If your organisation has ambitious plans for the future and wants to employ the most talented and productive people, then making the transition to employee-ownership could be for you.
In 2010, we set up Accord Energy Solutions, an independent hydrocarbon accounting company to provide services to the international oil and gas industry.
The aim was to ensure that customers worldwide were able to avoid problems in measuring and allocating produced oil and gas, an activity that is essential to running an energy company successfully.
What makes us unique in this field, however, is that we have created an employee strategy we believe is geared towards ensuring the provision of a highly efficient service.
The Employee Ownership Association defines employee-owned businesses as ones that are partly- or wholly-owned by their workers, who hold shares in the company. Employee-owned firms are not restricted by size or sector and include such luminaries as John Lewis, Starbucks, seafood suppliers Loch Fyne Oysters and robotic specialists Clansman Dynamics, which all have an international presence and high annual turnovers.
In fact, a survey by UK think-tank Mutuo in 2009 revealed that employee-owned companies contributed £25 billion to the country’s economy, suggesting that the model is both successful and sustainable.
For Accord, meanwhile, the move to becoming employee-owned was a deliberate part of our business plan. The organisation had grown quickly: within the first year – our turnover had hit £1million and the aim was to quadruple it to £4 million by 2013. We currently employ 16 staff and seven associate consultants and have plans to recruit more people in January this year.
But we believe that this growth has largely been the result of our co-ownership philosophy and the positive response that such an approach receives from both staff and customers. Our personnel are valued and their opinions are heard. They have a say in the way the organisation is run and they are consulted on all major decisions.
Three options
Their satisfaction with the principles that we have adopted is likewise reflected in their commitment to the company, which has resulted in low staff turnover and low levels of absenteeism. The CASS Business School carried out a survey last year, which also showed that the productivity levels of workers at employee-owned firms were on average 19% higher than traditional ones.
This figure only affirmed us in our decision to make the move. This we did with the support and guidance of the Baxi Partnership, which helps organisations to make the transition to alternative business structures, and Co-operative Development Scotland. CDS, which is a subsidiary of Scottish Enterprise and helps organisations to grow either by becoming employee-owned or joining with others in consortia, provided the necessary funding to make the shift.
The Baxi Partnership, meanwhile, has helped more than 30 international firms in both the private and public sector to become employee-owned businesses and assisted us in producing a bespoke model that met our goals and aspirations. It provided us with three options for structuring our employee ownership system.
The first was direct ownership, in which staff own shares in the company directly in as tax-efficient a fashion possible. This model is used by organisations such as fund managers Martin Currie and management consultancy, PA Consulting Group. The second option was indirect ownership, the path chosen by John Lewis in which shares are held in an employee benefit trust on behalf of workers.
The third option is a combination of the two and allows the firm to remain independent while also enabling staff members to share any increase in the capital value of their stock over time. It is this latter option that we chose at Accord.
So how does this model work in practice? We have introduced a share incentive plan, which enables personnel to purchase shares and be rewarded for their contribution in a tax-effective manner. But we also plan to set up an employee benefit trust this year, which will hold at least 51% of the company’s stock.
We believe that becoming an employee-owned organisation has been a key factor in our growth. The response from workers and customers has been positive, staff engagement and satisfaction has increased- and we also look forward to seeing how our approach will increase our ability to compete over the coming months and years.
Alan Spence is a director of hydrocarbon accounting consultancy for the oil and gas industry, Accord Energy Solutions.
