. Set up to increase the range and quality of mountain bike experiences, it aspires to make mountain biking the ultimate family-friendly adventure activity.

roadshow

Scotland is leading the way in the adoption of innovative business models. The coming year offers an excellent opportunity to leverage this success. Businesses that are already successfully exporting, such as employee owned Tullis Russell, Clansman Dynamics and Scott & Fyfe, are well placed to use the flexibility and power of their business model to seize new opportunities for growth. 

As Scotland ‘Welcomes the World’, hopefully you too are considering what 2014 could mean for your business. Are you capturing this once in a lifetime opportunity to profile your business and build international relationships? 

Wishing you a successful 2014

Best wishes

Sarah

Take Five

November 4, 2013 /

Jaye Martin 03Jaye Martin is a specialist adviser who joined Co-operative Development Scotland this summer. Here she shares her experience of what it’s like to work at Scotland’s co-operative and employee-owned enterprise development organisation.

It’s already six months into my new role as a CDS specialist adviser, focussing on collaborative business models, so now is as good a time as any to pause for a moment and take stock of my top five experiences so far in what has been an exciting and challenging few months.

 

 1. The CDS Collaboration Prize

PrintThis has been a revelation for me as I’d never been involved behind the scenes of a competition before – unless you count making up a quiz sheet for Comic Relief to sell around my village when I was 12! We were overwhelmed with the quality of the collaborative ideas contained in the applications this year and it’ll be a valuable learning experience for me to be involved in the strategy sessions for the winners when they take place in due course. Excitingly, we are poised to announce our winners shortly so watch this space…

 

2. New consortia

We support so many groups of businesses and communities across Scotland in exploring and formalising their ideas for collaboration and I love the variety this work provides. To mention only a few of the new collaborations we’ve advised so far this year: Destination Stirling, the new tourism group supported by Stirling Council, Scottish Enterprise and VisitScotland; Scottish Mountain Biking Consortium, a group of like-minded businesses committed to developing the best family mountain biking experiences, packages and solutions in Scotland; and Community of Raasay Retail Association (CORRA), the community group behind the purchase of the only shop on Raasay.

 

3. Community shares

On my second day at CDS, I attended our Advisory Board session on ‘Community Shares – Realising the Potential’. Of great interest was a presentation by Hugh Rolo of the Community Shares Unit in England. Their newly launched dedicated web platform for community share issues, Microgenius, is a potential game-changer for this growing sector. We are seeing increasing interest in community co-operatives in Scotland, particularly in relation to renewable energy generation (wind, hydro) and broadband projects.

 

4. Tweeting

Another revelation. Somewhere between dinosaur and sceptic when it came to social media,CDS Twitter I can now see the real value in tweeting, blogging and their ilk – there is the potential to strike up dialogue with like-minded individuals and organisations and to spread the word about co-operative business models. Follow me @CDSjaye and us @cdscotland to find out more!

 

5. Collective Futures workshop

I was pleased to be asked to present on the consortium co-operative model at one of the Collective Futures workshops. This is an exploratory project to define the nature and form of co-operative business models used by designer/makers to sustain and grow their creative businesses. The project is itself a collaboration between Gray’s School of Art, University of the West of Scotland, Glasgow School of Art and a selection of residents who are practising designers/makers from all over Scotland. I was (unsurprisingly) impressed at the creativity used to facilitate the discussion on collectives, particularly the ‘mood boards’ which caused much hilarity (one included a photo of Katy Perry being blasted into outer space) but also revealed inner thoughts about the pros and cons of collaboration.

And as for my top moment outwith CDS…? It has to be when a boy from Dunblane lifted the Wimbledon trophy on that oven-hot day in July. Let’s hope the next six months are just as exciting!

 

Employee ownership gives us a new lease of life

October 18, 2013 /

Turnberry Rug Works 13It’s been a busy few weeks for handmade rug manufacturers Turnberry Rug Works. Not only has the Scottish textiles company just become employee owned, but it also took centre stage at a high profile design event at London’s Kensington Palace, supported by Scottish Enterprise. Here, Turnberry Rug Works managing director John McKerchar, reports on how it all went.

Becoming an employee owned company is quite a journey to make. But for us long term planning has really helped to make the road less bumpy.

Since 2011 we have identified this dynamic business model as the best way to safeguard our long term stability and preserve the unique skills of our staff. We like to think that what we do is a bit different in the world of textiles.

Turnberry Rug Works is making the transition to employee ownership.

Turnberry Rug Works is making the transition to employee ownership.

Turnberry Rug Works specialises in producing handcrafted rugs and wall hangings from a converted granary overlooking the sea at Turnberry, on the west coast of Scotland. Our clients have recently included the British Embassy in San Salvador and Virgin Money.

We started out in 1991 and have grown to annual turnover of £450,000. Most of the team has been with Turnberry Rug Works for over 20 years so we’re part of the local community. Employee ownership gives us a new lease of life, and ensures we remain rooted here.

Turnberry's staff are the lifeblood of what they do

Turnberry’s staff are the lifeblood of what they do.

Quite simply the skills and experience of the staff are the lifeblood of what we do and mean that clients come to us instead of our competitors. So employee ownership will give our staff a real say in their future direction of travel and harness all their considerable expertise.

The help we have received along the way from Co-operative Development Scotland (CDS), the arm of Scottish Enterprise that supports employee ownership, has been very welcome. Their role has been to demystify the process and help us ensure that staff are fully on board for this.

The transaction involves the creation of an Employee Benefit Trust (EBT), which will initially acquire 49 per cent of the shares, and eventually the full balance will be purchased by the EBT out of the company profits over the next five years.

That means staff have every incentive to succeed and I have every confidence they will do so. Indeed we have just returned from exhibiting at Decorex in London which attracts a large number of interior designers and high-end retailers.

Turnberry Rug Works at Decorex in London

Turnberry Rug Works at Decorex in London.

It’s the type of event that is usually out of reach for a company of our size but thanks to Scottish Enterprise organising a delegation of six Scottish companies to exhibit at the event, we found ourselves in the gardens of Kensington Palace where the event was held this year

Before the event we held a series of meetings with Scottish Enterprise to design the stand and to discuss the best way to benefit from the exhibition.

In addition to the stand Scottish Enterprise organised a Scottish gin and apple juice reception in the late afternoon on the Monday at which we were able to invite as many of our contacts as we could.

It was mobbed and drew people from Harrods, John Lewis, Heal’s and the building unit from the Foreign and Commonwealth Office to the stand. The exhibition security had to chase us all out at the end!

On the first day, Sunday, the stand also hosted a breakfast reception organised by the British Institute of Interior Design (BIID).  Usually the first few hours are quiet when an exhibition first opens, but our stand was full of key personnel from the world of interior design.

We gathered about 100 contact names during the course of the exhibition. In the few days since the event we have been asked to sample and quote for business worth over £8,000.

The hard work has only just started, and we now have to work through all our new contacts and send samples and follow up details but the initial responses do look very favourable.

Staff at Turnberry Rug Works.

Staff at Turnberry Rug Works.

My impression from the other five participating companies was that they too had a positive experience and that the stand, organisation and quality of the visitors, matched their needs.

We are yet to go through our formal review with Scottish Enterprise but we as a company are hopeful that this can be a regular feature of the Scottish Enterprise programme to help small Scottish companies in this area of the interiors market.

Why Scotland should take Employee Ownership seriously

October 3, 2013 /

Sarah Deas 05Co-operative Development Scotland’s (CDS) Advisory Board recently met to explore ways of increasing take up of employee ownership.

CDS is the arm of Scottish Enterprise (SE) that is charged with promoting employee ownership.

Here, Sarah Deas, chief executive of Co-operative Development Scotland, explains how they invited policy influencers and membership bodies to join the debate.

In order to bring participants up to speed the features and attributes of employee ownership (EO) were first described. Participants heard how Scott & Fyfe, Tullis Russell, Accord Energy Solutions and Galloway & MacLeod came to choose the model and the resulting benefits. With the exception of Accord, these were all long established family businesses that chose EO as a succession solution. Whilst their experiences differed, there was one common and positive result – long term sustainability of the business and its jobs. This offered a clear demonstration of ‘why we should take the model seriously.’

The benefits described by the participants included securing local employment, driving performance and generating socio-economic well-being. We heard that since 1992, the ‘Employee Ownership Index’ has outperformed the FTSE each year by an average of 10%. Also, EO businesses have a significant presence in the ‘Sunday Times Best Businesses to Work For’ – there are three in the top 10. Clearly the model won’t be appropriate in all cases, however, research shows that on balance it out-performs other models.

Scottish paper and board manufacturer Tullis Russell made the transition to employee ownership in 1994

Scottish paper and board manufacturer Tullis Russell made the transition to employee ownership in 1994

It was acknowledged that there is growing political interest in the model, both within Scotland and across the UK. The Nuttall Review generated 28 recommendations that are currently being taken forward. HM Treasury has committed £50million per annum to incentivise uptake and recently consulted on the best way to use this funding. CDS is promoting the model directly to businesses and via the media and professional advisers. 83 professional practices (lawyers, accountants and bankers) have met with CDS over the last year – and two are now even considering the model themselves!

 We also learned that 73% of Scottish businesses are family owned and account for 50% of private sector employment. However, evidence shows that only 9% progress into third generation family ownership. So, what is happening when the family sells out? Answer: trade sale, management buy-out, employee ownership or insolvency. EO is one of the options – but suffers from being little known and understood. It was acknowledged that the number of businesses being sold has reduced due to the recession – which may lead to what some call the ‘succession time-bomb’. 

So, what more could we be doing to position EO as an effective option?

It was now time to reflect on the wider policy and business environment. Who better to kick off this discussion than respected economist, Jeremy Peat? He described two lenses through which we could look at the economy: GDP (output) and ‘economic well-being’. Jeremy felt that there are signs that economic well-being is becoming more important to the Scottish public: ‘There is a change in tone … and EO is part of this’. 

Jeremy Peat OBE

Economist Jeremy Peat

In reflecting on finance, he worried that there is limited understanding of the model by banks resulting in a lack of mutual empathy. In his view, we need banks to take a longer term perspective, new forms of finance (eg patient, crowd) to be created and for equity investors to appreciate that longer term factors matter. On a positive note, Jeremy felt that this is starting to happen. Overall, he felt that more plurality of business models would be helpful in rebalancing the economy. A ‘let many flowers bloom’ approach.

Guests included representatives of the Institute of Directors, Confederation of British Industry and Royal Society for the encouragement of the Arts, Manufactures and Commerce, alongside members of SE’s regional and industry advisory boards. Some shared perceptions of what they had heard. Others focused on the process by which the model could be most effectively introduced to companies. 

Scottish Enterprise and Highlands & Islands Enterprise account managers were seen as crucial in this process. A focused approach was strongly recommended, enhanced by diagnostic tools and support from ambassadors.  An important message was that EO should be presented as one of the options – cautioning against a ‘one trick pony’ approach.

The rich and wide ranging discussion also explored the employees’ view and the role of unions. The model was shown to work well from all perspectives. In summing up, it was felt that the ‘quick buck era has gone’ and ‘people are increasingly questioning values and priorities’. Employee ownership is a model for ‘sustainable enterprise’ and, as such, has an important role to play.

Keeping it in the family?

September 17, 2013 /

Carol LeslieCo-operative Development Scotland (CDS) is working with the Scottish Family Business Association to help family businesses explore employee ownership as an exit route.

CDS specialist advisor Carole Leslie shares the experiences of two heads of family-owned businesses on why this model is such a success.

“Scotland is a brand”, Maitland Mackie told the capacity audience assembled at Strathclyde University for the launch of the International Centre for Family Enterprise at the end of last month.

Seventy-three per cent of Scottish firms are family-owned, employing half the private sector workforce. Family firms are an important feature of the Scottish economy as well as playing a major role in their local area. As Martin Stepek, chief executive of the Scottish Family Business Association says: “Take away family business and there will be no community in Scotland.”  

The International Centre for Family Enterprise is an initiative which brings together the business, academic and professional world to provide a world-class collaborative resource to support this critically important sector. Martin Stepek, alluding to the difficulties caused to his family in running their successful family firm, put it so well: “I want to save family businesses the challenges that we experienced.”  

Maitland Mackie’s presentation was the first in a series exploring the essence of family business.

Maitland Mackie subtitled his talk: “How not to be a cantankerous old father”. He described the challenges and rewards of heading up one of Scotland’s most recognised brands. He emphasised the importance of people; not just family members but also the local families employed in the business. Most of his employees have at least 10 years’ service, many have 20 years plus. 

Maitland described his Damascene conversion from command and control management (or, in his words “Dae fit yer telt”), to a more inclusive and participatory culture. He advised the audience to “involve, involve, involve” employees and to be clear on business objectives. Mr Mackie also spoke of his “no change, no chance” philosophy. There are two rules; get the product right and market it well. 

Mackie’s of Scotland went from dairy farming to ice cream production and, in conjunction with another Scottish family business Taypack, diversified successfully into crisps. The firm is about to launch a chocolate range. Maitland attributed the successful diversification to the strength of the Mackie’s brand name. Family ownership enables Mackie’s to plan for the long term. The firm “lives” on its capital. There are no outside shareholders to consider. The company can focus on doing what it does best; serving the customer.

Much of what Maitland Mackie described resonates well with the experience of employee-owned firms. There is that same fierce loyalty to the brand, the commitment to producing the best product, and delivering the highest quality service. With no external ownership, the business can look to the long term. 

Keeping the business in the family was not an option for Ralph MacLeod, third generation of Lanarkshire-based agricultural feed manufacturers and merchants Galloway & MacLeod. It was important to him that the business remained independent, and the staff that had helped develop the business should have continuity, job security and the business should continue to support the local community. The Employee Ownership Model satisfied all these needs and enabled the employees to take over without incurring personal debt. In December 2010, The MacLeod family shares were transferred to two Employee Trusts.  

Maitland Mackie (left) and Ralph MacLeod (right)

Maitland Mackie (left) and Ralph MacLeod (right)

  His experience is encouraging. “I believe we’re more of a family business now”, he says. “Many staff have long service records and career progression is encouraged through personal development training. Galloway & MacLeod directors no longer have to worry about family succession every generation and the dynamic structure created rewards endeavor and innovation. The staff think and act like owners which is to the benefit of everyone connected with the business.”

“Galloway & MacLeod is a progressive, quality-focused business delivering the best service to our customers. Our people understand that and will all share in the success.” The firm has performed well since the transition of ownership, and has ambitious plans for the future.   

Passing on the business to the next generation is likely to be the preferred route for most family businesses. Maitland Mackie’s three children are now running the family firm. With nine grandchildren waiting in the wings, it looks like succession is solved for a few more years. When the next generation isn’t an option, models which preserve and protect the unique qualities that make the enterprise successful – the relationships, the loyalty, the personality – should be considered.  Employee ownership is one such model.

As Galloway & MacLeod demonstrates, selling the business to employees can be the natural progression. The employees are the people who know the business well, and have a vested interest in its success and sustainability. Like family firms, they provide quality employment and training for local people, in what is a proven business model. 

Family and employee-owned enterprises are critical to the long term prosperity of the Scottish economy. CDS welcomes the International Centre for Family Enterprise to Scotland, and looks forward to collaborating with such an exciting and worthwhile venture.

The second lecture in the series of the International Centre for Family Enterprise will feature Bill Gordon of William Grant & Sons and takes place on Wednesday 18 September 2013. To register for this presentation please email: corporate-events@strath.ac.uk or call 0141 548 2245.

2014: An exciting time to collaborate

August 9, 2013 /

Marc Crothall picture

The Scottish Tourism Alliance (STA) is an independent trade body comprising trade associations, individual businesses, marketing and local area tourism groups who earn their living from tourism or have an active interest in tourism.

Marc Crothall, CEO of the Scottish Tourism Alliance, explains why the organisation has partnered with this year’s Collaboration Prize at an exciting time for the Scottish Tourism industry.

The STA’s primary role is to lead, facilitate, co-ordinate and provide support to industry to help enable the successful delivery of the national strategy (Tourism Scotland 2020) objectives and vision. Other activities undertaken by the STA on behalf of its members are to collaborate with and represent industry views to government and agencies, offer advice and information to its members and enable strong networking opportunities across industry sectors.

We are recognised by government and public agencies as a credible and fully representative ‘voice of the Scottish industry,’ which Co-operative Development Scotland (CDS) has also acknowledged, and we are pleased to have been asked to work in partnership with them as a representative of the Scottish Tourism Industry.

The STA is delighted to support CDS’s Collaboration Prize as it focus’ on one of the key elements that underpins the National Strategy (Tourism Scotland 2020) “Collaboration”.

With the hook of a great £10,000 prize, the competition creates market opportunities, facilitates collaboration, endorses sustainable tourism and helps drive economic growth in the tourism sector. All of this contributes towards the Tourism Scotland vision in: “Making Scotland a destination of first choice for a high quality, value for money and memorable customer experience, delivered by skilled and passionate people.”

Tourism is one of the most important industries in the Scottish economy, generating £4.3bn from overnight visitors, employing 185,900 within the tourism growth sector and attracting 15 million visitors in last year alone.

Now is an exciting time to be a part of the Scottish Tourism sector which will grow exponentially in the coming years with three landmark events taking place next year when Scotland “Welcomes the World” in 2014 with our second year of homecoming and two of the world’s biggest sporting events: the Commonwealth Games and the Ryder Cup.

These events are key to the tourism industry as they will not only give us the opportunity to showcase Scotland to the world, but will provide the stepping stones to delivering the growth ambition set out in Tourism 2020. Many opportunities will also be generated for our home grown talent to work together to succeed on the world stage and compete in the world market.

With these vast opportunities on the horizon the STA is looking forward to seeing the calibre of entrants that emerge from the Collaboration Prize this year and how they plan on taking advantage of these forthcoming key events. Fundamental elements we will be looking for in the proposals are: 

  • Innovative and creative concepts
  • Collaborative opportunities identified
  • Sustainable plans and projects
  • Valuable contribution to the Scottish Tourism sector
  • And most importantly, vision for future expansion and growth

The STA is looking forward to seeing what the future stars of the Scottish Tourism Industry have to offer.

If you are not yet a member of the Scottish Tourism Alliance for more information on membership please visit www.scottishtourismalliance.co.uk or email jean.kilpatrick@stalliance.co.uk

Come together to make this a summer of success for your business

July 12, 2013 /

Gillian Kirton 02What do three farmers from Dumfriesshire, 51 musicians from Scottish Opera and 12 Scottish Screen facilities companies have in common? Answer they all won funds through last year’s launch of the Co-operative Development Scotland (CDS) new Collaboration Prize.  Now the search is well underway to find 2013’s winning ideas. With less than one month to go until the competition closes, CDS Collaboration Prize project manager Gillian Kirton gives us the latest update. 

What do three Dumfriesshire farmers, 51 musicians from Scottish Opera and 12 Scottish screen facilities companies have in common? Answer: A desire to grow their business through collaboration.

As CDS Collaboration Prize project manager, it’s an exciting time for me.  With less than one month to application deadline, I’m waiting with baited breath to see the exciting and innovative ideas to come in this year.

Last year our competition was such a success that more than a dozen new business collaborations were established, often with different aims and objectives.  So here’s a wee taster of the sort of consortium co-operative that our prize has created:

  1. Scottish Woodlot Association was set up to enable individual foresters to rent small forest lots for timber production while helping landowners maximise their forestry potential.  It also gave them a way to share often expensive specialist equipment.
  2. iMAPcc offers dedicated team of drug discovery scientists, consultants and associates with complementary backgrounds and experience in small molecule and biopharmaceutical drug discovery.
  3. Burns Country Larder sees six Ayrshire producers of fine foods including haggis, cheesecakes, beers, deserts, chocolates and ice-creams collaborate to access events and shows all around the country.

But what about the farmers, musicians and screen facilities…our three worthy winners from 2012?

With the help of colleagues in Scottish Enterprise and Business Gateway, I’ve had the pleasure of working closely with these three groups over the last year or so, joining them on their exciting journey as they form themselves as a consortium co-operative and reap the benefits of their £10k prize.  Do view the short videos of our winners – it’s great to hear it from the horse’s mouth as they say. Hopefully it will give you the incentive to consider how collaboration can help your business.

Screen Facilities Scotland brings together the best that Scotland has to offer in screen facilities.  Over 12 companies, with more to come on board, are now collaborating to secure contracts that may otherwise have been awarded to those south of the border or further afield.  I just love that one of the members created the Fatboy Slim Octopus of the London 2012 Olympics, and another filmed the James Bond and the Queen footage!

Screen Facilities Scotland video

Three farmers from the south west of Scotland (Castle Loch Foods Ltd) have come together to produce a range of luxury charcuterie products, using their individual high quality meats. This will see them access new markets, and hopefully export overseas in due course.

DG Farmers Cooperative video

Music Co-operative Scotland now gives us all an easy way to hire professional musicians for any occasion, offering any style of music you desire. All made possible through the formation of a consortium co-operative.

Musicians Cooperative Scotland video

This year we have increased our prize fund to £40,000 – up to four winners will each receive £5,000 consultancy support, and £5,000 cash to help implement their idea.  Even those that don’t win a prize can still access a comprehensive package of free support.

We are delighted to be working with our partners from Creative Scotland, Scotland Food and Drink and Scottish Tourism Alliance, and aim to attract really good entries from creative, food & drink and tourism businesses. In other words sectors that really lend themselves to collaboration.

However – our competition is of course open to all Scottish based companies regardless of sector.

So what are you waiting for?  The deadline for applications is 3rd August.  I personally can’t wait to see what comes our way this year…

Good luck.

Gillian

The PIGS that DO fly

July 1, 2013 /

 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.

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