CEO Blog – Staying on course to Better Business
Whilst the entire world has been buffeted and blown around by the pandemic, there has never been a more important time for organisations to stay agile and to stay focused on their purpose.
Of course, it has been essential to divert valuable resources to manage the national response to COVID19 here in the UK. However, the implications of this approach on the longer-term challenges are profound, for example in the NHS, where waiting lists for non-COVID related illness are now at an all-time high and not expected to recover to pre-COVID levels for many years, putting at risk the NHS’ very purpose of being ‘free at the point of need’.
In a similar way, the growth of employee ownership is facing its own strong wind which is pushing it in a particular direction. This has come in the form of a review of Capital Gains Tax (CGT). Announced by the Chancellor in July 2020, the immediate response from many business owners and their advisors was to force them prematurely to consider the longer-term future of their business and assets. This consideration has inevitably led some to consider the Employee Ownership Trust (EOT) as a possible exit route for themselves and a way of securing the future of the business for their employees.
Subsequently, over the last 6 months, we have heard from many advisors that they are very busy delivering EOT transactions, with business owners keen to see these completed before the end of the current tax year in March.
As the CEO of the membership body leading the campaign for more employee ownership, I am delighted by this news and the positive boost to the growth of the UK’s employee-owned sector that it will deliver. Welcoming new businesses, many of them SMEs or family-owned, to the sector is something we obviously celebrate as each one demonstrates the relevance and value of employee ownership to mainstream businesses.
However, with a focus on delivering the employee ownership ‘transaction’, it is critical that business owners, and their advisors, do not overlook the critical importance of the ‘transition’ that must also accompany this technical change of ownership if these businesses are to thrive and remain independent over the long term.
The EOA is driven by a purpose to ensure employee ownership delivers Better Business and not simply a change of ownership. Achieving this relies on two, interdependent features; giving every employee a stake in the business and giving the employees as a whole a say about how the business is managed. Ownership without influence is not an option if a business wants to realise the full benefits and value of employee ownership.
At the EOA’s EO Boost event in 2020, the largest ever gathering of the UK’s employee-owned community, we focused on why the transition to employee ownership is so important; delivering good engagement, good governance and good leadership. Without these three key pillars in place within a business, the voice and influence of employees is not being heard in a meaningful way and hence the opportunity to deliver Better Business for the organisation, its employee owners, its customers, its location and its supply chain will not be realised.
Many of the owners considering a move to employee ownership will rely heavily on the advice of their expert advisors regarding the most appropriate succession route for their business. As a result, these specialists have significant professional responsibility to ensure that they are advising owners on employee ownership, only where there is a genuine commitment to sustaining a business for the long term future benefit of its employees, customers and location.
Navigating through the rough waters of the pandemic remains a challenge for all, and we remain unclear about when we might eventually emerge into calmer waters. However, with a clear eye on our purpose of Better Business, the EOA will continue to provide learning, advice, support and connections as well as influence and lobbying to ensure that there is no watering down of the impact of employee ownership in the UK, especially with the need to ensure that the sector contributes to a better future for all.