5 reasons why the UK needs an EO Boost
There’s just under 2 weeks to go until our three-day virtual event that offers engaging learning and insightful discussions about succession, good business and employee ownership.
The EOA strongly feels that employee ownership has a key role to play in building back better in a post COVID-19 UK, linked to resilience and better income equality, which is why employee ownership experts and advocates J Gadd Associates and Postlethwaite have supported EO Boost as headline sponsors to the widest audience possible, free of charge, along with supporting sponsor Mott MacDonald.
We’re delighted to see 700 of you already signed up including those exploring employee ownership, employee owned businesses and those who support the case for more employee ownership, or just want to know a little bit more.
You can book your place for the streaming event and to gain access to all 18 sessions for up to a year afterwards HERE.
Here are my 5 reasons why the UK needs employee ownership right now:
The UK’s 6m SMEs are the bedrock of the economy. Established by entrepreneurial founders, collectively they account for 99% of the business population, employ 16.8m people and contribute annual turnover of approx. £2.3trn.
However, every one of these at some stage faces the challenge of succession; the point at which the founder chooses to make an exit, often for retirement reasons.
With finance often not available to support management buy-outs (MBO’s) and many founders’ dislike of the uncertainty and compromises often associated with a trade-sale, the employee ownership route is quickly providing the perfect solution for many founders and their management teams.
It offers flexibility over how much equity is sold, the opportunity to share rewards with employees, the ability to secure full value and the complete exemption from Capital Gains Tax if the EOT (Employee Ownership Trust) is used. Add to this the fact that for many owners, securing the culture of their business, the economic contribution for the region, the jobs of the employees and its services to its customers come ahead of a sale at the highest price, it’s no wonder this option is now the fastest growing route for succession.
Whilst the economy continues to face the challenges of a pandemic, many business owners continue to aspire for growth. For most businesses, this growth is a direct result of the endeavours of employees, both individually and collectively. However, the challenge is how to engage these employees in a way which means they think about the business in the same way as the founder?
“If only everyone felt some sense of ownership”, “I wish everyone was a passionate as I am about the business”. These phrases are not uncommon amongst owners and founders, because if everyone is aligned around a common purpose, feels personal responsibility for success and knows that their voice is heard and that they can contribute, then evidence shows that commercial success follows.
The employee ownership model is a perfect solution to the growth challenge. Giving everyone in the business a stake and a say, unleashes the talent, commitment, ideas and energy of individuals in a way that no single bonus payment or a pay rise will do. In spreading responsibility and reward throughout the entire business, the whole becomes more that the sum of its parts, with additional discretional effort visible from the shop floor to the Board room.
Having resilience is ever more critical and the pandemic has revealed the significant risks associated with places, businesses and individuals where resilience is lacking.
For places, this resilience includes having a mix of business types and sizes so that the local economy is better able to withstand the inevitable economic shocks that hit society. For businesses, resilience includes having sufficient reserves to withstand a pandemic or, processes and people that can adapt quickly to change. And for people, resilience is about having the emotional capacity and the financial wherewithal to adapt and withstand changes.
Employee owned businesses act in the long-term interest of their employees and in doing so are prone to develop healthy balance sheets that do not over-prioritise the payment of dividends for the short-term benefit of the few. In addition, through their shared ownership structure, employees are better informed, more engaged and more trusting of management. The evidence shows that together, these powerful features deliver highly resilient businesses that are better able to withstand economic and market shock.
4. Employee engagement
All leaders understand that engaged employees result in happier, more productive employees and therefore, more commercially successful businesses. Although there are many techniques and approaches of how to embed a culture of engagement within an organisation, many lack the ability to deliver a real sense of ownership or to do this over the long term.
Employee ownership however is a way of both sharing a stake in the ownership of a business with all employees and providing all employees with a say and the ability to influence. This is therefore the ultimate employee engagement solution.
When employees are vested in the organisations’ ownership and this stake is supplemented by the sharing of information, the opportunity to have a voice and the ability to influence, the benefits of great employee engagement are multiplied.
The independent sustainability of a business across generations is sometimes viewed through rose-coloured glasses. Who doesn’t mourn that the once independently family-owned Cadbury business is now part of a global conglomerate?
However, this ability to remain independent is important on many fronts for many businesses. From a family or founder’s perspective, there is of course an emotional tie that most do not want to break. And from a commercial perspective, inventions, market-leading products and niche markets are often the product of that independence.
But when a business exists in a buoyant market, how can it retain its independence when trade sale buyers or private equity are circling?
A transition to partial or full employee ownership provides a perfect solution to that challenge. Selling equity to an Employee Ownership Trust (EOT) ensures that the business can continue with the same culture, values and ethos. It provides sustainability for the next generation of owners, by offering security and giving them the confidence to invest their time and energy knowing that the business and their jobs will be safe. And for many businesses, this independence is highly attractive to future and prospective employees who value the opportunity not to be driven by external owners, possibly with a different set of, often short term, objectives.