CEO blog: Employee ownership’s role in our ‘special relationship’
Whilst French President Emmanuel Macron may have attempted to steal the ‘special relationship’ label of the UK and USA during his recent visit, after speaking at the National Centre for Employee Ownership’s (NCEO) annual conference in Atlanta recently, I am confident of the UK’s hold over that label – at least where employee ownership is concerned. For during my trip, I was struck by the similarities between these seemingly different employee ownership worlds.
Firstly, we share the same challenges. Whilst there are almost 7,000 firms in the US that would describe themselves as employee owned, there is still a significant lack of awareness of the model amongst business owners. This was acutely highlighted to me when I spoke with Jessica Rose of Fiftybyfifty, a campaign that seeks to grow the number of employee owners in the US to 50m by 2050.
The second challenge we share is the lack of understanding and advocacy of employee ownership by professional advisers including accountants and lawyers. I was told by one attendee that it would be possible to fit all the professional advisers in Atlanta who understood employee ownership in just one room, they were that scarce.
And finally, it was clear that access to capital remains another key challenge of the US employee owned sector, a challenge that the UK recognises knows only too well.
However, just like in the UK, there are a small number of dedicated and passionate organisations that are collaborating to overcome these challenges. In addition to the brilliant team at the NCEO, I was delighted to meet with colleagues from the Beyster Institute who are developing learning content to ensure the next generation of leaders are well placed to continue to drive more employee ownership, as well as researching the benefits of the sector. I also reconnected with Thomas and Kramer at Certified EO whose programme of accreditation of employee owned businesses continues to thrive, with the potential to act as a positive competitive differentiator for employee owned businesses.
As well as our shared challenges, it was also useful to confirm the shared opportunities of the UK and the US, the most striking one being the opportunity afforded by employee ownership to support business ownership succession.
During a visit to Essential Ingredients, an SME providing specialist services and products for a variety of household and personal use, I heard how employee ownership had provided the founding owners with a secure way to plan for the firm’s future. And at 50 year-old architects TVS Design, how the employee ownership model was supporting the firm to continue to grow and prosper with a new group of employee owners. During the conference itself, there were many case studies of similar stories, with Davey Tree, a family business more than 100 years old standing out as one that was embracing employee ownership having grown its turnover from $60m in 1979 when it became EO to $950m this year.
The similarities extend to the benefits that US employee owned firms say they experience; greater regional resilience and job retention; higher levels of employee engagement and satisfaction; and the ability to share rewards more widely. In particular, Loren Rodgers, my host from the NCEO, was keen in his keynote speech to remind the audience of the recent research which reveals the significant benefits and impact on economic wellbeing of employee ownership.
But just like the cultural differences of the UK and US, it would be amiss of me not to highlight the differences in our two nations experience of employee ownership.
The biggest difference is that in the main, the model of employee ownership in play in the US, the Employee Share Ownership Plan or ESOP, has an acute focus on retirement planning; it is a means of employees saving for their retirement through the purchase of shares in the company, with the business benefiting by relief in corporation tax.
That difference is profound as it means that there was more focus at the conference on the technicalities of the ESOP model and how to manage it; at the EOA Annual Conference delegates are more likely to experience content on how to bring the employee ownership culture to life. During the two sessions I presented, I therefore took the opportunity to suggest that there would be benefit on more focus on the advantages and benefits of employee ownership for the here and now, as opposed to simply when someone is approaching retirement – especially when a business is seeking to use its ownership structure to attract younger employees.
The other area of distinct difference – and one which I became increasingly envious of – was the amount of Federal and State legislation which is currently supporting the growth of employee ownership. This is also supported by the presence of a number of State Centers of Employee Ownership, such as the one in Pennsylvania. These centres are providing even more vocal advocacy and local capacity building for employee ownership.
A second area which is to be admired is the opportunity presented by better data collection. The US government’s data collection means that the NCEO and others are far better able to quantify the size of their sector and to analyse its impact – something which we continue to be challenged by in the UK.
I ended my short trip to the US with a view that whilst there are structural differences in the UK and US models of employee ownership, the similarities in the values of the businesses that chose to become employee owned are aligned; a belief that it is people that are the business and that sharing responsibility and reward with them will drive more corporate success. Hence, I for one feel that our ‘special relationship’ is intact and I very much look forward to continuing to collaborate with our US cousins in the future to support the growth of the global employee ownership economy.