Riverford's EO journey – what other company owners could learn
It’s been headline news in the business world, and for good reason – Guy Singh-Watson’s decision to sell his remaining 23 per cent stake in Riverford Organics and make the company 100 per cent employee-owned.
Guy’s story shows how a founder / owner can manage the pace and timing of their own exit when their succession plan includes EO.
How Riverford announced Guy Singh-Watson’s news in a Guardian ‘exclusive’ in May
Like many who support the EO sector, JGA’s founder and MD Jeremy Gadd welcomed the news from Devon.
Jeremy worked with Guy in 2018 at the start of Riverford’s transition and has enjoyed seeing how the business and its employee ownership have evolved since.
Is he surprised at the attention Guy’s latest move has attracted? No.
‘This was always his intention and it signals real confidence in Riverford as an EO business,’ Jeremy says.
Recognising the challenge of letting go
Riverford’s national profile, combined with Guy’s commitment to truly ‘live his values’ (he’ll pay full tax on his dividend), have naturally created interest – even more so given recent speculation about large EO companies and their ownership.
Jeremy respects Guy’s honesty about the challenges company owners can face when transitioning control of their business into EO.
‘Finding your way forward [as a company owner] can be a significant challenge. Having the foresight and courage to bring in someone independent to facilitate this thought process can be an effective way to navigate through’
Jeremy Gadd, JGA’s founder and MD
As Guy explains in the Guardian article announcing the sale of his last remaining shares in May: ‘Founders find negotiating this transition to their successors incredibly difficult and painful and most people make a bit of a mess of it… I don’t want to be that person who needs to be told to go.’
The value of investing thought and time
‘Guy’s candidness demonstrates why he was able to do this,’ Jeremy points out.
‘I remember, when we were working with him, witnessing those conversations around how you deal with the loss of something so intrinsically linked to your values and your identity.
‘Finding your way forward can be a significant challenge. Having the foresight and courage to bring in someone independent to facilitate this thought process can be an effective way to navigate through.’
What can we learn from the Riverford story?
So what can other founders learn from Guy’s approach to managing his exit while supporting Riverford’s evolution as an EO business? Jeremy highlights three key insights for company owners considering EO for their succession planning.
1. Understand your legacy and EO journey
You’re transitioning from owner to custodian to handing your company on. What’s your legacy? How do you capture this in a way that’s not only relevant to your successor, but to your successor’s successor too?
‘The fundamental thing about Guy and Riverford is the sense of legacy,’ Jeremy says. ‘As a founder, understanding what’s important to you about the process of becoming EO will help you create the map for your transition and that of your business.
‘This is the one business decision you’ll make that has most impact on you as the owner, and those who can engage the right specialist support are more likely to do it well,’ he adds.
Working with someone independent who understands what you want, but isn’t emotionally engaged in the business, will influence the quality of transition you achieve.
2. Recontract your relationship with the business as it evolves
JGA’s founder and MD Jeremy Gadd
Regularly checking in on and (if necessary) recontracting your relationship with your business will make a significant difference because becoming EO doesn’t just impact you – it impacts your people too.
‘As we see in this latest announcement, Guy is to remain involved as a trustee, NED and spokesperson for Riverford,’ Jeremy explains.
‘I recollect from working with him that he’d created a strong leadership team who were using EO to reinforce the values they felt were important. He invested time and effort in creating the right board, and helped them to understand his vision. He successfully navigated his own exit, trusted himself to make and learn from mistakes, and didn’t underestimate how difficult that is for a founder to do. He’s demonstrated courage in doing that.’
3. It’s clarity – not the size of your business – that matters
EO businesses come in all shapes and sizes and there’s no one way to ‘do’ EO. However, Jeremy’s experience of working with more than 90 companies shows that it’s clarity – not size – that matters most when enabling a smooth transition to EO.
‘So often, employee ownership can seem ‘nebulous’ but when you create a clear narrative for change you’re able to engage people in something tangible,’ he says.
‘Clarity of purpose for the organisation, clarity around how EO will impact that and clarity around your narrative for change – including how you’ll engage your internal and external stakeholders – will really make a difference.
‘It’s about planning for change and project management, regardless of size – and recognising that it also takes time.’
Unlocking the potential of good EO
James de le Vigne, CEO of the Employee Ownership Association, describes Riverford as ‘a powerful example of the potential that can be unlocked through employee ownership’. Indeed, Riverford won the ‘Delivering Good Governance’ category in 2022’s EO Stories Awards.
Jeremy agrees with James, pointing out that when EO is done well everybody understands the responsibility and reward of ownership and works together to achieve more.
‘This means that employees become your talent pool, challenges become opportunities and strategies become reality,’ he says.
‘In my experience, the best EO businesses gain a real commercial advantage by locking in the relationship between responsibility and reward – this can encourage social mobility too.’
He concludes: ‘Having been a supporter, customer and admirer of Guy and the Riverford team, I look forward to seeing them – and their employee ownership – continue to flourish in the years to come.’
Want to know how we can support you and your succession planning with our transition, people and governance services?
Taking tough decisions as an EO business – practical steps
The UK might have narrowly avoided a recession so far, but that doesn’t change the pressure many companies continue to face. These are tough times, and tough times bring tough decisions – particularly when restructuring, redundancies and cuts to hours are involved.
Elon Musk’s approach understandably made global headlines (for all the wrong reasons) when he took over at Twitter last year.
In fact, the CIPD put the billionaire on the cover of its People Management magazine as an example of ‘how not to make people redundant’ and went on to explain the legal, commercial and personal considerations a good employer should instead apply, in its informative article within.
So if you’re the leader of an EO business taking tough decisions in the current climate, what should your priorities be? What is best practice?
Here, our Associates Lisa Fryer and Kathie Robb share their insight and five practical steps to support leaders to take tough decisions when they are EO.
Do your research – then clarify options
You have a tough decision to make. Start by investigating your options, clearly setting out each one’s pros and cons.
‘This will help when it comes to seeking the support – or even agreement – from stakeholders,’ says Kathie. ‘Remember that in an EO business you may need your Trust Board’s approval if redundancies or significant changes to your structure are being considered.’
Next, do your research and check current best practice with trusted sources, including the CIPD and your legal advisors or accountants. They will help you navigate the statutory requirements and meet minimum expectations.
You should be mindful of your business’s values, ethos and wider reputation too.
As Lisa (who is also JGA’s Operations Manager) explains: ‘There’s nothing wrong with working to minimum statutory requirements, but if your customer base values trust and respect highly, you should take this into account.
‘Younger customers and the power of social media mean that a poorly-considered action can have a significant impact on your reputation (as seen at Twitter) – risking your business’s sustainability in the longer term.’
Keep your employee-owners informed and engaged
One of EO’s benefits is that the best solutions can come from within.
In companies with a genuinely effective EO culture, the employees will already understand your business’s challenges and direction of travel.
‘While it might be scary to explain that tough decisions must be taken, if your employees are already informed and engaged it’s likely these won’t be a huge surprise,’ Kathie points out.
‘Values-led businesses tend to work with transparency and appreciate honesty, so bear this in mind.’
Avoid taking hasty action under pressure
So what mistakes might leaders make when taking decisions in today’s climate – and how can they avoid them? Lisa identifies the top two as taking ‘hasty action’ as a result of feeling pressurised because of rapidly evolving situations – and not seeking expert advice.
‘There’s a risk of just doing what might have been done before, even though legislation, attitudes and expectations might have changed,’ she says.
Another pitfall can be the informal leaking of concerns and challenges, causing unnecessary unrest, speculation and distress.
If your network is raising concerns, Lisa recommends working with ‘general observations rather than specifics’. Save those details for trusted specialist advisors instead.
Seek expert advice on best practice HR if you need it
Having the right HR policies in place (ideally from the start) will also support leaders when they face tough choices.
‘Investing time in an HR policy for restructuring and redundancy might not be your priority when all is well, but it will give your business a solid basis if needed later,’ Kathie explains. ‘Flexible working, career breaks and contractual flexibility as an employer might also afford a more open discussion / conversation when the tough times hit.’
Don’t forget to ensure any HR policy is updated to keep it legally compliant. You should also take account of changes in attitude and expectations, especially around restructuring and redundancy. Seeking expert external advice can be particularly useful here.
‘Any Trust Board worth its salt will be asking the operational leadership to identify the current top challenges facing the business and, more importantly, what plans are in place to mitigate their impact as early as possible’
Kathie Robb, JGA Associate
Draw on the insight and value of your Trust Board
As you’d expect, sound governance comes into its own when tough decisions need to be made.
In an EO business, the Trust Board can add real value, with its oversight of the business risk register and role as a conscience for the Operational Board providing a positive support for effective decision-making.
‘Taking a more measured approach and looking through the longer strategic lens, the Trust Board can ask difficult questions during the good times and increase scrutiny and challenge as situations change,’ Kathie reveals.
‘Any Trust Board worth its salt will be asking the operational leadership to identify the current top challenges facing the business and, more importantly, what plans are in place to mitigate their impact as early as possible.’
‘Smoothing the curve of change and helping to minimise any shocks – this is where sound governance can pay real dividends,’ Lisa adds.
Support your leaders to deliver change well
Of course, tough decisions don’t only affect those on the receiving end of difficult news. Leaders are people too so a good EO business should be providing them with the right professional (and personal) support to deliver change well.
‘It’s easy to assume that senior leaders will be capable and ready to communicate and support the delivery of tough decisions,’ says Lisa, ‘but the business should check that those who will be responsible for the execution of any plans are well-informed and up-to-speed on all communications, decisions and what is open for discussion.
‘The business should also provide the opportunity for this group to feedback and access specialist advice, even if it’s through an internal lead. Lastly, if you want to deliver and execute tough decisions well, you’ll need to demonstrate empathy at all levels – remember this isn’t the same as sympathy.’
Taking tough decisions as an EO leader – practical steps
It’s a lot to take in. So what five top practical tips would Kathie and Lisa offer to EO leaders taking tough decisions in challenging times?
1. Take time to take stock as soon as possible. Don’t get wrapped up in the day-to-day – you need to be heads-up to the horizon so you can limit any surprises. Check with your networks for any incoming trends or concerns to ensure nothing slips through. Chances are, other business leaders will be considering similar challenges so ask around and share what you can in exchange.
2. Speak to specialist advisors before you get to the crunch. Seeking their input early could save time, energy and keep the whole situation a lot calmer in the long term.
3. If you’re an EOT, fully utilise your Trust Board. Ask for their challenge and be prepared to listen and act on their questions. Trust Boards tend to have employees on them, frequently from positions that are not senior leadership, so their experience and perspective can be invaluable.
4. Engage with your governance and wider employee groups, where possible. If you’ve identified an incoming problem and they’re able to support with solutions (however creative) this may lead to a smoother outcome.
5. Don’t assume you’ll get everything right. Remaining alert to how any change is being managed and experienced by your employees can make a huge difference. If your business already supports open and effective two-way communication, fewer employees should be frustrated or begrudge any personal impact in the longer term. Graciously accept feedback from employees about their experiences, acknowledge where improvements could be made for the future and appreciate their honesty.
Want to know how JGA’s transition, people and governance services can support you and your EO business to take tough decisions in challenging times?
The value of the NED as a ‘critical friend’ on your Board
If there’s one thing about board development that Adrian Wheale is passionate about, it’s the role of the ‘critical friend’.
As JGA’s Associate, Executive Resourcing, he sees first-hand how the ‘dissenting voice’ of an Independent Trustee or Non-Executive Director can make a senior team more effective, through the independence and challenge it brings.
So do organisations understand the true value of the board-level ‘critical friend’?
Although the ‘critical friend’ is enshrined in UK Corporate Governance, Adrian’s experience is that some boards still seem to only pay ‘lip service’ to it.
This is despite recent high-profile organisational failures showing the damage that can occur when a ‘critical friend’ is absent at a senior level – or when their voice is discounted and goes unheard.
The value of rigour and challenge
‘Too often, not enough thought is put into the fundamental engineering of our top teams and, similarly, not enough credence given to the critical friend role,’ Adrian reveals. ‘We promote on competency and technical skill, but rarely on acumen and independence of thought or views.’
He also challenges the assumption that liberal, inclusive organisations (and their leadership) are any less prone to the risk of group think than other types – or models – of business.
‘The critical friend’s ability to ask ‘Why?’ – or ‘Why not?’ – at key moments brings invaluable rigour and challenge, ensuring that a fail-safe exists,’ he explains. ‘Engineering a board from a more diverse base will address the risks of group think, but it’s the critical friend who adds ‘steerage’ to the process.’
‘The critical friend’s ability to ask ‘Why?’ – or ‘Why not?’– at key moments brings invaluable rigour and challenge’
Adrian Wheale, Associate, Executive Resourcing
Strengthening board diversity of thought
Adrian’s appreciation of the role of the ‘critical friend’ in successful board development reflects his commitment to strengthening diversity of thought at senior levels – and ensuring that it is captured in a useful way.
Yet genuine diversity of thought doesn’t just happen. It starts with an organisation’s Constitution (or equivalent) and should run through its purpose, values, vision and goals. It must be revisited regularly to sustain its impact on leadership culture and supported to add value and grow.
‘Diversity of thought should be a separate agenda item,’ Adrian asserts. ‘If it isn’t called out it isn’t valued.’
Identifying the gaps an NED ‘critical friend’ could fill
Adrian’s executive resourcing experience has shown him why being able to assess a senior team’s psychological and values balance is fundamental to building stronger boards.
Psychometrics can be very useful when profiling their mental diversity and identifying the gaps that a ‘critical friend’ could fill.
‘Fixed-term tenure on boards is a good way to ensure things don’t get stale as well as appointing a truly independent Non-Executive Director, Trustee or Employee Rep to challenge your thinking as a critical friend.’
The right board directors in the right roles
The good news is that Adrian’s not alone in his appreciation of NEDs, as demonstrated by last weekend’s Sunday Times Non-Executive Director Awards where the winners were, he says, ‘exemplars of getting this right’.
So what should you do next?
At JGA, we have a track record of successfully supporting EO and values-led organisations with their board composition and development – including during and after EO transition. Our Executive Resourcing and Independent Trustee Resourcing services connect clients with the highest-calibre candidates for their senior roles. We also enable organisations to build Trust Board effectiveness.
To find out more
EO is different – your leadership development should be too
Leading in an employee-owned business – it’s different. Different responsibilities, different opportunities, different rewards. Ask those who do it well and they’ll confirm that leading employee owners requires a different mindset and skills to leading in a ‘conventional’ business.
Yet the need for EO-specific leadership development is often ignored.
Or it was, until now – because it was recognising transition’s impact on both new and existing leaders that led J Gadd Associates to partner with Telos and the Employee Ownership Association to create our latest leadership development programme last year.
Recognising the impact of transition
‘How to be an empowering leader or manager in an EO business’ was launched via EO Learn as five virtual half-day sessions run over three months from last September.
Designed to enable delegates to foster and develop a growth mindset, as well as engage, inspire and empower employees, feedback from the first cohort is strong.
Registrations for the next course, starting in March, are now open on the EOA website, and JGA Lead Associate Garry Davis is excited.
Drawing on his experience of leading and enabling others to lead and energise engagement, in an EO business, he’s worked closely with Telos to design and deliver a programme that can flex to individuals’ needs.
‘How to be an empowering leader or manager in an EO business’ has also been ‘sense-checked’ by other EO businesses and influencers via the EOA’s membership council and board, to ensure it meets the bar for EO Learn.
‘Often, during transition, the focus is on the financial and legal transaction, but founders and owners should also be looking at their leaders’ capacity to lead themselves and others in a co-owned business’
Garry Davis
Realising the benefits of a growth mindset
The first delegates came from organisations at all stages of EO transition, and quickly established trust and rapport. This generated high levels of openness, challenge and encouragement as they learned from each other’s experiences. Garry is confident the next cohort will do the same.
‘How to be an empowering leader or manager in an EO business’ meets a clear need with its blend of focused input, practical application and facilitated reflection on real experiences to bring the learning to life.
So why was Telos the right partner for J Gadd Associates?
‘For me, Telos’s extensive experience in leadership development across a wide range of organisations complements that of JGA. This shared expertise, combined with our understanding of EO transition, people development and what it takes to lead co-owners effectively, sets this programme apart.
‘Telos’s Growth Mindset psychometric tool and the opportunity to network and learn from other EO leaders are also core strengths.’
Learning from the experience of other EO leaders
In fact, Garry identifies the ‘hunger to learn from their peers’ as a key contributor to its early success.
‘The first delegates quickly built trust and rapport, and we saw high levels of openness, challenge and encouragement. The Growth Mindset tool really challenged their current thinking and transformed limiting beliefs.’
So who is ‘How to be an empowering leader or manager in an EO business’ for?
Not only leaders in transitioning and newly EO businesses, but also those in established organisations who might be new to EO or their team. By addressing the impact on leaders when businesses become employee-owned, the course supports them to grow.
'Telos’s extensive experience in leadership development… complements that of JGA. This shared expertise, combined with our understanding of EO transition, people development and what it takes to lead co-owners effectively, sets this programme apart’
Garry Davis
Working with trusted partners to secure EO success
‘Often, during an EO transition, the main focus is on the financial and legal transaction,’ Garry reveals, ‘but founders and owners should also be looking at their leaders’ capacity to lead themselves and others in a co-owned business, to secure their future success.
‘At JGA, we understand the impact of transition on leaders and why a growth mindset is essential when preparing for change. If that impact isn’t addressed, it can limit the organisation’s capacity to energise the culture and realise the full potential of becoming EO.’
Next steps
The next fully virtual ‘EO Learn – How to be an empowering leader or manager in an EO business’ development programme starts on 3rd March 2022. You can find out more, and register, via EO Learn on the EOA website.
If you would like to know more about how JGA can support you with our Transition, People and Governance services, please get in touch here
EO needs new role models for a new age. Could it be you?
EO’s never been short of role models: think of the pioneers. Spedan Lewis’s ‘experiment’ that became a £10bn business. Ove Arup with his belief in ‘socially useful work’. Max Fordham with his ‘fit to be an employee, fit to be a partner’ stance.
All innovative thinkers who challenged the business norm. All founders of businesses – John Lewis Partnership, Arup, Max Fordham – still championing EO today.
But how people live and work has changed, and EO is changing with it. So what makes an EO role model now?
What qualities ensure EO remains a relevant way to do business when so much else around us has changed?
An innovative and growing sector
This much is clear: employee ownership today is a diverse and dynamic sector with innovative people, at all levels, championing the cause.
And EO is growing.
As the Employee Ownership Association confirms, 250-plus companies have transitioned since the start of 2020. That figure includes Go Ape which attracted national coverage by becoming EO in October as part of its founders’ succession planning.
This diverse mix is reflected in J Gadd Associates’ experience too. Our clients span multiple sectors, sizes and ownership models – from Riverford Organic Farmers and Aardman Animations to Kilnbridge, NC Squared and Community Dental Services.
‘What the best EO organisations share is vision, passion, commitment and determination,’ says JGA’s Managing Director Jeremy Gadd, ‘and an understanding of what the ownership in ‘employee ownership’ is all about.
‘The founder’s values and beliefs remain firmly at the heart of the business, long after the individual has stepped down and gone.’
The power of shared responsibility
So ‘ownership’ – where do you start? ‘Max Fordham’s focus on EO being about shared responsibility, rather than shared profit, is the key,’ says Jeremy. ‘For me, it’s very powerful.’
JGA’s experience has also shown that successful employee ownership isn’t just about great employee engagement. ‘It’s about helping people understand the responsibility, opportunity and reward that employee ownership can bring – and how to unlock the benefits of their model,’ Jeremy explains.
Defining what ownership means is a conversation JGA’s Associates have with both pre- and post-transition clients, as they explore which practical steps to take.
‘What the best EO organisations share…. is an understanding of what the ownership in ‘employee ownership’ is all about’
Jeremy Gadd.
So what makes an EO role model?
This is a good time to be EO, despite the challenges of the pandemic. There are countless inspiring EO organisations, teams and individuals out there – some regularly garnering awards and media mentions. Guy Singh-Watson of Riverford Organic Farmers and Julian Richer of Richer Sounds are well-known names for a reason.
But what about EO’s smaller ‘movers and shakers’? What qualities make them different and better?
And what if the next EO role model could be you?
Jeremy is intrigued to see who will emerge and what will set them apart, as EO itself continues to evolve.
Drawing on JGA’s own experience, he predicts: ‘The leaders of EO tomorrow will succeed by understanding, and inspiring, an organisational performance that’s delivered by empowered and inspirational employee owners.
‘They will ensure the competing challenges of diversity and inclusion, ESG, client demand, new technology and existential threats are met and viewed as holistic, rewarding opportunities.
‘The challenge for those of us involved in growing this dynamic sector will be identifying and learning from you. It’s an exciting time to be supporting EO.’
Want to know how we can enable you to unlock the benefits of employee ownership with our Transition, People and Governance support?
EOTAS - what's it all about?
Jeremy in conversation with Cathy Kay
Jeremy is an independent Trustee for Aardman Animation and The Rooflight Company
With the launch of our new service, a joint venture with Russam, and supported by the Employee Ownership Association, Jeremy caught up with Cathy Kay, Managing Partner - Commercial, Russam.
“As a Trustee Director myself, I know just how important it is to attract the right independent trustees to ensure the Trust Board carries out its responsibilities effectively, modelling the way in corporate governance standards.
We work with founders, owners and existing boards to support their Trustee recruitment needs. Attracting the right Trustee is an essential ingredient in ensuring the executive or leadership teams receive the right combination of critical support and independent oversight.
Our partnership with Russam has been founded on a shared desire to match the best people, ensuring the right fit for every boards’ needs.”