What are the benefits of being employee-owned?
Chris McDermott, Managing Director of The 1:1 Diet by Cambridge Weight Plan and Chair of the Employee Ownership Association, shares his expertise on how businesses can benefit from being employee owned, particularly as the nation moves towards the ‘new normal’ of post-pandemic working life.
Employee ownership is growing in popularity throughout the UK and, given the uncertainty that has surrounded this year, it is clear to see why many business leaders are considering the shift.
Our employee owned business has no external owners/stakeholders, significant bank borrowing or debt. The decisions we make, for and on behalf of the business, matter because we are all owners of the business – we are ‘captains of our own fate.’
With so much at stake, it could lead to a lot of indecision and hesitation within the company, but by and large it doesn’t. We firmly believe that good employee-owned businesses don’t need to abandon good business practices in order to succeed. In many businesses, I suspect that senior management and owners tell their employees that they are “all in this together”, when in fact they are not. But with our employee-owned business, we really are…in it together!
Being an employee-owned business can be liberating as we stand and fall solely by the decisions that we make. We don’t have to produce annual dividends to keep shareholders happy, meaning that we have greater freedom than most other businesses.
However, employee-ownership also comes with its challenges. Here at The 1:1 Diet, we choose to run the business like any ‘normal’ company, with all of the complexities that involves. I truly believe that to run a successful, commercially oriented employee-owned business requires a beating capitalist heart at its centre. This means we are not, and cannot act like a worker’s collective, co-opinion.
With a ‘normal’ management structure in place within the company, decision making power is delegated to those who need it, with Directors clearly responsible for creating and delivering the strategic vision.
This allows the company to respond quickly to opportunities and threats, which has been paramount throughout the pandemic. We benefit from having this leadership structure in place, and don’t have to seek approval from either an owner or employees (who we call Employee Stakeholders) for the commercial decisions that we make.
Employee owned businesses also benefit from increased communication and engagement. As owners, our Employee Stakeholders have a right to know what is happening across the business and the plans for the future. They need to know how we are performing and what our financial situation is, this has been particularly important over the last nine months. To help aid this flow of information, we have two Employee Stakeholders on our Trust, and regular forums (called Voice Groups) where all are encouraged to raise questions and concerns about the business to the senior leadership.
Effective communication is crucial in helping employee wellbeing and productivity, and employee ownership is a great way to ensure that employees are given a greater voice, something that not all businesses manage to achieve. Giving everyone a say in their business is an extremely attractive quality for future employees.
Making employee ownership ‘real’ for everyone is very important to us. In a very tangible way, we aim to pay a profit-share percentage each year (last year it was 20% of base salary) to all our employees, as well as what we call a Stakeholder Dividend (10% of a pre-tax profit) split equally between everyone in the business. It is very empowering to be able to share the rewards like this with everyone, a benefit that is not always achievable in ‘normal’ businesses.
The non-tangible elements have been based around collectively defining our core values, then codifying them around accountability, communication, creativity, excellence, progress and respect. This culture, in particular, has been the bedrock of our resilience during the pandemic.
However, just like our competitors, we must remain nimble, innovative and cost-efficient to survive. Being an employee-owned business in itself is no guarantee of success.
Our journey began back in 2009 when our previous owners began to consider their options. They had been in the business for many years and wanted to retire from the day-to-day running of the company but were looking for a way to do this that could preserve the company’s unique culture and identity. Employee ownership provided them with a way of capturing, nurturing, and preserving the best elements of the business, whilst also realising a reasonable material value for the company. Fast forward ten years to 2019, and the business was nationally recognised for its dedication and commitment to empowering our employees, winning the highly prestigious Employee Owned Business of the Year Award.
As of November 2020, we have 6,500 independent consultants across the UK, each able to work their own hours in a way that is suited for their lifestyle. And the consultants are incredibly passionate and engaged with the company.
This year has been challenging for all businesses and we are currently rebounding from a difficult period in April and May. The robustness of our business model (direct sales) has helped us recover our sales position quickly, and the lockdown has been the ultimate ‘litmus’ test for our version of employee ownership.
Our long term aim is to be the best employee owned business that we can be, to enrich the lives of our Employee Stakeholders, to be a major player in the dieting sector (both in the UK and around the world) and to achieve this without sacrificing the core values that we have all created. It is a big ask, and one we will only achieve if we work hard for our collective good – understanding that we truly are all in this together.