How to unlock the potential of your employee-owned business

How do you create and lead a successful employee-owned (EO) business when the climate is as tough as now?

For Telos Partners' Jeremy Gadd, the answer is clear. Clarify and articulate the ‘Three Rs’ (rights, responsibilities and rewards) of employee ownership – then bring each to life.   

In his previous roles as founder/MD of JGA, and as an Independent EO Trustee, Jeremy has seen how each ‘R’ can drive business performance.

As he explains: ‘The most successful EO businesses know how to use their employee ownership as a business lever. The Three Rs underpin everything they do.’

Jeremy Gadd draws on his experience of working in and with EO businesses for 35-plus years

 

Unlocking the best of employee ownership

‘Those are the component parts that allow your business to have a different relationship and conversation with your employees as ‘owners’.

‘When people can articulate how the rights, responsibilities and rewards of employee ownership are effectively applied across all levels of their business – that’s where you can unlock really great EO.’

Jeremy cites Arup, Cambridge Weight Plan, Gripple, Richer Sounds and Riverford Organic Farmers as businesses whose understanding of the Three Rs epitomises good EO in action.

Each demonstrates the deeper value that great employee ownership can deliver – for people, businesses, communities and the economy.

Recognising the role of leadership in success

Jeremy and Telos colleague Corrine Thomas on their way to support an EO client

In his 11 years with JGA and now at Telos Partners, Jeremy’s appreciation of the Three Rs’s has been boosted by seeing how useful our clients have found the process of clarifying what they mean for their own businesses.

‘Often, when clients reach out to us for our support, they’ll say: ‘Our people don’t get it’,’ he explains. ‘When I ask what it is that their people don’t get, the reply is ‘being EO’. Understanding the Three Rs will go a significant way to helping them ‘get it’.’

He points out: ‘At one level, employee ownership is simply another ownership model. If you really want to pull the lever it affords you, you must bring the Three Rs to life – that’s what enables you to unlock the discretionary effort of your employee owners and secure the outcomes you want.

‘This is why a key part of our work at Telos Partners is helping clients to explore what they’re trying to achieve, how they’re engaging their people and whether they have the right leadership in place.

‘That last point is important because every business needs great leadership to be successful, irrespective of its ownership model.’

Find out more about our employee ownership support here.

How to put the Three Rs into practice

Jeremy and Telos colleague Lisa Fryer prepare to deliver a session on EO governance at the eoa conference 2024

So what do the Three Rs look like in practice?

Every business is different, but there are three questions every employee owner should understand:

·      What am I allowed? (my rights)

·      What do I have to give? (my responsibilities)

·      What will I get? (my rewards)

‘The rights of employee ownership might include the right to understand, influence and challenge how your business is working, to engage and be consulted with on major (and some smaller) issues,’ he explains.

‘The responsibilities might be to participate positively, work collaboratively and support your fellow co-owners, to drive the performance of your business beyond your day job. To look for solutions, not problems.’

And the rewards?

‘The obvious one is the reward of receiving a share of the financial profits,’ says Jeremy. ‘Indeed, some people believe employee ownership only works when you’re sharing profit.

‘However, I disagree – there are not-for-profits, mutuals and spin-outs where the rewards aren’t a profit-share but can be the ability to influence, participate and have the opportunity to create a culture with a deeper sense of belonging. The ability to influence how surplus is invested for customer, client or patient care (depending on sector) is very appealing.

‘In an employee-owned business the reward may be that you feel more in control of your destiny – that the future is more stable because there’s a lower risk of buy-out by a venture capitalist or competitor.

'There’s also the reward of working in an independent business where your input makes a difference and your voice is truly heard.’

Deepening your relationship with your employee owners

'When you become employee-owned, you should recognise that it's powerful to create a different relationship with your people'

But clarifying your employee owners’ rights, responsibilities and rewards is only half the picture. The next step is to bring them to life.

It’s not rocket science.

‘You may already be doing some of this in your business,’ Jeremy says. ‘But when you become employee-owned, you should recognise that it’s powerful to create a different relationship with your people – and explore how you want to make that real at different levels of your business.

‘For example, if you believe the right to influence is important, you need to create the mechanisms to support that. If you’re going to pay a bonus, you need to be clear about how that can be achieved – it may be linked to the responsibility to reduce wastage and improve efficiency.

‘If you do this, the individual can see how they can make a difference and truly play their part. It’s important to look at your people as your fellow owners, not as employees.

 

The right EO leaders in the right place

'The Three Rs are about making the most of your employee ownership model to drive greater performance'

‘This is where having the right leaders in place – who can connect with the ideal yet who also know how to make employee ownership ‘real’ at all levels of your business – is essential.

‘Get this right and that’s how you can become successful, both through transition and beyond.

‘Fundamentally, the Three Rs are about making the most of your ownership model to drive greater performance,’ he concludes.

‘And this is why the evidence suggests that the most successful employee-owned businesses are more productive, more resilient, have higher morale and lower attrition – and benefit from their ability to take a long-term view.’

Find out how we can support you and your employee-owned business. Get in touch with us today.

A version of this blog was first published on the JGA website and by the eoa.