This article was first published in People Management
In a market driven by customer choice, firms are increasingly recognising that success is reliant on their ability to innovate, incubate and take bold decisions. This environment requires leaders who are prepared to make the shift away from traditional thinking and behavioural norms; and employees who care strongly about contributing to their employers’ success. Following the traditional path will no longer lead to increasing market share.
This progressive thinking and courageous action requires more than simply attracting and hiring the best but giving them a real stake in the business. Over the last 20-30 years, the way we feel about work has changed significantly and employers need to create a deep-rooted culture of trust across the organisation, underpinned by clear and meaningful action that demonstrates that people come first.
Employee-owned businesses like John Lewis & Partners – and PA Consulting – are part of the solution. Giving employees a stake in business ownership not only creates a sense of purpose and connection to a greater good, but also gives employee-owners more skin in the game – driving the desire to innovate and win in the market.
Employee ownership also re-balances these factors. It sees financial success as an outcome of the fact that employee-owned firms authentically care about their customers and their people – and not the other way around. This applies not just in private sector companies but in not-for-profit organisations too.
The Buurtzorg model, which provides nursing home care in the Netherlands, is a stellar example of what can be achieved through meaningful employee engagement. It starts with a desire to satisfy both patients and nurses by empowering them with the ability to deliver all the care that patients need. Their aim is to create a working environment where there is no real distinction between employees and employers. They also happen to have achieved savings of around 40 per cent in comparison to the rest of the Dutch health care system.
What employee ownership does is set the tone for the relationships within the workplace in a way that means employees know their contribution will be valued – something that’s considered to be the norm in today’s social media driven-world. It is this sense of putting people first that builds trust, engagement, innovation and ultimately success.
Of course there are downsides to employee ownership. The model needs to move on from an antiquated profit-share that delivers a token amount on a flat basis across the organisation. Shared ownership must be authentic and responsive – and not merely create an impression of democracy (or holacracy) while decisions actually remain very much the domain of a few at the top.
Ownership therefore needs to be considered more broadly and more thoughtfully than in the past, making sure wide consultation and decentralised decision making don’t jeopardise the creativity and ability to be fleet of foot that is so critical to success.
But the upsides are clear. It’s time for a new model of business, and employee ownership could just be the key to creating an organisation that thrives in today’s ever more competitive environment.