When Workers Own the Business They're Happy to Go the Extra Mile; Could the Long-Term Success of Businesses in Wales Be Secured through Employee Ownership? Rhian Edwards, of the Wales Co-Operative Centre, Ponders the Benefits

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HEN the Wales Co-operative WCentre published its report on employee ownership and business succession earlier this year, the focus was largely on the perceived gap between business owners who have an established and safe exit strategy secured, and business owners who are reliant on a trade sale as their means of retirement.

The report, Employee Ownership: Defusing the business succession time-bomb in Wales suggested that employee ownership should be considered as a means of ensuring that perfectly viable businesses in Wales aren't lost purely down to poor succession planning and lack of suitable buyers.

Employee ownership offers an alternative approach that all business owners should at least consider as part of their succession planning.

The report alluded to another benefit of employee ownership - the fact that employee ownership and improved levels of employee engagement could help business owners grow their businesses - well before they started thinking of retiring.

A report published by the Cass Business School earlier this year suggested that employee-owned businesses have a longer-term focus and favour activities that have a long-term payback horizon. It also suggests that significant employee representation at board level can have a significant impact on performance and that employee commitment can support the strategic imperatives of the business.

There is a substantial body of evidence that suggests that employee ownership can lead to greater productivity, reduced absenteeism and more involvement in driving innovation.

In his influential paper, All of Our Business - Why Britain needs more private sector employee ownership, published by the Employee Ownership Association, William Davies argues that employee ownership can be seen as a "commitment device".

In an employee-owned organisation the primary focus of management becomes engagement with staff and stakeholders, and with more enduring relationships then more tacit knowledge and intangible business knowledge can be shared. More ownership and more engagement can equal more growth.

All of Our Business uses a company called Gripple and its founder Hugh Facey as example of a business owner who has used employee ownership as a means of ensuring the company flourishes after he has left. Facey believed that employees should purchase shares in the company "so as to be engaged in decision-making and fully alert to risks and uncertainties that are part of any business environment". Gripple is an innovative company developed on the design, production and marketing of a wire joining and tensioning device. Nearly 80% of its 220 employees own equity in the firm. Employees are required to buy-into the company after a 12 month qualifying period with loans available to enable purchase where necessary. …