We can do better; shining a light on corporate governance in employee owned businesses
In inviting responses to the Corporate Governance Reform Green Paper, government has reignited an important debate to consider the impact of the current structures of corporate governance of the UK’s listed or quoted businesses on society and the economy.
At a time when trust in many of the UK’s biggest and most important institutions is at rock bottom, the economy is experiencing uncertain times, and with an urgent need to maintain consumer confidence, the publishing of this Green Paper opens up a much-needed dialogue about how business can do better.
Ask any of the people you know best, your family, friends, neighbours and colleagues, what they think ‘corporate governance’ means and why it matters, and most won’t describe it in the same language as the Green Paper. They are not familiar with, nor that interested in, ‘LTIP’s’, ‘pay ratios’ or ‘shareholder committees’.
However, they most likely will say they are tired of hearing about the disproportionate levels of pay and reward of some CEOs, compared to the pay of the rest of the employees; that they are dismayed at the way in which some of the corporate investors in these businesses appear to turn a blind eye to the excesses of such pay and not use their vote at the AGM to arrest it; and that they question why Board level representation of these businesses continues to be dominated by a small number of the same people, with an absence of representation from employees or consumers.
In short, they are fed up with the unfairness, lack of transparency and lack of broader representation of many big businesses and that they want to see businesses behave better.
So as I prepared the EOA’s response to the Green Paper this week, it was with great pleasure that I read almost 30 case studies from our members, which described how, as employee owned businesses, they approach their own corporate governance and behaviours.
In reading these, I found myself feeling both incredibly proud and full of anticipation.
Proud that this diverse group of organisations, of every size, sector and age are able to demonstrate the same abiding values that guide their behaviours to employees, customers, suppliers and the communities in which they exist.
They evidenced fairness to their employee owners, with many of them paying the same bonus to everyone, including executives; they described how they value honesty and integrity, engaging with their customers, suppliers and employees, often sharing performance and financial data to broaden understanding; how they placed trust in their employee owners to act in the best interest of the wider organisation, enabling them to hold positions on executive Boards or other key representative positions; and they evidenced the long termism when planning and investing for the future of the business, putting it, and not the appetites of external shareholders first.
My anticipation however comes from hoping that this compelling library of evidence, which clearly demonstrates how the government’s ambitions for better corporate governance can be delivered, is seriously considered alongside that of other organisations who will no doubt call to retain the current status quo. Whilst it’s clear to me that the status quo has to change, there are other organisations who will see this differently, providing their own compelling narratives of why the government should water down its ambitions for reform.
So I call on every employee owned organisation and business to use its voice at this important time, with its customers, suppliers, regional media and trade bodies, to share their own case studies and stories of how they behave, with fairness, integrity and transparency and demonstrate that employee ownership really does deliver a better way of doing business.
Employee ownership is an established model of business and is ideally placed to contribute directly to government’s objectives for a more productive, fairer society and an economy that works for all.
It is also a shining light for how this can be achieved in a better way.