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Employee ownership: enlightened business or a handy PR exercise?

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Becoming employee-owned requires long-term thinking, regular reviews and maintenance to make it successful, writes Donald Insall’s Renée O’Drobinak 

London staff 2016 (c) damian griffiths 86

Employee Ownership (EO) is so du jour. We regularly see architectural news headlines reporting that another practice has become employee-owned, complete with an upbeat press statement and a photo of a beaming, grinning workforce.

As a practice that has been employee-owned for decades, we get a bittersweet feeling akin to finding out that Voodoo Ray’s has been opening new shops across London then realising your favourite midnight pizza joint is no longer the sole domain of bleary Dalston outings.

The argument for employee ownership as a business model is undeniably strong. It is well-documented as a sustainable alternative to a trade sale as a succession strategy, as we have seen in the story of Novograf published last year, or more recently, Richer Sounds.

The Ownership Dividend, published by the Employee Ownership Association, reveals compelling evidence of better staff retention and increased profits.

We also can’t ignore the tax perks, introduced in 2014, for both vendors and employee-owners when converting to an employee-owned business, which is certainly a contributing factor in EO’s skyrocketing popularity.

But what does ‘becoming employee-owned’ actually mean? How much of the business is actually employee-owned – 20 per cent? 100 per cent?

What happens when the clamour of press attention dies down and the workforce turns up to work on Monday morning? Has anything changed in the business, or is it just a convenient way of getting a good word out about the practice before you quietly roll out the redundancies?

This is not to say a small ownership percentage is inherently suspect – here at Donald Insall Associates, when we moved to employee ownership in 1991, we started out with 23 per cent of the practice being owned by a trust on behalf of employees, followed by a jump to 55 per cent in 1996.

We have gradually increased the percentage since, culminating in a happy moment in April last year when the directors sold their remaining shares to the trust, making us 100 per cent employee-owned. But EO, as we hear amongst fellow EO businesses, is indeed a journey – it takes time for it to settle in.

Becoming an employee-owned practice entails a comprehensive review of leadership, governance, management, finance, HR and communications activities. It goes beyond a mere profit share at the end of the year – it needs to affect and evolve the foundations of the business.

Weight loss consultancy Cambridge Weight Plan’s Chris McDermott, speaking at the EOA Conference last year, spoke of the challenges of leadership as the next generation that succeeded the founder, or in his words, ‘being Captain Picard’.

He described how they tackled employee engagement, including taking tangible actions to set up a dialogue between the ‘up and down’ of the organisational hierarchy, creating ‘voice groups’ made up of representatives across the organisation.

He also discussed the tricky balance between the interests of the departing founder and the next generation, which will resonate with many architectural practices, and we are no exception.

In our case, we built transparency and representation into the day-to-day operations of the practice by including regular in-depth reporting on the current status and financial health of the practice.

Like Cambridge Weight Plan, we have interest groups focusing on particular subjects, like sustainability, which are comprised of members from all levels and any findings and activities by that group are reported to the board.

Of course, things that have worked well in 1991 won’t necessarily work in 2019 – we face a fresh new challenge of engaging with an entirely new generation of members, encouraging them to understand and partake in the management of the practice. Last year we successfully rolled out a programme inviting members from all levels to observe and participate in our board meetings. It proved a hit, and our current waiting list is one year.

You would be forgiven for perhaps thinking EO is easy-win PR. But the truth is, that lovely photo call and a press release alone aren’t going to net you the ‘ownership dividend’. Being employee-owned requires long-term thinking, regular reviews and maintenance to make sure the organisation doesn’t end up metaphorically on the Building at Risk Register.

Renée O’Drobinak is graphic design and communications manager at Donald Insall Associates, a BME PR Pros 2019 mentee and one of the founding members of the Employee Ownership Association Built Environment working group. She is speaking at a panel discussion on Employee Ownership culture at the Employee Ownership Association Built Environment networking event at Arup tonight (26 June). 

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