The below article appeared in the October 2014 edition of Energy International
There’s nothing quite like owning the business to put a spring in your step on the way to work. As employee owners, everyone at our company has the high motivation that comes from having a stake in the organisation.
Accord Energy Solutions was the first employee owned company to be launched from start up in Scotland and is one of fifty employee owned ventures in the country which together employ over 2,500 people.
As an organisation working in the oil and gas industry, we can see how successfully our business model works in the energy sector. We find people are interested to hear more about what we do, how it works and the impact on peoples’ daily working lives.
The power of ownership
We own this firm together and that means every one of us cares about the success of this venture, launched just four years ago. The business model is increasingly popular and, like this company, employee owned operations across the country are performing well financially and are now worth £30 billion to the UK economy.
Recent research commissioned by Cooperative Development Scotland and carried out by academics at Edinburgh, Stirling and St Andrews Universities has shown that employee owned companies fared better than traditionally structured organisations in the areas of sales, productivity and employment.
This is borne out by our own experience after we comfortably exceeded our five year turnover target a year ahead of schedule and maintain a high employee retention rate. Thirty of us work for the business and just two people have left in the four years since our launch.
It has never just been about money. We wanted to make a difference and to create a work culture focused on improvement, sustainability and growth, a business where people mattered.
Studies by the Employee Ownership Association (EOA), the voice of employee owned businesses in the UK, echo our experience. They’ve shown that workers in employee owned companies have higher levels of job satisfaction and a greater sense of well-being than people working in mainstream business organisations.
There’s also a genuine sense of employee engagement, with four out of five workers reporting a sense of achievement from their work and 80 per cent saying they’d be happy to recommend their workplace to others.
The ins and outs
Employee ownership works by shares in the company being directly distributed through a Share Incentive Plan or indirectly through an Employee Ownership Trust or a combination of both. This gives employees a controlling stake in the business and means they can influence the future direction of the organisation.
As well as giving individual employees a sense of empowerment, working in an employee owned organisation brings those other tangible benefits like higher productivity and better financial results. Further advantages are seen in the positive attitudes we have towards our work, which makes our business attractive to potential recruits, allowing us to hire the best people and to hang onto them.
Earlier this year, the UK Employee Ownership Day 2014 was held to raise the profile of this business model and encourage more business leaders and decision makers to consider it as an option for future business structuring. Across the whole of the UK there are now over 180 employee-owned companies with forecasts from the Employee Ownership Association (EOA) that this figure will continue to grow.
The EOA reports the number of businesses like ours is growing at an annual rate of 9 per cent with productivity increasing at an average of 4.5 per cent and annual profitability of 7 per cent, exceeding levels among externally owned companies.
Change is the only constant
Yet there seems to be a perception that it’s more difficult to start an employee owned business from scratch, rather than to change an existing business to employee ownership. But this isn’t necessarily the case. Although there is no ready-made structure or one size fits all model for new start-ups, being employee owned from the outset avoids the hassle and uncertainty that can accompany midlife changes in organisational culture.
John Lewis Partnership is perhaps the best known example of an employee owned business and several years ago commissioned research by Cass Business School which showed that companies owned by their employees are more resilient than conventionally structured businesses.
Employee owned organisations outperformed the market during the downturn and showed lower risk of business failure, according to a survey of senior executives and analysis of financial data from 250 companies.
There is an appetite for change in the way we run our businesses and serve our customers, both from those customers and from entrepreneurs. According to the chief executive of the EOA, Iain Hasdell, after the banking crisis and the downturn, customers are increasingly looking for products and services they can trust and which reflect their personal values.
This business model undoubtedly resonates with those disenchanted with the current marketplace and those who strive to do better for employees and for customers. Could it work for you?