Guest Blog: Why Management Accounts are important when your business is EO
Transitioning your business to employee ownership is an exciting step, but it changes aspects of your governance too. In our latest guest blog, Sean Hackemann, Director and Founder of Specialist Accounting Solutions Ltd, explains why robust, clear and timely Management Accounts are important when your business is employee-owned.
The challenge for new employee-owned businesses
Sean Hackemann, Director and Founder of Specialist Accounting Solutions Ltd
Many businesses undergo significant changes following an employee ownership (EO) transaction [writes Sean]. This often impacts the financial information and its users within the new employee-owned business.
For instance, there might be members in the new leadership team and the board of trustees who now have access to financial information, which was previously not disclosed to them. Some of the leadership team members might have limited experience in understanding Profit and Loss Accounts (P+L), Balance Sheets and Cash Flows and the associated KPIs.
Most employee-owned business will have a large debt to pay to the vendors over the next few years, and the combination of all these factors gives a new scale of importance to the monthly Management Accounts and their use.
Understanding the basics of your Management Accounts
It’s recommended that individuals in senior positions exposed to this (new) level of information (typically the Management Accounts) receive adequate training to understand the key financial statements and the KPIs of the business.
The more nuanced elements of the company’s financials will vary by sector and business, but they can be dealt with in more detail later on. For instance, the finance staff could provide group training sessions.
The acid test will be for the leadership team members and the trust board to see the Management Accounts and have a good grasp of how the business is performing financially.
Is there a budget?
‘Most new employee-owned businesses will have a substantial amount of debt to pay to the vendor… Given these financial pressures, it’s advisable to have a financial budget to know what profits need to be achieved, so that the business can afford the repayments’
Sean Hackemann, Specialist Accounting Solutions Ltd
Most new employee-owned businesses will have a substantial amount of debt to pay to the vendor (aka ‘deferred consideration’), which means the business needs to generate a certain level of profits to pay off the debt.
Normally this debt is repaid over five to seven years. Given these financial pressures, it’s advisable to have a financial budget to know what profits need to be achieved, so that the business can afford the repayments.
The absence of a budget would result in the leadership team not knowing if the business was on track in being able to repay the debt owed to the vendors.
The final piece in this jigsaw will be that the Management Accounts compare the actual performance to the budget, both on a monthly and a year-to-date basis, showing variances in both £ and percentages.
Based on the information presented, the users of the Management Accounts will then have the challenge to take appropriate actions, if they can see the business is off track (for example, if sales are too low and/or costs too high).
The timing of your Management Accounts
Sean Hackemann
When it comes to Management Accounts, the adage ‘timing is everything’ still holds true. The quicker these are presented, reviewed and discussed, the better.
There’s no point discussing January’s figures at the end of March, especially if this business is struggling because of unforeseen circumstances. We would recommend preparing these within 21 days of the previous month.
A major criterion is to ensure that the Management Accounts are still robust and reliable, even when working towards a quick turnaround.
There might be wider issues to consider here, such as the quality of the underlying systems and reporting software (for example, the company’s CRM system) feeding into the accounting system.
If the reports used as a basis to prepare the accounts are slow and clunky, it’s likely that the Management Accounts will be impacted negatively. It will either take longer to prepare the accounts, or they might not be reliable, or both.
The presentation of your Management Accounts
‘The Management Accounts should be presented clearly in a format that’s easy to understand and follow, even by ‘non-accountants’… If there’s confusion each time the numbers are discussed, or items are regularly missed (‘Oh, I didn’t’ spot that’), there’s a problem’
Sean Hackemann, Specialist Accounting Solutions Ltd
The Management Accounts should be presented clearly in a format that’s easy to understand and follow, even by ‘non-accountants’. This is easier said than done and it might be useful to seek external support to achieve this (higher) level of quality.
A good way to test this is how easily the Management Accounts can be understood by the leadership team and the trust board. If there’s confusion each time the numbers are discussed, or items are regularly missed (‘Oh, I didn’t’ spot that’), there’s a problem.
Some useful ways to help make Management Accounts more palatable are graphs, bar charts, tables with KPIs and summary P+Ls.
The bottom line of your Management Accounts
It is hardly surprising that the Management Accounts form a pivotal role in helping the new leadership team steer the employee-owned business towards ‘Financial Freedom Day’ – the day when all debts owing to the vendor are paid off.
In most cases, many years will pass and challenges will inevitably occur (such as Covid, recessions, cost of living crises).
Having a robust and reliable set of Management Accounts each month and being able to make informed decisions on what – and what not – to do will be just one of the many things a new employee-owned business and its leadership team will need to achieve, when the business embarks on its employee ownership journey.
Sean Hackemann is a Director and Founder of Specialist Accounting Solutions Ltd. Team SAS prepares independent business valuation reports for various scenarios, including employee ownership transactions and provides outsourced finance services to SMEs.
Find out more about them on their website here
Trustee Connect – championing the difference an effective Employee Trustee can make
So you’re an Employee Trustee. Maybe new in post, maybe not, but conscious that the role you’ve taken on carries all the responsibilities of a board-level director and is integral to the governance of your employee-owned (EO) business.
Kathie Robb, JGA Associate and host of Trustee Connect (with 'friend'!)
Yet, perhaps, it’s also come with no clear ‘job description’, no training, no personal development support and no extra time to get to grips with what being an Employee Trustee really involves.
Where can you go for support?
This was the challenge that led JGA to launch Trustee Connect in 2020. Fast forward four years and our insightful open forum for Employee Trustees is on a roll – with healthy numbers at each confidential online quarterly meeting.
The depth and quality of topic being shared has also matured.
Free to current and previous employee-owned clients that we (and now our Telos Partners colleagues) have supported, Trustee Connect was set up to enable Employee Trustees to network, share best practice and explore common challenges together.
Today it’s fulfilling its goal – supporting Employee Trustees to maximise their value by giving them the clarity, support and confidence they need to be effective in this unique board-level role.
Developing trustees’ confidence and understanding
JGA Associate Kathie Robb has been at the helm from the start and is thrilled at the way Trustee Connect has evolved. The last 12 months have been especially exciting, she says.
‘We’ve seen lots of new faces as well as regular returners, which helps to create a lovely dynamic for stimulating conversation and debate.
‘Building a network of great trustees who can reach out to others in the same position for help, support and advice has been a particular highlight for me.’
Creating a safe place to talk
Kathie ensures each session is a ‘safe place’ for trustees to talk
Is Kathie surprised at the way in which the conversation has matured? ‘Not at all,’ she says.
‘Employee Trustees tend to be respected, capable, invested people who have a passion for their work and business – alongside a sound understanding of what’s important to ensure its long-term success and how best to benefit their colleagues.
‘It’s a wide-ranging, varied role where there’s no ‘one size fits all’.
‘This means that pretty much every Employee Trustee has to make the role their own through trial and error, which is why having a safe place to talk where no topic is ‘off limits’ is so important. We enjoy great conversations every time.’
Giving trustees the space and time to grow
‘Where Employee Trustees are given the opportunity to invest time and energy in their own development, time to liaise and converse with their colleagues… and where they’re valued and integrated into the Trust Board on an equal footing – that’s when… the business sees how vital a great Employee Trustee is’
Kathie Robb, JGA Associate and host of Trustee Connect
Unfortunately, one thing that hasn’t evolved since 2020 is the level of understanding in many EO businesses of what an Employee Trustee is or does.
‘There’s huge variation in how well businesses understand the role and its value,’ Kathie agrees. ‘In my experience, it’s the minority of employers who ‘get’ it, but when they do we see the trustees ‘fly’.
‘Where Employee Trustees are given the opportunity to invest time and energy in their own development, time to liaise and converse with their colleagues on a regular basis, and where they’re valued and integrated into the Trust Board on an equal footing – that’s when we and (of course) the business see how vital a great Employee Trustee is.
‘Sadly, quite often a trustee is simply given the role or elected/selected without really knowing what’s required and without a clear role profile. If you’re the only Employee Trustee – or if this is a new role to your business – you can feel daunted, uncertain and very alone.’
Learning from the experience of others
JGA’s MD Jeremy Gadd often joins Kathie at Trustee Connect meetings
This is where Trustee Connect comes into its own.
‘We’ve created a relaxed environment where there’s no such thing as a ‘stupid’ question,’ Kathie explains. ’All comments, questions, challenges and observations/experiences are welcomed and, within the group, everything is confidential.
‘New Employee Trustees can gain insight, information and advice from others who might have dealt with similar situations.
‘They can also reap the benefit of the experience and knowledge brought by our MD Jeremy, who often joins with other members of the JGA team.
‘Equally, experienced Employee Trustees can learn from others’ insights and challenges, and bring the benefit of their own time in the role to encourage and support others.’
Building on the success of Trustee Connect
It’s clear Trustee Connect is going from strength to strength. What’s next?
After asking the Employee Trustees what could make the meetings even more useful, a guest speaker will join the next Trustee Connect on 31 October 2024.
Kathie’s inviting an Independent Chair to share their thoughts on running a Trust Board meeting, what makes a great agenda, what they look for in an Employee Trustee and the value they believe the trustee can add.
‘It will be fascinating to have a different perspective on all things Trust Board-related and there will, of course, be plenty of time for an extensive Q&A session,’ Kathie confirms.
JGA is also exploring running a potential in-person Employee Trustee development and networking day, after several Trustee Connect members expressed their interest in such an event.
‘We already know there’s huge benefit in coming together for 90 minutes to talk through what’s on your radar, but investing time in your own development is so key,’ Kathie says.
‘Our Employee Trustee day would focus on building a better understanding of the trustee role and how to build your effectiveness with the Trust Board – combined with the chance to network and focus on the elements of the role that are important to you We’ll keep everyone updated as we have news.’
But that’s not all. On the back of Trustee Connect’s success, JGA and Telos Partners are expanding our Connect networks for employee-owned clients – starting with MD Connect which will be headed up by Telos Consultant Alex Bloom.
Great people, good discussion – the power of Trustee Connect
Trustee Connect is 'energising, challenging and enjoyable', Kathie says
So the future’s looking good. If Kathie had to choose three words to describe her journey with Trustee Connect, what would they be?
‘Energising, challenging and enjoyable,’ she says.
‘Energising – because the group brings so much passion and focus that it’s hard not to be inspired by them!
‘Challenging – because the bigger the group, the wider the range of topics and it’s important to ensure every trustee feels included and heard, even if we can’t always get through it all. If that happens, I’ll always invite them to contact me after if they have a burning issue or anything else we can help with.
And enjoyable? ‘No surprises here,’ concludes Kathie. ‘Great people, good discussion and a voyage of discovery. What’s not to like about Trustee Connect?!’
Want to join Trustee Connect or know an Employee Trustee who might? Visit our Trustee Connect page and register for our next meeting here
Trustee Connect – supporting Employee Trustees to add value and grow
It’s always good when something you’ve created starts to grow, so it’s no surprise that our Associate Kathie Robb is more than happy to talk about Trustee Connect.
Trustee Connect is JGA’s insightful open forum for Employee Trustees who want to network, share best practice and explore common challenges together in a confidential online space. Launched in 2020, it’s free to all our current/former clients, with the friendly quarterly meetings lasting 90 minutes each time.
Kathie gets ready for Trustee Connect
Kathie has been involved from the start when Trustee Connect was just an idea. It was sparked by JGA’s recognition of the often solo nature of this hugely responsible yet frequently misunderstood role, following our MD Jeremy Gadd’s conversations with Employee Trustees across a wide range of EO businesses.
Today – coffee cup to hand – Kathie enjoys facilitating the network’s regular meetings, with others from our team logging in to offer their insight, if required.
A safe and confidential space
‘We started Trustee Connect to provide a safe space for Employee Trustees to explore the role with others and build a network for support or advice,’ she explains.
‘Often, Employee Trustees are asked to take on the role or are selected/voted into it before they – and sometimes the business – really know what it entails. This means they might be confused about what they are there to do and how to do it, while having few people to discuss this with.
‘With Trustee Connect, we began small and quickly realised we were offering a valuable and much-needed service. Since launch, we’ve seen both JGA’s client numbers and the invitees to our sessions grow exponentially.’
Exploring common issues together
Attended by a mix of experienced and new-in-post Employee Trustees, today’s meetings are certainly never dull…
Recent hot topics have ranged from the challenge of ‘wearing two hats’ (day job plus board-level position) to how to ask affective questions. ‘We always have a lively, entertaining and useful session,’ Kathie confirms.
Conversations are often focused around the newer attendees and the questions they have – including what they can (and can’t) do as a member of the Trust Board.
‘There’s been much discussion around how to work with fellow Trust Board Directors and particularly the Chair, and how to build knowledge and understanding of the Trust Board and its activities with their work colleagues,’ Kathie says.
‘It’s so interesting that whatever the size of business, type of industry and EO model they have, the challenges, questions, experiences and debates are all very similar.’
Demonstrating a passion for their business
‘We’ve come across businesses where investment in the Trust Board’s capability is a high priority – here, it’s pretty obvious that the Employee Trustees’ confidence and knowledge of the role and their responsibilities is impressive…[and] the benefits are clear for both the individual and the business’
Kathie Robb, JGA Associate and facilitator, Trustee Connect
So has anything surprised Kathie about Trustee Connect?
‘Yes,’ she reveals. ‘I’m constantly surprised by the willingness of individuals to take the plunge and step into the Employee Trustee role, often without really knowing the full remit of the job and what it entails.
‘However, that demonstrates to me that these are often just the right people to be Employee Trustees – they’re brave, adventurous, willing to stand up and be counted and have such a passion for their business that they’ll give anything a go!’
Recognising the need for support
Of course, not every EOT has Employee Trustees, but those who do know their vital contribution to maintaining sound governance in both newly-transitioned and established EO businesses.
Working in the ‘engine room’ of their business, Employee Trustees must balance the responsibilities of a board director with the demands of their ‘normal’ job.
Yet they can find themselves operating in a vacuum if their business hasn’t recognised the need to support them with the right training and development – or spent time building a wider understanding of the Employee Trustee role across the company as part of an effective Trust Board.
Developing confidence and knowledge
Kathie with JGA’s Jeremy Gadd, who often joins Trustee Connect meetings
‘Most EO businesses are aware of the requirement to set up a Trust Board as they transition into employee ownership and some quickly recognise what the Board is there to do and the value it can add,’ Kathie agrees.
‘Some, however, take it pretty much at face value as an exercise they’re required to undertake, and don’t fully embrace the opportunities a Trust Board presents. Their investment in developing the Trust Board and its members is therefore low on the list of business priorities.
‘In general though, time for personal and team development varies.
‘We’ve come across businesses where investment in the Trust Board’s capability is seen as a high priority – here, it’s pretty obvious that the Employee Trustees’ confidence and knowledge of the role and their responsibilities is impressive.
‘Often, however, the day job gets in the way of taking time out to develop their skills and knowledge and Employee Trustees find it difficult to ask for this time. It’s rare that it’s freely given but, where it is, the benefits are clear for both the individual and the business.’
Strengthening trust board effectiveness
‘In my experience – and having talked with other Independent Trustees who recognise the value of having Employee Trustees on the board – it’s obvious they bring insight, observations and opinions that we wouldn’t otherwise be able to access’
Jeremy Gadd, Independent Trustee and JGA’s founder and MD
So seeing Trustee Connect go from strength to strength has been rewarding, not only for Kathie but for the rest of our team – some of whom are Independent Trustees on Trust Boards where they work directly with Employee Trustees.
Our MD Jeremy is an Independent Trustee with two EO businesses and has seen the difference that effective Employee Trustees can make.
‘In my experience – and having talked with other Independent Trustees who recognise the value of having Employee Trustees on the board – it’s obvious they bring insight, observations and opinions that we wouldn’t otherwise be able to access,’ he says.
‘This can be very useful during testing or stressful times, as well as during periods of significant change where the impact on the front line isn’t always so visible.’
Fresh ideas for a bright future
An unexpected guest at September’s Trustee Connect!
As for Trustee Connect and the future, Kathie is keeping an (excitingly) open mind…
‘We’ll continue the quarterly meetings as they seem to be working well,’ she says. 'We usually have a new cohort of attendees each time, so it’s always fresh and a bit of a voyage of discovery.
‘We think it might also be helpful to invite guest speakers – such as an Independent Chair, a finance expert and a legal expert – at different times to share the benefit of their experience.
‘But essentially, we plan to keep listening to our Employee Trustees to ensure JGA and Trustee Connect can continue to deliver whatever they need.’
Want to join Trustee Connect or know an Employee Trustee who would find it useful? Read our Trustee Connect page and register here.
To find out more about how JGA can enable you to strengthen your Trust Board’s effectiveness, get in touch.
EO is growing – but what do the figures mean?
‘Oh, wow, that figure is a lot!’ It’s not often a business report sparks a response like this from our MD Jeremy, but the EOA’s 2023 update on the EO sector did just that.
Or rather, part of it did – the news that 90 per cent of today’s 1,400-plus EO companies have become employee-owned since the Finance Act of 2014.
This legislation introduced a tax incentive for founder/owners to choose EO when succession planning. It’s the focus of an HMRC consultation on EOTs and EBTs which is now open for responses until 25 September 2023.
No surprise then that Jeremy was struck by that 90% figure when it was released on EO Day 2023. And we’re sure he wasn’t alone...
Encouraging the growth of EO
‘That’s a lot of new EO businesses in the last nine years,’ he points out, ‘but we haven’t reached a tipping point yet. We’re certainly seeing today’s growth in company transitions reflected in the increasing number of enquiries we’re getting about the support JGA can provide.
‘The government’s policy has succeeded in encouraging EO’s growth, but there are potential risks which is why we welcome the HMRC review.
‘It shows the government is prepared to invest time and energy to get the legislation right and secure EO’s long-term success.’
Yet Jeremy is in no doubt that, although the 2014 Finance Act has facilitated the sector’s growth, the increase in the number of EO companies is being driven by more than the tax incentive of selling to an EOT.
Supporting significant change
‘It may sound counter-intuitive, but I often remind our clients that EO is simply another form of ownership – it’s what you do with it that enables you to achieve more. Transitioning to EO won’t guarantee your business’s future, but it does allow you to continue to be successful by engaging with those who made it the success it is’
Jeremy Gadd, JGA’s founder and MD
‘EO’s undoubtedly meeting a broader need,’ he explains. ‘A significant percentage of the founder/owners we support are concerned about their legacy, their team’s long-term employment and their ability to recruit in a market where EO is a driver for those who assume it’s a better way to work.
‘It may sound counter-intuitive, but I often remind our clients that EO is simply another form of ownership – it’s what you do with it that enables you to achieve more.
‘Transitioning to EO won’t guarantee your business’s future, but it does allow you to continue to be successful by engaging with those who made it the success it is. It can also encourage genuine social mobility.’
The first step is to ensure your company is ‘in the right place’ with a solid business foundation before choosing EO as a succession plan.
‘Becoming EO involves significant organisational change and much of our work involves supporting this delicate part of the transition,’ Jeremy reveals. ‘Once your EO is embedded, you can accelerate the benefits of being employee-owned.’
Unlocking the potential of your people
So what else in the EOA’s 2023 report caught Jeremy’s eye? The fact that the top five sectors for EO remain unchanged, he says.
So why are more businesses in Professional Services, Manufacturing, Construction, Wholesale and Retail Trade plus Information and Communication employee-owned than other industries across the UK?
‘I expect this is nuanced, but what do these sectors have in common? There’s a significant element of ‘people relationships’ here,’ Jeremy suggests. ‘Done well, EO encourages greater engagement. To achieve that you need greater education, so people become more educated and empowered too.
‘For Professional Services, I’d look at EO’s appeal as a succession model,’ he adds. ‘Many are LLPs and for LLPs succession is a challenge, because who can afford to buy into the practice? It’s an important and live conversation right now.’
Clarifying your story and beliefs
The Guardian breaks Riverford’s latest news in May
So, when it comes to sectors, are Riverford Organic Farmers and Go Ape the exception rather than the rule? Both have become EO since 2018, with Riverford’s founder Guy Singh Watson selling his remaining shares to the EOT this summer to make his farm 100 per cent employee-owned.
Jeremy worked with Guy during the early stages of his EO journey and has followed Riverford’s story with interest ever since.
‘With Riverford and Go Ape, both have a strong belief in their businesses and are very values-led. Historically, if you look at the John Lewis Partnership or Scott Bader, their founders Spedan Lewis and Ernest Bader also had a clear narrative about what employee ownership could mean.
‘If we want to broaden EO’s appeal, we need to identify the organisations who are genuinely values-led but have yet to engage with this model. EO might be growing but we haven’t hit a tipping point yet.’
Promoting sound EO governance
And what about governance? Large-scale failures of this in non-EO organisations have been headline news in recent years, spotlighting the impact on people and reputation when leadership accountability isn’t strong.
The good news is that the EOA’s 2023 report confirms that 97 per cent of EO businesses have at least one form of employee governance, while 74 per cent have at least two.
JGA has a proven record of enabling EO businesses to establish sound governance, whether that’s by building Trust Board effectiveness or ensuring employee representation is strong.
The size of the challenge
Jeremy and JGA Associate Pip Meaden have both enjoyed getting out to support EO clients this summer
And, finally, size – the UK’s 50 largest EO companies now employ more than 180,000 (combined) employees between them. But there are 1,400-plus EO businesses in total, so what about them?
At JGA, we work with clients whose teams range from five to several hundred employees. ‘It’s important to recognise that different organisations are grappling with different challenges,’ Jeremy says. ‘What does it mean to you to be EO? That might be an easier concept to navigate with a smaller team. The space in which a business operates will influence the discussion too.’
Either way, Jeremy is excited by EO’s opportunities at a time when interest in a more sustainable way of doing business is building: ‘We’re certainly in for an interesting 10 years.’
Want to know how our transition, people and governance services can support your EO business? Get in touch here.
How to strengthen your Trust Board in challenging times
Are you an Independent Trustee or in a business with one, or more, on your board? If so, you’ll understand the difference the right Independent Trustee can make, thanks to the critical support and independent oversight they bring.
At JGA, we appreciate Independent Trustees too – not least because three of our team have first-hand experience of the role.
Our MD Jeremy Gadd, Associate Philippa Meaden and Operations Manager Lisa Fryer all hold this position on a range of EOT Trust Boards. Lisa is particularly excited (as are we!) because she has just taken on her first Independent Trustee role – at EO manufacturing company Pym & Wildsmith.
Supporting the next step on your EO journey
Through JGA, Lisa was already supporting Pym & Wildsmith to navigate their transition from family-owned business to employee ownership, but has handed over that work now she is Chair of Trustees.
‘It feels quite a privilege to be appointed as an Independent Trustee and I am excited to be joining the team as they really get to grips with embedding their employee ownership across the business,’ she confirms.
‘I can’t wait to get stuck in and make an impact in this new role.’
‘I’ve seen the journey the whole team has been on to get to this point, both physically and emotionally, so I’m hopeful I can bring this understanding to a different role and support them on the next step in their employee ownership story.’
Lisa Fryer – Pym & Wildsmith’s new Independent Trustee
Ensuring your governance is strong
But every EO company is different, so how do you find the best Independent Trustee for your business? Someone who can listen and contribute usefully to your board’s (often complex) conversations, asking the crucial questions that keep your governance strong?
At JGA, we can help.
We have a track record of working with clients not just to find the highest-calibre Independent Trustees but also to strengthen their Trust Board effectiveness in the longer term. Here’s what we do.
1. Finding the right Independent Trustee for your business
A good Independent Trustee brings independence of thought, a fresh pair of eyes and the ability to ask the simple questions that invite people to think in a different way.
We source high-calibre Independent Trustees for forward-thinking EO organisations – in partnership with leading executive search business Russam.
Read about our Independent Trustee Resourcing service (including how to register if you’re looking for your next Independent Trustee opportunity) here.
2. Enhancing the effectiveness of your Trust Board
A strong EO Trust Board adds even more value in tough times, with its oversight of risk and role as a conscience for the executive board providing a positive support for effective decision-making.
We enable businesses to build Trust Boards that actively make a difference – adding assurance that your governance is strong. It’s good practice to check in regularly and revitalise your governance if needed, whatever stage of being EO you’re at.
Read about our Trust Board effectiveness support here.
‘A good independent Trustee brings independence of thought, a fresh pair of eyes and the ability to ask the simple questions that invite people to think in a different way. We source high-calibre [people] for forward-thinking EO organisations…’
J Gadd Associates
3. Supporting your Employee Trustees to develop and grow
Not every EOT has Employee Trustees, but those who do know the value this hugely responsible (often misunderstood) role can add.
Trustee Connect is JGA’s friendly and insightful open forum for Employee Trustees who want to network, share best practice and grow. It’s confidential and free to all our current/former clients, with quarterly online meetings run by our Associate Kathie Robb.
Read about Trustee Connect and how you/your Employee Trustees can join it here.
Kathie Robb runs JGA’s open forum for Employee Trustees – Trustee Connect
Want to know how JGA can enable you to strengthen your Trust Board and business? Follow these links or get in touch.
Keeping your people engaged and excited about EO
It’s not rocket science. For most of us, the connection we feel to our business is as important as the work we produce. In fact, the quality of the two is often linked.
So if you’re an EO company looking to maximise your potential by strengthening your employee owner engagement, what practical steps can you take?
The first is to recognise that effective employee engagement doesn’t only reinforce your ethos and values – it unlocks commercial benefits too.
That’s because knowledge and awareness can drive positive behaviours such as collaboration, sharpening the focus on key business goals.
In today’s tough economic climate, sharing key challenges such as margin and profitability will always be time well spent.
Communicate openly with your employee owners
As Lisa Fryer, JGA’s Operations Manager and Associate, points out: ‘It's easy to talk about revenue and income targets, but how often do employees hear about margin and profitability? And do they understand the link with employee services and benefits?
‘Openly sharing figures will support your employees’ wider education about their business and can positively impact your ability to achieve commercial goals.’
Lisa speaks from experience. In previous commercial roles, she saw how enabling her team to understand their contribution changed behaviours and added value to the bottom line.
Keep employee owner engagement on the radar
Yet focusing on employee owner engagement can quickly slip off the radar post-transition, especially if other change is afoot. Even without the pandemic’s impact, energy can drift.
Reaching the point of transition can also leave companies feeling they need to step back and draw breath.
Lisa offers this advice: ‘If your business plans to pause, make one commitment, set a deadline for when you will give more attention to culture and stick to it. Explain to employees why there’s a break and when EO will be back on the priority list.’
Refresh your employee owner engagement as you grow
So is it ever ‘too late’ to start engaging your employees in your EO? ‘Definitely not!’ says Lisa.
‘In fact, keeping your employees informed and engaged in your EO is something you need to revisit and refresh over time to ensure your approach is still fit for purpose – so set a review point to check in.’
It’s easy to think that because you have an employee survey with encouraging results, it’s ‘job done’. ‘But if you’re facing into wider commercial or cultural challenges, it can make a huge difference when everyone feels involved and engaged with the changes and goals,’ Lisa explains.
‘We often advise organisations to see their transition as the start of a longer journey, so there’s no need to run headlong into lots of activity right at the start. Instead, pace yourselves and identify the areas of your culture that will have the biggest impact over the longer term first. As your business evolves, other things will naturally change too.’
Practical tips for effective employee owner engagement
So how can you keep your employees informed, engaged and excited about EO? Lisa shares these practical tips.
1. Be clear about your purpose, so employees understand your ultimate focus. This provides a point of alignment and something they can test business successes and decisions against.
2. Establish a strong set of values. These will clarify expectations, help with decision-making and support external stakeholder relationships too. Don’t have them? Involve and engage everyone in shaping them for the longer term.
3. Explain your governance structure, each element’s responsibilities and how they support/challenge each other. Raise the profile of the teams involved and equip them with the skills and information to engage your whole business.
4. If you’re establishing or reinvigorating an employee forum or council, be clear about roles and responsibilities. In smaller companies, it’s usually more effective to hold informal group meetings, such as a bacon butty breakfast for all!
5. Support your middle leadership. They’ll be feeling squeezed as the shift in ownership will change attitudes and expectations. Equip them to be more empowering EO leaders to accelerate embedding your EO.
6. Communicate well and through several channels, investing in new tools or people if needed. As employees share more and influence bigger decisions, the language and culture will shift anyway.
7. Define the key indicators of business success and share regular performance updates. Ensure these cover more than sales and profit, so every employee feels connected to your overall success.
8. If not already a member, join the Employee Ownership Association. Get involved in their activities, networking and learn from others’ best practice, while sharing your own.
Secure the right support at the right time
Employee ownership isn’t a label – it’s a different way of doing business that requires energy and focus to bring to life. That’s why our Associates draw on their own experience to enable EO companies to effectively engage their employee owners.
Our employee owner engagement support ranges from EO perception studies, employee representation reviews and mentoring to EO-focused leadership development (with Telos Partners as part of the EOA’s EO Learn) and our free-to-clients networking forum for Employee Trustees.
Want to know more about how we can support you with our range of transition, people and governance services? Get in touch with us now.
Meet Adrian – our board development and resourcing pro
‘There’s no typical EO business, no typical EOT, no typical EO culture and that makes my work with JGA very interesting’. So says our Associate Adrian Wheale, whose specialist focus doesn’t ‘just’ cover executive selection but spans ongoing board development too.
And he loves it. Why? Because whether it’s corporate governance, executive resourcing or the need to strengthen board effectiveness, ‘it’s always about the people’, Adrian says.
‘It’s the opportunity I have to add value that matters. The fellowship of my colleagues, the engagement of our clients, the real people / real time nature of the work we do – at JGA, these are all the things I most enjoy.’
Developing an effective executive team
Good news then that demand for the specialist board support Adrian provides through JGA is growing, and his diary for the months ahead is already filling up.
Adrian (far right) with other members of our team
This is being driven (in part) by the economic climate, which is stress-testing many businesses, overstretching leadership experience and affecting some companies’ ability to raise funds. It’s tough out there right now.
Yet that makes Adrian’s extensive commercial, governance and board-level (Chairman, MD and NED) experience particularly relevant, and is fulfilling work for someone who thrives on variety.
‘Being the catalyst that crystallises boards to become better boards, and stepping up people to that board, is different every time because of the personalities and pressures involved,’ he explains.
Striking a balance between the executive and trust board
‘The better the Trust Board the better the EO model and getting the balance right between the Executive and Trust Board is a ‘real time’ challenge… It’s not an easy gig and if you’ve never been on a company board you may not have the skills or experience required’
Adrian Wheale, JGA’s board development expert
‘In an EO business, I’m interested in the dynamic between the different stakeholders: the company vendors, the executive team and the Trustees. Often, the executive team is an important stakeholder, yet it may not be recognised as such or it could be struggling now that the founder/owner is letting go.’
He is quick to point out that the Trust Board is also very influential. ‘It’s a cliché’ but it’s true: the better the Trust Board the better the EO model,’ he confirms, ‘and getting the balance right between the Executive and Trust Board is a ‘real time’ challenge.
‘There has to be a tension because one board is running the business on behalf of everybody and the other is ensuring it’s run on behalf of the trust beneficiaries. It’s not an easy gig and if you’ve never been on a company board you may not have the skills or experience required.’
Working with a diverse EO sector
Adrian’s background isn’t in EO, but since becoming an Associate with JGA he’s quickly gained a ‘good handle’ on the complexities involved. He’s also been ‘pleasantly surprised and stimulated’ by the variety he’s found.
Adrian catching up with JGA colleague Lisa Fryer
As he explains: ‘I knew I would be working with a diverse range of clients, motivated into EO for a range of reasons, but the variety is far wider than I imagined. We’re talking about ‘50 shades of grey’ in people here.
‘There’s no typical EO business, no typical EOT, no typical EO culture – and becoming EO is a complex move.
‘I enjoy the creative element of putting context to what each business does – how long it’s been EO, the state of play on the executive board, whether the Trust Board has already been put together and, if so, to what degree.
‘I then focus on where the need to change is most immediate. If there’s a gap, it may need an executive recruitment to fill it or ongoing individual mentoring or board development to upskill.’
JGA – the ‘people people’ in EO
In smaller organisations, the transition for the founder/owner to EO is often ‘mirrored by a second journey’, he adds, as the company moves from being product-driven to market-led.
This means that ‘future casting’ (predicting things that will have a significant impact on your business) is happening simultaneously to the transaction, presenting another challenge for the incumbent, or nascent, board.
‘All this activity requires a huge amount of mental agility from both the founder/owner and the leaders taking over,’ says Adrian. ‘This is where JGA’s flexible no-one-size-fits-all approach allows me to first understand each client’s ‘palette of issues’ and then chose the right colours to paint in the gaps.
‘I see JGA as the ‘people people’ in EO and that is reflected in our bespoke approach.’
Maintaining his focus and enjoying life!
It sounds like fulfilling work which could also (at times) feel demanding, so what keeps Adrian focused through his working day?
1. The ability to work from home and the freedom this brings regarding my family and my business.
2. The most annoying dog on the planet who crashes into many of my digital meetings! He’s a wire-haired dachshund and is a small dog with a BIG character.
3. The variety of clients I deal with, through both JGA and my own business.
4. Having had years of leading someone else’s business, then leading my own, I like that JGA isn’t my business: it’s Jeremy’s and it’s in good hands. I’m happy now to be a NED and consultant: I advise, solve problems and can multi-task.
5. Living where I do in a great urban village, with everything I need close by: a library, pub, a Waitrose and the connectivity that became so important during Covid. Even better, I can walk to the downs…
Find out more about how we can support you and your board through our transition, people and governance services – get in touch
Revitalising your governance at key stages of being an EO business
Is your EO business set up to withstand tough times? Checking in on your governance might not be top of your ‘to do’ list right now, but revitalising it will strengthen your commercial resilience for the months ahead.
Just ask Lisa Fryer, JGA’s Operations Manager and governance ‘pro’.
‘Governance might have a reputation for being a bit dull,’ she concedes, ‘but it’s simply good organisation. It’s about having sound structures in place to ensure your business can do what it needs to do.’
In uncertain times, ensuring your governance is strong provides reassurance and stability, while safeguarding your reputation. It also creates opportunities to connect more deeply with clients and employees.
So how do you revitalise your governance at key stages of being an EO business?
Lisa shares her practical tips here…
Stage 1 – Revitalising your governance during EO transition
During EO transition, you’ll be preparing the ground for your legal and financial transaction and ensuring that your business, leaders and employees are ready for your company’s sale to an EOT (Employee Ownership Trust).
Your Board
You may already have an Executive Board, but does your senior team have the capability, experience and skills to lead your organisation through its EO transition and support employees through an extended period of change? Undertaking a Board diagnosis could give you invaluable insight and options through external appointments, internal promotions and NEDs for permanent or interim roles.
Your Employee Forum / Council
If you already have an employee forum or council, do they have a role to play during your EO transaction? Very few will be a formal part of your governance structure, with decision-making powers, so this may be the time to review whether your current set-up is the right one for your employee-owned future. It’s also worth supporting your forum members’ understanding of what employee ownership is (and what it isn’t), as well as consulting and involving them in the transition if you can.
Your EOT
If you’re setting up an EOT (Employee Owned Trust), how is the trust being supported in its duties from the outset? Do its members have access to effective independent advice in addition to training on fiduciary responsibilities? Are they appropriately insured and have they considered how they would like to operate?
If you’re appointing an Independent Trustee, how will you do this? Using your network may not ensure you secure the diversity of thought and experience your trust needs to be truly effective in the longer term. Consider the value of appointing an Independent Trustee with experience of leading in an EO organisation in the early stages, as this is when your employees’ experiences of EO will start to be formed.
Stage 2 – Revitalising your governance in the early years of being EO
Post-transition, the focus shifts to embedding your employee ownership: putting down foundations, educating employees about their ‘new’ business, launching (or strengthening) employee representation and establishing sound structures and routines.
1. Take your time, don’t set unrealistic targets and continue to access specialist advisors. Use their wealth of knowledge to provide options, and consult with co-owners on what and how they expect to be involved. The clue is in the name: you’re employee-owned!
2. Do your research and don’t be swept up by what look like ‘perfect solutions’. EO is a diverse and growing sector, so there’s no one size fits all. Beware rushing to get things ‘nailed down’ or creating something so rigid that it can’t be easily adapted further down the line.
3. Whatever you establish, allocate time to review and adapt. After meetings or presentations, check in and make sure you celebrate what worked well and pick up any challenges or frustrations.
4. Invest in developing your Executive Board and other leaders to enhance their ability to support and empower your new co-owners.
5. Support your Trust Board to become truly effective. Although its key focus at this stage is to ensure the debt repayment is fulfilled, its job isn’t quite as simple as that. The Trust Board will be busy developing their relationships and skills while acting as a ‘critical friend’ – particularly on matters impacting employees’ experiences – to your Executive Board.
Stage 3 – Revitalising your governance as an established EO business
Now comes the ‘accelerate’ stage, when things have clicked into place, most employees and leaders understand (and value) the EO model and you have a clear vision or purpose in place. Things seem to work smoothly and there’s strong collaboration across the company.
This is the time when everyone feels ready to build up speed, but you’ll still need some support to keep your high performance vehicle running smoothly.
‘In uncertain times, ensuring your governance is strong provides reassurance and stability, while safeguarding your reputation’
Lisa Fryer, JGA Operations Manager and governance pro
1. Make sure you’ve always got the right team in place. Things move on, different skills are developed or needed, and some might decide it’s time for a change.
2. Manage your succession, particularly at Executive and Trust Board level. Have a plan and agreed processes and stick to them. Appointing senior leaders should be done with transparency so everyone has confidence in the decision and the candidate gets the best start to their role.
3. Apply the same approach to the Trust Board. Make sure your Trustees have the right mixture of skills and that relationships aren’t too ‘cosy’. If it starts to feel like this, or you’re a new Trustee joining an established Board, ask again about the processes and routines. If it sounds as though a lot goes through ‘on the nod’, you may not be as effective as you could be.
4. By now, your organisation should have developed effective tools or processes to gather employee input and feedback. Make sure your Trust Board is aware of these and ask what the Executive Board does with this information. There’s no point gathering opinion if you’re not prepared to listen to what is said.
Want to know how our Transition, People and Governance services can support your employee-owned business? Get in touch to arrange a no obligation meeting now.
Governance – 5 things every EO business should know
Sound governance is the foundation of every well-run business, not just legally but commercially too. In unstable times it acts as a trusted bedrock for the way things are set up, accounted for and done.
But when you’re employee-owned – or transitioning to it – there’s a ‘double layer’ of governance to bear in mind. This is because of the additional checks and balances that employee ownership will bring.
So, as a founder / owner, what are the 5 things you need to know about governance if you want to equip your boards with the right framework of authority and accountability to be successful, both before – and after – your business becomes employee-owned?
Our ‘governance pro’ Associate Lisa Fryer shares her insight below.
1. The size of your board matters
Leading employee owners is different, so your executive / operational board should be well-prepared and structured to make the most of this opportunity – ahead of your EO transition. It must be agile enough, in size and nature, to support your company’s needs.
If your board is small, it can be especially useful to seek particular expertise in the form of a high-calibre Non-Executive Director. The challenge and rigour these ‘critical friends’ bring will ensure your directors have the insight they need to make the best decisions – and avoid unproductive ‘group think’
2. You need the right capabilities in the right roles
Does your board have the collective capability to operate your business effectively once it becomes employee-owned? If board members are long-serving, you should ensure their skills are still relevant or can be developed to support the next stage of your company’s growth.
Pre-transition (then every two years) your business should do a thorough skills audit to identify your board’s strengths and gaps. This will highlight development opportunities and when external expertise should be brought in. Individuals might feel vulnerable, but often transitioning boards are already composed of very talented and inspiring leaders. It’s why your company is successful.
‘Do a thorough skills audit… Individuals might feel vulnerable, but often transitioning boards are already composed of very talented and inspiring leaders. It’s why your company is successful’
Lisa Fryer, Associate, JGA
3. Clarifying your Trust Board’s role and responsibilities is important
Your Trust Board provides a vital extra layer of governance for your employee-owned business. Both Independent and Employee Trustees (if you have them) should clearly understand their role and responsibilities – and it’s important that the rest of your company understands them too.
Your Trust Board is not usually a decision-making body; it is your ‘conscience’. Its value lies in the independent perspective, insight and challenge it brings as it ensures your board is operating in line with your purpose and ethos – and in the best interests of your beneficiaries.
4. Identifying your purpose, vision and values is fundamental to future success
As founder / owner, you should clarify what matters most about the way in which your business will operate once it becomes employee-owned, and ensure this is referred to in some way in your Trust Deed and Articles of Association.
What is non-negotiable in your purpose, mission and values? Where are your red lines? Remember that these legal documents will provide a clear reference point for your boards as they navigate the path ahead. Use them, therefore, to specify what’s most important without being restrictively detailed to avoid undermining your company’s ability to evolve and grow.
5. Rigorous organisation and record-keeping underpins sound governance
It might seem tedious, but establishing a clear administrative process and diligent record-keeping is integral to the smooth running of your employee-owned executive / operational and trust boards. Setting a clear agenda for meetings, where each director, NED or trustee understands their purpose and the information they must bear in mind, is good governance.
Maintaining accurate records ensures that, if challenged, both boards will be able to clearly demonstrate what was considered, explain the reasons they signed off a particular decision and provide the assurance they were acting in the best interests of your beneficiaries.
What should you do next?
JGA is the UK’s largest independent multi-service provider of commercial, cultural and engagement services to the employee-owned sector – with a successful track record of working with founders / owners at all stages of the transition process. We also provide ongoing and expert people and governance support.
To find out how we can support you or your organisation, please get in touch here.
Sale of a company by an EOT
Next in our guest blogs series, we ask Andrew Evans, Partner at Geldards LLP, to share with us what they found out when they were asked to research the implications of selling an EOT.
In this briefing we look at the tax consequences should an EOT decide to sell the trading company (and end the EOT). EOTs are normally set up to hold shares in the trading company on a long term basis. However, there may be circumstances where the trustees of the EOT decide to sell the shares in the trading company to a third party.
Sale to another EOT
The transfer of the shares to another EOT should not have any adverse tax consequences. The transfer will be treated as a gift of the shares to the EOT buyer and the shares will transfer on a no gain no loss basis. The selling EOT has to submit an election to HMRC to claim the relief from chargeable gains on the transfer of the shares. A transfer of shares in this way will mean that the employees of the selling EOT receive nothing for their indirect interest in the shares. The employees do obtain an indirect ownership in a larger group.
Tax consequences of selling the trading company and ending the EOT
We were asked to pitch for a piece of work advising the EOT trustees on the sale of the shares in the trading company after the management team received an attractive offer from a third party buyer. This caused us to look at more detail into the tax consequences of a sale of the shares and even we were surprised at the high amount of tax that would be payable.
The sellers are at risk of paying CGT on the sale if the EOT breaches the qualifying conditions by the end of the tax year following the tax year in which the disposal takes place (in simple terms, a maximum 2 year period). The sale of the shares held by the EOT would be a breach on the basis that the EOT no longer controlled the trading company.
Once the sellers’ risk period has ended, the CGT risk passes to the trustees of the EOT. The EOT is treated as taking over the base cost of the shares in the company from the sellers. In many cases this could be the nominal amount paid for the shares on incorporation of the company. On a sale of the shares by the EOT, the whole of the increase in value of the shares is taxed as a chargeable gain in hands of the trustee because the trustee is deemed to have sold and reacquired the shares at their current market value. No deduction is given for any deferred consideration due to the sellers. The current rate of CGT for a trust is 20%. The EOT will then be left with a cash lump sum from which it has to pay any deferred consideration. The balance of any money has to be paid to the beneficiaries (the employees) and the payment will be taxed in the same way as a cash bonus, so subject to income tax and National Insurance Contributions, a further 63.75% tax for the highest rate taxpayers. The effective rate of tax could be 71%, so for every £100 received on a sale up to £71 is paid in tax.
Example
A company is sold to an EOT 4 years ago, so the tax risk lies with the EOT trustee. The sellers are still owed £8m in deferred consideration. The management team (which includes some of the sellers) receive an offer of £12m for the company which they wish to accept and recommend to the EOT trustee.
The EOT trustee pays tax at 20% CGT on the £12m due to the deemed sale and reacquisition rule, so pays £2.4m in tax.
The sellers receive the £8m deferred consideration (still paid with no CGT).
The EOT trustee is left with £1.6m out of which it has to pay the costs of the sale (say £100,000), so £1,500,000 is left to be paid to the employees. If there are 50 employees, they would each receive £30,000 (gross). After basic rate tax and NICs, they would be left with around £15,400 each which is not a brilliant return on the sale of the shares for £12m.
Conclusion
The trustee of an EOT needs to carefully consider any sale and particularly the tax consequences where there is a substantial amount of deferred consideration outstanding. The trustee must also consider the wider interests of the beneficiaries to satisfy its fiduciary obligations and act in the best interests of the employees. Even if the EOT deed does not require a vote by the employees in favour of the sale, the trustee may wish to consider holding a vote to ensure consultation (and approval) by the beneficiaries, or in the last resort, obtain a ruling from the Chancery Division of the High Court (which decides on trust issues).
Any decision may be made easier, the larger the potential pay-out to the employees. A “lottery” sized pay-out, even after tax, may be sufficient compensation for the employees at risk of losing any job security. However, the trustee directors must ensure they satisfy their fiduciary duties in reaching any decision.
Geldards have an established track record advising owners and their companies on the transition to employee ownership via an Employee Ownership Trust (EOT). Their combination of Corporate and Tax expertise provides a seamless service when dealing with the technical requirements to qualify for the tax benefits of being EOT owned.
To explore your employee ownership needs contact Andrew Evans directly here
To find out more about how JGA can support your EO business with our Transition, People and Governance services, please get in touch here.
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
Diversity of thought - why it matters
Diversity of thought. You know when you hear it: views shift, minds stretch, ideas flow. There can be challenge – uncomfortable perhaps but useful, because this is how innovation grows.
Who wouldn’t want this kind of culture for their organisation? Particularly when building a stronger board or developing leaders for the tough conditions we all face today.
But saying you welcome diversity of thought isn’t the same as making it happen. So how do you it bring it to life?
Supporting diverse representation is the first step to tackling ‘group think’. But to unlock diversity of thought’s real value, an organisation must also foster an actively inclusive culture across the workplace as a whole.
Leading by example
In reality, this means not only recruiting candidates with differing backgrounds and life experiences in the first place, but enabling them to contribute fully once in their roles.
This is particularly important at Board and senior leadership level because of the impact of this group’s mindset and behaviour on a business’s culture and direction. Leaders are vital role models for emerging talent coming through from below.
Today’s International Women’s Day 2022 (8 March) challenges the specific bias that stunts women’s career progression and life chances (#BreakTheBias).
But IWD’s call for a world where difference is actively valued is equally relevant for the UK’s other eight legally ‘protected characteristics’ – which range from disability, age and sexual orientation to maternity, race and religion / belief.
When it comes to diverse thinking, everyone has a role to play.
Harnessing difference as a strength
As JGA Lead Associate Pip Meaden explains: ‘There’s no doubt that our personal experiences shape our values and how we view, think, feel and act – yet I’m not sure that in business we fully utilise this as a strength.
‘At JGA, we know from listening to our clients that an employer who encourages diversity of thought and opinion – and understands how to capture it effectively – is viewed by their workforce in a positive light.’
Are employee-owned businesses generally better placed to do this? In theory, yes.
‘Organisations that share responsibility across the workforce should already have mechanisms in place to channel employee voice and opinion into their core thinking and decision-making process,’ says Pip. ‘This can challenge leadership, but when it works well it can also play a key role in supporting positive outcomes.’
Practical steps to unlock diverse thinking
So how can you harness the power of diverse thinking in your organisation? Pip shares three practical steps.
Encourage your workforce to take an active interest in your business and provide the space for opinion and thought to be shared.
Ensure leadership has the capacity to listen.
Provide individual development for those who require more confidence to voice opinion and share – it’s not always easy.
‘We know that an employer who encourages diversity of thought and opinion – and understands how to capture it effectively – is viewed by their workforce in a positive light’
Pip Meaden, Lead Associate
The role of the ‘critical friend’
Sound advice – but that’s not all, because Adrian Wheale, JGA’s Associate, Executive Resourcing, reveals there’s another step that every Board should take to prevent senior-level ‘group think’ causing the kind of damage seen in recent headline-grabbling organisational failures: appoint an Independent Trustee, Non-Executive Director or similar independent figure to act as a ‘critical friend’.
As Adrian explains: ‘The ‘critical friend’ role is steeped in Company Law, Corporate Governance codes and normal UK practice. But, too often, not enough thought is put into the fundamental engineering of our top teams and, similarly, not enough credence given to the role. We promote on competency and technical skill, but rarely on acumen and independence of thought or views.
‘Engineering a board from a more diverse base will support diversity of thought and address the risks of group think, but it’s the ‘critical friend’ who adds steerage to the process,’ he concludes.
‘When an Independent Trustee, Employee Trustee or NED with real independence, rigour and challenge is present, then a fail-safe exists.’
JGA’s Independent Trustee Resourcing and Executive Resourcing Services can directly help organisations to achieve greater diversity of thought at a senior level. To find out more about these and our other Transition, People and Governance services, please get in touch.
Challenging, supportive, insightful – the value of an Independent Trustee
Challenging, rewarding and (yes, at times) surprising: that’s how MD Jeremy Gadd describes the experience of being an Independent Trustee.
And he should know. Not just because Jeremy and Lead Associate Pip Meaden are themselves Independent Trustee Directors at four successful EO businesses – but because, at JGA, we specialise in building Trust Board effectiveness and providing Independent Trustee Resourcing support.
So what value can an Independent Trustee bring to your Board? The clue is in the name.
The value of independence
As Jeremy explains: ‘A good Independent Trustee brings independence of thought, a fresh pair of eyes and the ability to ask the really simple questions that invite people to think in a different way.
‘You’re there to ensure the company is being run in the best interests of the beneficiaries - who are the employees - and that’s different to other Non-Executive Director roles.’
Pip agrees: ‘I get to ask the questions that some might view as naïve, but which often bring about the best conversations. It’s critical that, when appropriate, the challenge is there – being able to offer assurance that the right decisions are being made for the right reasons is key.’
The power of working together
Part of the role is to fill a gap by providing additional insight and skills – chairing, financial, EO or sector-specific. Jeremy cites the ability to listen and ask good questions, curiosity, empathy, commercial know-how and sound judgement as integral to being an Independent Trustee.
Working together is also important.
‘When you join a Trust Board, you must first collectively establish trust and define your purpose and culture,’ he says. Then, as an Independent Trustee, you’ll be able to call out the important things that might feel uncomfortable, and stand your ground.
‘You’re independent but you must be a team player, recognising that everyone in the room is playing their part.’
This approach extends to the relationship an Independent Trustee builds with any Employee Trustees the company might have – ‘a really important dynamic’, Jeremy says. ‘The Employee Trustee offers valuable insight into the experience of working within the organisation.’
As an Independent Trustee, you can also support the Employee Trustee to develop in their role as their business grows. ‘Employee Trustees take on a high level of responsibility and that can feel lonely,’ he points out. ’That’s why JGA launched Trustee Connect, our open forum for this vital group.’
‘A good Independent Trustee brings independence of thought, a fresh pair of eyes and the ability to ask the really simple questions that invite people to think in a different way’
Jeremy Gadd, MD and Independent Trustee
‘It’s critical that, when appropriate, the challenge is there – being able to offer assurance that the right decisions are being made for the right reasons is key’
Pip Meaden, Lead Associate and Independent Trustee
The challenge of ‘keeping close’
So what about Jeremy’s own experience as an Independent Trustee? He currently holds the role at two innovative EO businesses: multi award-winning animation company Aardman and design-led manufacturer and supplier The Rooflight Company?
‘I’m lucky to be on two very good, very diverse Trust Boards that operate in different ways and have strong relationships with two impressive executive teams,’ he agrees.
‘I’ve taken time to understand the different dynamic and business lifecycle of each, to ensure my judgements are well-informed and sound. It’s a privilege to play a small but important part in the success of a company when it’s making significant organisational changes or capital investments.’
Being an Independent Trustee has enhanced Jeremy’s personal development too, giving him the chance to meet (and learn from) people at all levels and across functions, including Employee Reps – something that gives him ‘a real buzz’.
‘What might surprise some is the range of issues we discuss,’ he adds. ‘The challenge for anyone in this role is to keep close enough to the organisation to sense how it’s being run internally. You don’t need to know the detail, but is it living its values? It’s important to get that balance right.’
Getting the right people in the right roles
For Pip, being an Independent Trustee offers the opportunity to apply her experience of working within EO at a different level, supporting people and cultural change. ‘It enables me and my fellow Trustee Directors to monitor, sense check and balance the way the businesses are being led,’ she explains.
‘With the employee ownership trust (EOT) the major shareholder, I enjoy my role as an independent voice. I can bring a degree of common sense and perspective which can be difficult for others to offer if they have an emotional attachment to an issue or thing.
‘the EO sector’s growth and the number of founder / family-led businesses choosing to transition is driving the demand for good Independent Trustees,’ concludes Pip. ‘My advice to any organisation is to be very clear about your requirements, seek expert support with the Independent Trustee Resourcing process and recruit accordingly.’
What should you do next?
At JGA, we connect high-calibre Independent Trustees with forward-thinking EO organisations through our EO Trustee Appointment Service (EOTAS) – in partnership with Russam. We also enable businesses to build Trust Boards that actively make a difference – with our Trust Board Effectiveness support.
Want to know more?
How Employee Representation can give your business the edge
It’s no secret: if you’re an owner/founder or senior team transitioning your business to employee ownership, your diary will be pretty full. The legal and financial steps involved in shifting your ownership model will (quite rightly) consume much of your time. So if employee representation isn’t a legal requirement for your future, why should it be on your radar at all?
Good question.
Employee representation is good EO practice, sound governance and can bolster your ESG: that much is clear.
But an effective Employee Representative Group (ERG) and/or Employee Trustees can also drive your commercial performance, with their ability to share knowledge, unlock innovation and ‘temperature check’ your business just three of their core strengths.
The value of influence
They can challenge your thinking. An ERG isn’t a decision-making body but it can exert a profound influence on your decisions, while the value of Employee Trustees lies in their ability to sense check that your board’s decisions are being taken in the best interests of everyone in the business.
Together, ERGs and Employee Trustees can sharpen an organisation’s performance by enabling leaders to engage effectively across all areas – strengthening accountability, relationships and results.
As Associate Libby Unsworth puts it: ‘You’re employee-owned – why wouldn’t you want to listen to your employees’ useful insight and use their good ideas to support your company’s growth?’ Why not indeed.
Putting representation on the radar
So where do you start when there’s no ‘one size fits all’ group or forum or framework for employee representation?
Although some organisations use an ERG to engage their employees right at the start of their journey into transition, for most founders/owners it may not be a top priority at this time.
At JGA, we understand this. That’s why we advise clients that it’s enough, at this busy stage, to include employee representation as an intention – then seek professional support from an experienced business later.
‘A company may think it can go from being owned to being employee-owned without any impact, and initially it might feel as if nothing has changed,’ Libby reveals. ‘But over time there will be a difference as owners focus on what transition means for them personally, their people and their business as a whole.’
This is the point at which JGA’s support can be particularly useful, as we enable clients to understand how EO feels in reality and to unlock the benefits employee representation can bring.
‘Seeing the energy, enthusiasm and pride as individual employee owners grow over time – in their new roles, alongside their business – is one of the things I enjoy most,’ says Libby.
‘A company may think it can go from being owned to being employee-owned without any impact… But over time there will be a difference as owners focus on what transition means for them personally, their people and their business as a whole’
Libby Unsworth, Associate
What should you do next?
Establishing effective representation requires time, vision and energy. Every business will do it in their own unique way.
Here, Libby shares the five practical steps leaders can take to get the ball rolling and build momentum on the road to success:
Be clear about your ERG’s role and responsibilities – what they are and what they’re not. Work with it, trust it and value the connection it provides with your employee owners.
Encourage your ERG to influence leadership decisions. It isn’t a decision-making body but ensure you listen to what it brings and, if you don’t agree, explain why.
Prioritise honest and transparent communication with your ERG. Share what can safely be shared about business decisions and finances (the good and the bad) in an accessible format to foster engagement.
Be ready for (appropriate and professional) challenge from your ERG. In elections, your Board may not get the ERG it ‘wants’ – this may feel uncomfortable but will ensure things are lively and make you think twice.
Be open to being held to account for your decisions by your ERG. Employee representation is about working together, challenging, influencing and asking questions. If you do this, you will be confident that your decisions are well thought-through, transparent and fair.
Want to know more about how JGA can support you to develop effective employee representation?
To find out more about employee representation, read our guest blog for Postlethwaite here.
ESG – why it should be on your radar in 2022
ESG. Whatever your sector, model or size, understanding what it is and what it could mean for your business is important as ESG moves ‘mainstream’ in 2022.
So what is it? ESG stands for Environmental, Social and Governance and refers to a set of standards for a company’s operations that socially-conscious consumers, investors and potential employees can use to screen decisions.
Often applied in sustainable or ethical investing, ESG has started to replace CSR as the go-to term for socially responsible business practices.
But there’s more to it than this, because ESG isn’t just relevant for those working in the ‘green economy’. As its profile grows, ESG is becoming a core feature of doing business, not an optional extra. It is CSR rebooted and should be on the radar of every values-driven company today.
Growing awareness – and the need to act
‘The idea that companies need to act as corporate citizens isn’t new,’ says Associate Lisa Fryer, ‘but the pressure to be aware, take steps and be transparent and honest about how your business is doing – including where you’re limited – has grown.
‘ESG is more than an add-on to your company report. The best values-driven companies are integrating it with their operations. They understand that ‘greenwash’ won’t wash in a social media age.’
Indeed, while the power of social media can be divisive, it has also raised public, political and business awareness of genuine prejudice and discrimination. By highlighting bias, it’s shone a light on differences in the treatment and experiences of others that are reshaping many workplaces, as well as the lives we lead.
Different approaches for different sectors
At J Gadd Associates, we’ve noticed a growing awareness of ESG among many of our existing and former clients, and are excited at the way in which some – such as Riverford Organic Farmers – are leading the way. Environmental consultancy LUC is another example of a client that has taken a strong public environmental stance.
‘Many organisations have been conscious of ESG for some time, but there’s a sharper focus on it now – its profile has risen,’ Lisa confirms.
‘Those with an environmentally-driven customer base are already ahead: ESG matches their values and they are openly sharing information with those who work and shop with them. It’s key to maintaining trust.’
For others, it’s about clarifying their intentions, setting practical goals and being realistic about where – and how – they can strengthen their approach to Environmental, Social and Governance in a way that supports their reputation and commercial success.
Each company’s stance will be different depending on their sector, product and services. Some face a bigger challenge. There is no one size fits all.
‘As its profile grows, ESG is becoming a core feature of doing business, not an optional extra’
Setting realistic ESG goals
So what about us?
At J Gadd Associates, the way we work with employee-owned and other values-driven businesses is shaped by our values – Trust, Integrity and Clarity. We are clear in all that we do.
That means that this year, like many other companies, we will be clarifying and applying our own ESG standards to align with our values, so we can be transparent when sharing information with our clients, trusted partners and wider networks about our progress towards realistic goals.
But we’re not starting from scratch.
The nature of JGA’s Transition, People and Governance services – and the way in which our Associates design and deliver them – means that much of what we do is already connected to strengthening our clients’ ESG.
Moving forward in the right direction
How so? As a business working with the employee ownership sector, our support is geared around the ‘S (Social) element. We enable employee-owned organisations to unlock the potential of their people and bring their employee ownership to life.
Alongside this, our experience in supporting clients to establish sound governance with fit-for-purpose structures and processes – and the right people in the right roles – doesn’t just ensure they are legally compliant. It also strengthens their commercial resilience and ability to grow.
As Lisa points out: ‘If your organisation embeds good governance, you, your people and customers will know that the E and S of ESG are being taken seriously and that any decisions are being taken appropriately. At JGA, we see this in action through our work on developing trust board effectiveness and building a stronger board.’
‘When you have a clear vision, strong values and the right people in the right roles, good governance keeps everything moving forward in the right direction.’
‘An important part of JGA’s employee ownership work relates to enabling our clients to define their purpose. Achieving ESG goals is a lot easier when an organisation understands what it values and why.’
Meeting your customers’ expectations
Lisa is excited to see how many companies are now ‘stepping up’ when it comes to ESG. ‘As a business, they feel it’s the right and responsible thing to do,’ she explains.
‘And it’s what their employees are asking them to do. The pandemic has prompted many people to reassess what matters, raising employees’ expectations. The shift to hybrid working hasn’t limited access to talent, so talent can be more demanding about where they want to build their career – and how.’
‘At JGA, we’re working with a generation of leaders whose approach is being influenced by their children. The younger generation is challenging them to be more conscious of factors such as the environment.’
The Employee Ownership Association has recognised this shift too. Last year it ran a webinar series on ESG, which Lisa followed.
‘One of the many points the EOA webinars made was that all eyes need to be on the ball. Even if you’re an organisation supplying services or products to other organisations, those clients have reputations and customers at the end of the chain who are expecting them to take the right decisions,’ she says.
‘This focus is consumer-driven. In the past, having a stance on ESG was a nice to have – now it’s a must-have. If you haven’t started yet, you’re behind the curve. The business perspective has changed.’
‘Each company’s stance on ESG will be different depending on their sector, product and services. There is no one size fits all’
Next steps
At JGA, our Transition, People and Governance services can help clients gain clarity and take practical steps towards achieving their ESG goals.
To find out more about how we could support you
Want to build Trust Board effectiveness? Support your Employee Trustees
It’s not easy being an Employee Trustee. And why would it be? The role is unique, with its own distinct issues and opportunities, including the full legal responsibilities of a board-level post. It can be lonely, with limited access to specialist training or time to develop the skills to contribute effectively. It can feel tough.
These are all challenges that JGA Associate Kathie Robb recognises from her work supporting Employee Trustees and building Trust Board effectiveness. And they are what led to last year’s launch of JGA’s new open forum, Trustee Connect.
Free to JGA clients, Trustee Connect enables Employee Trustees to network and share best practice with those doing the same role in diverse employee-owned businesses – in a safe, confidential space.
An insightful and supportive network
‘We created Trustee Connect to bring new and more experienced Employee Trustees together in a relaxed conversation, offering the chance for mutual support, insight and networking,’ says Kathie. ‘Trustee Connect enables Employee Trustees to deepen their understanding and confidence so they can be more effective in the role.’
And that’s important, because Employee Trustees are usually elected/selected by their colleagues or appointed by the leadership team just as their organisation transitions to employee ownership.
‘Often, if a business has recently become EO, neither the leaders or the electorate fully understand what being an Employee Trustee involves,’ says Kathie. ‘And why would they? It’s new to everybody. They probably get the basics of the role, but then what? How do Employee Trustees work with their Trustee and work colleagues? What do they talk about? What about their responsibilities?’
Employee Trustees can also be new to the board environment.
‘While Independent Trustee Directors often come from other board-level situations, Employee Trustees might come straight from the ‘shop floor’, with no experience of sitting at a table discussing financial and legal business matters,’ she says. ‘That can feel quite daunting, without the right support.’
‘Often, if a business has recently become EO, neither the leaders or the electorate fully understand what being an Employee involves. And why would they? It’s new to everybody’
Kathie Robb
The opportunity to grow
Yet becoming an Employee Trustee is, she confirms, a great opportunity to grow.
‘Employee Trustees are usually energetic, inspirational and capable people who already have the eyes, ears and trust of their colleagues. In this role, they now also have the chance to address and influence senior leaders who are actively seeking their insight.
‘They’ll be questioning, challenging and holding management to account, making a difference in a way that’s recognised by others on the Trust Board. I’ve watched people blossom and move their careers forward as a result – and that’s exciting.’
Sharing best practice
JGA launched Trustee Connect in 2021, with three 90-minute quarterly meetings held so far. Feedback has been very positive and Kathie is looking forward to facilitating another ‘insightful, interactive and lively conversation’ at the next Trustee Connect on Wednesday 19 January.
What common themes have emerged so far?
‘The role’s isolation and lack of time. The gap in understanding of what’s involved, especially by the rest of the business – we talk about that quite a lot,’ she reveals. ‘You’re an Employee Trustee: how do you fulfil your role?
‘We’ve also looked at how being an Employee Trustee differs from being an Employee Representative, and shared best practice around engaging other employee owners to help bring employee ownership to life.
‘Trustee Connect enables Employee Trustees to deepen their understanding and confidence so they can be more effective in the role’
Kathie Robb
Practical tips to strengthen Trust Boards
Most newly-EO businesses will have engaged professional support with the legal and financial process, with a transition ‘tick list’ that includes appointing Employee Trustees and establishing employee representation.
They will get the job done – mission ‘complete’. But what happens now?
As a newly-EO business, how do you ensure these key parts of your governance structure can function effectively? Here, Kathie shares her top three practical tips.
Invest the time and energy to build relationships as a Trust Board. Focus on how you work together as a team to ensure each member can strengthen Trust Board effectiveness.
Equip your Employee Trustees with the understanding and skills to fulfil their role and its legal and fiduciary responsibilities. Support them to learn from best practice and network – if a JGA client, through Trustee Connect.
Ensure the rest of your organisation understands what your Trust Board and Employee Trustees do. Engage your employee owners to share their insight and create value for the business you own.
Next steps
At JGA, we enable Employee Trustees to contribute more effectively and strengthen Trust Board effectiveness through our Governance support. Please get in touch if you would like to know more.
Trustee Connect is free and open to Employee Trustees of current and previous JGA clients, with no subscription or minimum attendance required. If you would like to join the next quarterly meeting on Wednesday 19 January (11am to 12.30pm), please request a place here.
Employee Trustees - How they make a difference
Reflections on the first year as an employee trustee, by Lucy Wallwork
Find out how we can support your trust board
One year after becoming 100% employee owned, the employee trustees at LUC have been reflecting on their experiences so far.
Late January 2020, the newly formed Trustee Board for LUC met with JGA for a bespoke workshop focused on enabling them to establish effective relationships and meetings from the outset. Little did anyone realise just how valuable that day would be, when soon afterwards Coronavirus locked down the UK.
Fast forward through lockdowns, working from home and roadmaps, the employee trustees have been sharing what their year has been like, what being an employee trustee at LUC means, and a little about the sorts of things they’ve been involved with.
Follow the links to find out for yourself what the trustees have been sharing.
Listen in to this discussion
Employee Ownership Trustee Appointment Service
Why Independent Trustees are such valuable assets
Over half the transitions to employee ownership trusts have occurred since 2017, with the White Rose annual survey reporting on EO Day last June, that 100 new businesses had converted in the previous 12 months. There are an increasing number of founders and owners choosing the employee ownership model for their businesses. These choices often secure long term sustainable employment, rooted within communities and committed to demonstrating positive values.
There is a common requirement for an employee ownership trust to appoint a mixture of trustees, enabling strategic oversight on behalf of the beneficiaries, with at least one of these being independently appointed. Sometimes these needs can be fulfilled from within your current network, but that may not bring the diversity and perspective your trust board needs. With more transitions to EO and more boards maturing, actively succession planning and challenging their effectiveness, we believe the need for high quality independent trustees will continue to grow.
We recognise the value and importance of effective governance, and the assurances it can bring to organisations. We believe that with independence comes greater integrity, an asset to any organisation, ensuring that business values and purpose are effectively nurtured. We know how independent trustees can spark new conversations, generate discussion and transfer their knowledge to new boards and environments. In addition to their specific areas of expertise, we also believe that effective independent trustees bring the benefits of fresh perspectives, cultural challenge and occasionally a healthy scepticism.
Our joint venture with Russam is focused on supporting employee owned organisations to find the best match for their Trustee Board. Since opening for registrations at the start of this year, over 300 candidates have joined, seeking to share their expertise, spread best practice and promote good governance.
Whether you are a current trustee, have been a trustee previously or are looking to become one, why not take a look at the role and register to ensure you’re in the mix for future opportunities.
We’re very excited to be launching this service, and can’t wait to support employee owned organisations in finding the right trustee for them. Kathie, our lead associate for this service is available to send you further details and discuss your needs in more detail, so feel free to drop us a line if you’re interested.
EO Day 2020 - time for change
Friday 26th June is Employee Ownership Day. Lisa Fryer, Associate, considers how now may be the perfect time for even greater awareness of this business model.
When the June edition of People Management landed and I took a moment to flick through the articles, ‘Remaking Corporate Governance’ caught my eye. So I made a coffee and allowed myself time to take a closer look…
There is no doubt that the current circumstances are having a significant effect on the way that companies are operating. At the beginning of 2020, key questions were centred around how businesses were addressing their environmental impact and supporting positive climate change action. How could UK businesses prepare and adapt to the impact of Brexit and whatever related trade deals were also major concerns?
Within a few short months we’ve experienced global disruption to welfare and economies as a result of Coronavirus. Currently the inequality experienced by all BAME communities has been brought in to sharp focus, with heightened awareness as a result of Covid-19 impact in addition to protests following the deeply disturbing footage of Ahmaud Aubrey and George Floyd.
Those businesses who have responded positively, engaged communities, demonstrated genuine care and concern for their employees and acknowledged their impact on wider society appear to be weathering the storm better. Maybe our fundamental need to be acknowledged as valuable individuals rather than expendable assets has finally come clearly in to focus.
The article explains how corporate investors and boards are aware of ESG (environmental, social and governance) factors. The apparent mentality around ‘pie splitting’ rather than ‘pie growing’ was referenced, with an acknowledged shift towards the latter being increasingly identified, but not mainstream. The roles of HR Directors and NEDs in ensuring recognition and discussion around the changes taking place in society were noted, with a reflection that these discussions more frequently appearing on board agendas. Instead of worrying about how to chop up what was available, the article reports more focus on activities that enable businesses to grow, naturally making more available for everyone. Bonus pay outs for bosses or buying up stock options doesn’t necessarily build business resilience.
I couldn’t fail to notice a couple of quotes picked out in the article. “It will take a long time for people to go back to brands they feel haven’t done the right thing”, and also “If it’s a choice between helping society and boosting profits, it’ll be profits every time”. We should of course all be aware of the role we play in this as consumers.
In my 30+ years of working within the EO community, it’s easy to think that so many would want to undertake business in a positive and ethical way. And yet for me, this article highlighted that so many businesses are yet to identify the benefits of doing the same business in a different way.
Whilst the article covered the changing pressures on boards to adjust their business focus in the current climate, there was little reference to the Employee Ownership model: this introduces a further layer of governance and assurance focused on ethos, community and doing the right thing, even when nobody else is looking.
When you’ve built this in to your business model, it can be so much easier to take those long term decisions. You can tap in to your deeply committed employees, connect with a loyal customer base and communicate innovative change in a positive and future focused way. For good measure, your customers and clients know that you are more likely to be there in the future for them, because you’re not worrying about how much pie you’ve got to split up. You just want to make sure that you can keep on making even more of those beautiful pies long in to the future.
So if you were to ask me what needs to come from the current situation, it would be for the business community to acknowledge that Employee Ownership is not a marginal option or business model for those slightly quirky business owners who want to give something back to their employees. Employee Ownership already has a corporate governance model that addresses a number of the concerns this article has identified. Although we cannot claim these businesses are perfect in this area, there is a far smaller risk of boards misjudging situations when there are Trustees to assure, particularly employee trustees.
Employee ownership is one business model option that helps to address perceived capitalist greed, executive privilege and the endless pursuit of profits at whatever expense. Employee ownership is an opportunity to work and contribute towards something that will enhance others lives for a long time after you’re on the board or a part of the organisation. Employee ownership is the model of business that enables greater engagement and focus around your ultimate purpose, which in turn more effectively supports your immediate community, stakeholders and employees.
So for me the question for EO Day 2020 would be, ‘How can we build resilient and sustainable organisations that we can trust to do the right thing?’
#EOisTheAnswer