Socialising capital the employee ownership way
The media is prone to labelling; hence, we have ‘millennials’, ‘the gig economy’ and ‘soap stars’.
In the absence of a deeper understanding of the employee ownership structure by some commentators, it is sometimes the case that this innovative and progressive structure of business ownership is also labelled – as a form of socialism. This was the case recently, in what was an otherwise excellent article about the transitions to employee ownership by Union Industries and Aardman Animations.
I could use the rest of this article explaining why I don’t consider employee ownership to be a form of socialism (not least because the state does not own the means of production). However, having spent time this week at the Annual Employee Ownership Association Conference in Birmingham, it’s better that I explain this through examples of the brilliant businesses I met there.
Alpha Leisureplex Group, the winner of this year’s UK Employee Ownership Awards Rising Star Award is an outstanding commercial success. Since becoming employee owned in 2015, this former family owned business has grown from 600 to 700 employees and in 2017 reported an increase in sales of 15% and an increase in profits of 18%.
A G Parfetts, the winner of the Employee Owned Business of the Year is now 100% employee owned. This former family owned business of 600 employees has just reported its most successful year yet with turnover growth of 6.8% at £346m and profits growing from £3.3m to £5.1m.
Gripple, the winner of the Employee Ownership Culture Award, is a phenomenal example of commercial success in an increasingly competitive global marketplace. With record profit in 2017 from sales of £67m and a five-year plan for further growth to 2021, this employee owned business continues to thrive.
All of these award winners are examples of strong performing, profitable businesses, operating in competitive markets, using the skills, insights and knowledge of their employee owners to continually improve and prosper. I doubt any would like to limit themselves with a specific label, although each is proud to call themselves employee owned.
So if there really has to be a label given to this progressive, innovative and successful form of business ownership, then I propose that we describe employee ownership as a powerful way to socialise capital.
Employee ownership socialises capital because through its ownership structure, it shares the value of that capital with all employee and the resulting wealth created by that value with everyone, on a more equal basis. And through better forms of corporate governance and employee engagement, it enables employees to exercise voice and influence over how that capital is applied and used.
I don’t expect that all commentators will agree with or even consider using this description – and inevitably this means that they may continue to use hackneyed phrases to try to label employee ownership or to put it in an easy to understand box. The Employee Ownership Association will therefore continue to give voice and profile to this productive and innovative business model, highlighting the many stories of its commercial success in competitive markets and ensuring that its potential is not limited by lazy references that limit its appeal.
One key route to do this is via the impact and potential of employee ownership revealed earlier this year in the Ownership Dividend. This unique research revealed that when employees have a stake in the firm, owning capital directly or indirectly, the impact on their commitment, care and behaviour, delivers higher levels of corporate performance, which in turn supports more resilient regions, contributing to a stronger national economy.
In an increasingly polarised and divided society, where labels often discriminate, leading to tribalism and conflict, employee ownership provides a bridge between socialism and capitalism, delivering a route to socialise capital, in a progressive and inclusive way.