In a highly entertaining and thought-provoking short talk given at the TEDx event in Glasgow in 2012, which I was privileged to attend, David Erdal championed employee-ownership, pointing out the multiple advantages of this business model. You can watch a video of the talk (below), read my review of his book (Beyond the Corporation, Humanity Working) and share the links with those you think might be interested.
Note that if you don’t have 15 minutes to watch the video, I have illustrated some of the main points of Erdal’s talk below, using some of the images he used.
David Erdal opened his talk along the lines of the caption to the above picture, saying that for too many of us the experience of work lies somewhere between the experiences of rape and prostitution. While this comparison may seem extreme, it does serve to illustrate the point that many are unhappy in their jobs, and that it needn’t be this way, as he went on to explain.
In the above diagram, which illustrates the distribution of money and power in a conventional (non-employee-owned) company, notice that money flows to the top, and those higher up the pyramid have power over those at the bottom. Such companies widen the gap between rich and poor. See The Equality Trust website for what this does to individuals and society. For this reason, and others, I strongly oppose tax concessions for large public limited companies!
David Erdal took over his family’s business and was disturbed to find out that this was how he was perceived by the employees. He decided to change things.
Initial reforms were not particularly successful. People were reluctant to express their real opinions, and when all the power remained in the hands of the top dog, even profit-sharing did not make for a great work experience or for the commitment of employees.
When a company is employee-owned, however, and people have adapted to the idea of being their own bosses, they are much happier. Creativity, resilience and re-investment are boosted, and there are many other positives, as David Erdal discovered. This certainly happened to the firm previously owned by his family (Tullis Russell), once employee ownership had bedded in.
This diagram makes the same point! It illustrates the situation in employee-owned organisations: the power pyramid is much flatter. In fact, while management is delegated, the managers are chosen by the employees so have to keep them happy. There is a significantly lower pay differential and managers – not least the CEO – take great pains to keep employees fully informed about the state of the business and their reasons for business decisions. People are happier, healthier, more productive and more committed to the organisation’s long-term best interests. Some would describe this as ‘power with’ rather than ‘power over’, and it certainly works!
Many of the world’s longest lived, most innovative and highly rated (by their customers) companies are employee-owned. For example:
The collaborative culture of Arup, fostered by its employee-ownership structure, makes it one of the most successful and innovative engineering/architecture companies in the world.
The John Lewis Partnership has existed for 80 years and continues to thrive. Its components, Waitrose and John Lewis, consistently rival each other as the best retail companies in the UK with regard to customer service: happy staff, happy customers!
The highly innovative optical company, Carl Zeiss, has been employee-owned for 120 years and even survived a schism forced by the Iron Curtain!
There are several other examples in David Erdal’s talk, and many more in his book (Beyond the Corporation, Humanity Working). Watch, read, share!
…And, finally, if it makes sense to you, let your political representatives know that you DO NOT support tax and other concessions favouring large public limited companies (generally run for the short-term profit of a few and which widen inequality), but you DO support them for employee-owned concerns, which have been shown to have wide benefits, not only for their employee-owners but also for wider society. It would be great if public procurement favoured employee-owned companies instead of being effectively biased against them…
Employee-owned Central Surrey Health, formed by 700 nurses and top-rated for the quality of the care services it offers, failed to win a big contract because the procurement panel was more assured by Virgin Care’s financial model (underwritten by Branson and the Virgin Empire) than theirs, which, incidentally, they had had independently reviewed and found to be sound. Current legislation is, arguably, biased in favour of non-employee-owned companies, yet there is now a huge body of evidence demonstrating the wide positive impact of such organisations. This must be fixed!