New guide urges businesses to consider employee ownership

Businesses across Britain are being encouraged to consider the benefits of employee ownership on the UK’s first Employee Ownership Day (4th July).

‘Simply Buyout’, is a new guide that supports business owners on the road to employee ownership. It was developed by partners across the UK including the Wales Co-operative Centre, Co-operatives UK and Co-operative Development Scotland, and sets out a roadmap with practical tools and resources to inspire business owners to engage their staff in business ownership. It is particularly relevant for business owners who are considering their exit strategies.

‘Simply Buyout’ is aimed at owners who wish to sell their business, professional advisers, and employees looking to gain an ownership stake in the business they work for. It helps signpost people to specialist employee ownership experts who can help to create successful and sustainable employee owned businesses.

Employee owned businesses have higher levels of employee engagement, are more productive and more resilient in an economic downturn. According to the Employee Ownership Association, over the past 12 months there has been a 10% increase in the number of companies in the UK converting to employee ownership. Employee-owners have higher levels of job satisfaction, feel a greater sense of achievement and job security and are more likely to recommend their workplace than employees in non-employee owned businesses. Employee ownership in the private sector is worth around £30billion to the UK economy.

The Wales Co-operative Centre has a strong and long standing commitment to supporting employee ownership and increasing employee engagement within the Welsh workplace. The Centre has supported employee ownership transitions throughout Wales and was instrumental in developing the deal which led to over 200 miners buying and running Tower Colliery in Hirwaun, Aberdare.

The Centre employs a specialist employee buy-out team which provides advice to businesses across Wales on succession planning and employee ownership. Derek Walker, Chief Executive of the Wales Co-operative Centre welcomed the publication of the report:

Derek Walker, Chief Executive of the Wales Co-operative Centre welcomed the publication of the report:

“Employee ownership offers business owners a sustainable means of growing their businesses whist involving their workforces and sharing the benefits of the business’s growth. It also offers an attractive option for business succession planning. ‘Simply Buyout’ will help raise awareness of the potential for employee ownership in Wales. The Wales Co-operative Centre is on hand to provide expert help and advice”.

The Wales Co-operative Centre hosts regular events on employee ownership for business owners across Wales. They actively promote employee ownership and planned business succession to professional advisors and business support agencies across the country.

In 2012, the Wales Co-operative Centre published a report ‘Employee Ownership: Defusing the Business Succession Time Bomb in Wales’ which called for business owners to consider employee ownership as a viable and sustainable option for planned business succession.

Employee Owned Businesses in Wales

Aber Instruments

Aberystwyth

Aber Instruments produces measuring instruments for fermentation in brewing, It has 28 employees. Aber Instruments started a transition to employee ownership over ten years ago and this year became completely employee owned. The company employed a number of different approaches to the transition including selling shares directly to the employees and setting up an employee benefit trust (EBT) to hold shares on behalf of the employees. www.aberinstruments.co.uk

Skye Instruments

Llandridnod Wells

Sky Instruments produces specialist climate monitoring equipment. It employs 18 people and operates in extremely niche markets. Approximately 70% of its sales are exports. Its owners started the move towards employee ownership as a means of keeping high tech jobs in Powys. They have utilised an indirect ownership approach, an Employee Benefit Trust which both employees and owners believe offers an equality of voice to the employees as the transition progresses. Continuity and local identity are strong motivation factors for the owners of this business. Within a few years, they will have withdrawn their equity stake and left a sustainable business in Wales. www.skyeinstruments.com

Primepac Solutions Ltd

Ebbw Vale.

Primepac Solutions Ltd is a worker co-operative that fills bottles, sachets and tubes for clients including leading brands in the health and personal care sector. The co-operative was formed when their parent company decided to withdraw from Wales following a major fire which destroyed their packing facilities. A group of employees was formed in response to this and they were able to use their redundancy payments to set up a new company. The company employs 22 permanent staff and between 10 and 20 temporary staff. Since 2007, PrimePac Solutions Ltd has seen a year on year increase in both turnover and budget. Its turnover has increased from £370k in 2006 to £3.8million in 2012. The firm has paid out dividends to shareholders greater than the amount they invested at the start.

In 2012, Primepac Solutions won the prestigious Productivity and Performance Award at the national Employee Ownership Conference in Birmingham. The award showcases the most dramatic and powerful examples of employee owned organisations driving up levels of productivity to deliver improved performance, and leading to exemplary outcomes in a particular field. www.primepacsolutions.co.uk

SCS Group

Allan Meek established SCS Group in Caerphilly in 1993., to produce ventilation and smoke control systems in new residential buildings. By the early 2000’s, with a large workforce and a turnover of over £5m he started to think about succession planning. He established an Employee Benefit Trust in 2005 to buy company shares using retained earnings in addition to shares being sold and gifted to individuals directly. The recession in 2008 delayed Allan’s plans, necessitating rapid changes in the business and slowing the rate at which the EBT was able to buy company shares. However, Allan’s primary concern is leaving behind a successful business with rewards going to those who have committed their energies to the company. The luxury of Allan Meek’s’ position is that there is no urgent necessity for him to exit which allows him to focus on what is best for the business.

www.groupscs.co.uk

Wales also offers a base for world famous non – indigenous employee owned businesses:

Arup

Arup is an independent firm of designers, planners, engineers, consultants and technical specialists with offices in Cardiff. In Wales, one of Arup’s highest profile projects was their involvement in the construction of the National Assembly for Wales Senydd building, where they provided structural, civil, transportation, facade, geotechnical, wind and lift consultancy to the project. Arup is a wholly independent organisation owned in trust for the benefit of its employees and their dependants.

www.arup.com

John Lewis Partnership

The John Lewis Partnership's 84,700 Partners own John Lewis and Waitrose’s. The partnership owns 29 department stores and 274 supermarkets as well as six John Lewis at Home retail outlets, an online and catalogue business, a production unit and a farm. The partnership turns over in the region of £9.5b. The Cardiff store in the St Davids 2 development is the largest currently operated by the partnership outside London. Ownership is held in Trust on behalf of the employees. Employees have a voice in the running of the business through a series of staff councils, staff magazines and other communication tools. Benefits include paid secondments, staff excursions, subsidised canteens, and a bonus system that has delivered at least a month’s extra salary per year since 1999.

www.johnlewispartnership.co.uk

Ends