I’ve just returned after attending the Oxford Symposium on Employee Ownership and wanted to share my experiences of the event. This is the second year that the Symposium has taken place. Organised by Graeme Nuttall OBE and Professor John Hoffmire, the aim is to bring together individuals and organisations active in employee ownership from across the world to share ideas and learning. The number of nations represented was impressive: there were at least 20 countries attending including Australia, Japan, Denmark, Slovenia, Canada and the US.
It was fascinating to hear the different environments in operation. Canada has recently passed legislation to introduce a form of Employee Ownership Trust (EOT), but their model will not benefit from the same tax advantages as we do in the UK. Australia has had one company adopt the EOT, which has generated some interest, but no tax incentives, and little progress. Many countries do have wide adoption of share schemes, particularly within their larger businesses, but these are often viewed as a form of remuneration rather than as an ownership stake for employees.
Some countries do use this direct shareholding model where employees buy shares in their companies as employee ownership. The Employee Stock Option Plan (ESOP) is the prevalent model in the US, and many companies with an ESOP do tie the shareholding to the governance. I was struck by the story of Carris Reels, a Vermont company with an ESOP who describe themselves as “100% employee owned, 100% employee governed”. Carris Reels has a strong culture in place which we would recognise as employee ownership. However, the requirement to have an annual valuation, and issue shares to each employee
does seem onerous compared to the simplicity of our EOT structure. The ESOP model is often used as a retirement plan and attracts significant tax advantages, particularly in certain states. I got the impression that it does focus significantly on the financial aspects of employee ownership and appears quite expensive to maintain in terms of adviser fees. Some of the fees quoted for the transition process were quite eye-watering – six figure sums to implement and then significant maintenance costs. The EOT legislation provides a framework for UK companies, and generally, the advisers’ fees are much less than the six
figure sums quoted by US advisers. Furthermore, the EOT model is more egalitarian and, I believe, helps foster more of a team effort in a workforce.
The importance of data was emphasised heavily and this is an area where the US has a better track record than we have in the UK. I was very pleased to hear Campbell McDonald of Ownership at Work talk about the significant study his organisation is working on. OAW will soon be publishing results (expected mid-October) of the Knowledge Programme research and early signs show a very positive correlation between employee-owned businesses and improved productivity, employee retention, investment in training and people’s well-being. Hard evidence makes for a strong argument and my hopes are high that this research will prove beyond all doubt that employee ownership is the better and fairer way to structure business.
There was a variety of sessions exploring different elements of employee ownership, featuring speakers from the various countries represented. Despite the differing experiences, we face many of similar challenges. Gaining support and recognition from the
policymakers and the more conventional business community was a common theme throughout the two days. Involving international employees can be complicated due to differing tax regimes. Making decisions on the distribution of profit was an interesting discussion. Leadership succession is an issue in many companies across the world once the founder begins to phase their exit and that’s a topic that resonated with me, and I think at Jerba we have now found a good solution.
The most enjoyable part of the event was found in the informal discussions with other delegates. It was good to hear that in the UK, we are actually quite ahead of other countries when it comes to having a fertile environment for employee ownership. I was encouraged to hear how highly thought of we are in Scotland; people do look to us as progressing well with growing employee ownership. The fact we have a Minister at Holyrood with specific responsibility for employee ownership was viewed as a strong commitment, and the work of CDS was recognised as pivotal in Scotland’s success at increasing the number of employee-
owned businesses. Many countries rely on a small number of “advocates” or unfunded organisations to promote employee ownership and are finding it a challenge to gain the same traction.
The event was an energising experience. I came away pleased at what we have achieved but with a strong feeling that we can’t allow ourselves to become complacent. Yes, we are ahead of many countries and we are fortunate to have a good support system in place. We could be doing a lot better. There remains a general lack of awareness of employee ownership models, and too many business owners find out by chance, sometimes too late. There’s a lot of work to be done with our policymakers, in both Holyrood and Westminster, and in our business community. We all have a part to play in keeping employee ownership on the Scottish agenda. Talk to your customers and your suppliers, shout out loud about your employee ownership. Don’t be shy about your successes. The world’s eyes are on Scotland’s progress and it would be good to return next year with even more positive
by Simon Poole and Jerba Campervans
The three Symposium organizers were The Center on Business and Poverty, Employee Ownership Foundation, and the law firm of Fieldfisher, with generous donations from The Menke Group, Prairie Capital Advisors, Scott Bader and Janet Cooper.