Employee ownership is no country for old men
Friday 3 July 2015By:
- Lucy Farrow
There’s something distinctive and special about leadership in employee owned companies and it’s central to the sector’s success
Today is Employee Ownership Day, when businesses up and down the country will celebrate the benefits of working without having to answer to external shareholders, usually with cake.
Employee ownership is a big deal at the moment. The sector is worth £30 billion – equating to 3% of GDP, and the number of employee owned businesses in the UK has grown at an annual rate of 9% per year. The Government announced tax breaks for organisations that commit to shared ownership in last year’s Finance Bill, recognising that these businesses are helping to address the UK’s deepest seated economic challenges.
At OPM Group we’ve been working on this for over a decade. We became the UK’s first employee owned ‘public interest’ company when our founders wanted to retire and needed a safe pair of hands to entrust the business to; deciding that the safest hands were the people who had built the business alongside them, and so our employee buyout began.
Things have changed a lot since then, as we’ve weathered successive Governments, internal changes of leadership and a hesitant recovery from the financial crash. I took over as Chair of our Ownership Trust in January 2014, assuming the position of a non-executive director at the tender age of 28. And that’s the feature of employee ownership that I want to talk about – how my experience proves that different people from outside the traditional management hierarchy and demographic can be empowered to take on leadership roles.
Employee owned businesses have a wide range of organisational forms, but in most cases the owners delegate day to day responsibility for the business to a management structure. The key here is that these two structures run in parallel, and in many businesses (including ours) there’s a culture of encouraging a wide representation on the ownership side. This acknowledges that employees at every level can lead – we have representatives from our most junior level through to our most senior working together to hold the board to account.
This ownership structure has given me the opportunity to take on a leadership role much earlier in my career than would have otherwise been possible, crucially without needing to acquire the ‘status’ usually associated with non-employee owned companies. We also choose our ownership leaders in a different way via a popular vote. The qualities needed to win an election voted for by your peers aren’t necessarily the same as those required to sit a senior management interview, and that has major benefits. This diversity of perspectives and styles mixes things up in board meetings, and also provides a positive example to all employees that there isn’t one cookie cutter route to success.
The nature of employee ownership also influences the way in which we exercise leadership. We take a collaborative approach to problem solving, with everyone expecting to contribute to the challenges we face as a business. This could range from suggesting an idea for saving money in a group session at our general meeting, or leading a small task group to investigate a new area for business development. I see all of these as opportunities for people to explore leadership roles outside of their ‘day jobs’, and the further responsibility of being an owner of the business is what makes this real.
All this positivity isn’t the whole picture though as there are problems in employee owned businesses just like any other. Having an organisational structure that challenges hierarchies doesn’t magically dissipate power imbalances, or give every employee the confidence to take on a leadership role. It took me a long time to get over the impostor feeling in board rooms and find my voice – I couldn’t have done it without the support of a great board team and a mentor who listened patiently to all the things I wish I said after each meeting and to challenge my negative assumptions.
I’m still working on this, but I’m also increasingly, in turn, trying to show others that they are capable of leadership too.