Demystifying Great Governance: The role of EOT Trustees

Great governance is a key step towards achieving Great EO and a fundamental part of the EO Framework. But what exactly is it and how does it relate to the roles of Independent Trustee and Employee Trustee?

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Defining Great Governance

Governance differs from business to business and sector to sector. At its heart, however, it boils down to a list of universal outcomes, practices, and approaches – including:

• Clear goals and responsibilities
• Adherence to core principles
• Strong leadership and strategy
• Effective stakeholder engagement
• Transparent communication and reporting
• Robust systems and processes
• Accountability and performance review
• Risk management and compliance
• Organisational efficiency and effectiveness

As we’ve already alluded to, there’s no one size fits all approach – especially when it comes to employee owned businesses (EOBs).

That’s because, unlike other businesses, most EOBs have an employee ownership trust (EOT) board that becomes a fundamental piece of their operations and day to day governance. 

The Role of an Independent Trustee

As the name suggests, an Independent Trustee (IT) is an individual independent of that business who sits on its EOT board.

That much might all seem obvious, but many underestimate the critical responsibilities and impact of this role. Sometimes even ITs themselves!

The value they offer is in stimulating discussions at the EOT board level about how well the business is achieving its strategic aims, engaging with all stakeholders, how they’re investing in their EO model, and more.

Their number one priority is doing the best they can for that business and helping them on the way to achieving Great EO.

Becoming a top tier IT, who raises the bar on the quality of governance in an EO business requires learning, reflecting, being receptive to change, asking the difficult questions, and not being afraid of challenging the status quo.

All of this knowledge and more is provided in our highly successful ‘How to be an Impactful EOT Independent Trustee’ course.

By attending, you’ll learn how to maximise your impact on any EOT boards you sit on and raise the bar on the overall quality of EOT governance 

Engaging Your Employee Trustees

But ITs don’t sit on the board alone. There’s also Employee Trustees (ET). 

As well as the duties essential to this role, ETs should have an awareness of the position the IT plays on the EOT board, the behaviours and skills they should have, and when to draw on their expertise. 

That puts them in the best position to see if a business is getting value from an IT and if they’re acting truly independently.

If other EOT trustees recognise there is more value your IT could bring to the EOT board and ensure they’re delivery best practice, they can be sent towards our Independent Trustee course.

While there’s a greater understanding of what the ET role entails, there’s still confusion around how both roles interact with another. 

It’s no exaggeration to say it’s a symbiotic relationship. It’s all about bringing out the best in each other. 

Any IT worth their salt should have the skills to coach and mentor your ET, and the ET needs to know when and how to draw on their IT’s experience and knowledge.

That’s why making sure both understand the responsibilities of their roles is vital for ensuring an EOB is operating with great governance – and is on the right track to achieving Great EO.

Part of this approach should include sending them to attend our ‘How to be an Effective Employee Trustee / Director’ course.

Over five days, ETs gain a solid understanding of the requirements of their role, as well as demonstrating how they can maximise their impact. Combining case studies and real-world examples, everything they learn can be effectively applied to their own role.

Reward and Governance

Governance impacts every part of a business, including reward, and especially around key EO milestones like financial freedom.

Combined with agile reward incentives, evolving your governance will enable you to leverage your EO advantage.

Effective reward systems – such as share schemes and profit-sharing – are crucial for attracting and retaining talent. 

These incentives align employees' interests with the company's long-term goals, motivating them to contribute to the business's success. However, the effectiveness of these reward systems depends on having great governance in place.

If you’re already asking questions and wondering how to enhance this relationship in your own business, you’ll be delighted to know we’ve got a brand-new course on exactly that.

With all these tools in place, you’ll be on the right track to Great EO.