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As the Benefits of Employee Ownership Come to the Fore in the Public and Private Sectors, Should Charities Also Look to Transition to Employee Owned Models?

02/03/2013 21:54 GMT | Updated 01/05/2013 10:12 BST

It's rare that you leave a management course feeling inspired and determined to take action beyond your own organisation, but that's what happened to me last week. Baxi Partnership, a beacon for employee ownership that offers support to organisations that are or want to become employee owned, put on what they call an Oxford Leadership Masterclass. For me it would be better described as a shot in the arm to campaign for mutual ownership as that's what I've felt like doing ever since.

Various compelling case-studies were shared on the day that make employee ownership seem the obvious way to improve our society without the need for any radical legislative change. (At this stage I want to point out that I'm not typically a cheerleader for coalition government policy, but their rhetoric on promoting greater mutual ownership should be welcomed). One of the stories we heard was of research conducted by Dr David Erdal on a trio of towns in Northern Italy that are socially and culturally identical apart from their levels of employment in employee owned businesses. The two towns with a higher percentage of employees in mutually owned companies enjoy significantly better health amongst the general population combined with lower incidences of domestic violence and anti-social behaviour.

Whilst sceptics will point out that the results from Italy prove only a correlation, the theory behind the hypothesis is hard to argue with. If employees are meaningfully engaged at work and have a stake in their company, they'll likely be happier and less stressed. They are therefore less likely to die of a heart attack or to have an unhappy home life, and these benefits spread broadly throughout their community. I wondered as I heard these stories whether employees of the John Lewis Partnership are statistically more likely to enjoy these benefits than employees of one of their competitors - it would make a worthwhile study.

Increasing employee ownership and engagement is clearly a good social policy, but what excites hardnosed business brains is its irrefutable impact on a company's bottom line. Employee owned businesses are known to provide higher levels of customer satisfaction, better quality services, lower staff turnover, better levels of innovation, and they are more resilient. The poster child of the employee ownership movement in the UK, John Lewis, has out-performed its competitors consistently over the years, and that story is repeated across sectors. Research performed by Cass Business School added further weight to the body of evidence through its findings that during the depths of the current recession, sales growth at employee owned businesses was 11% compared to 0.61% for non-employee owned businesses over the same period.

Applying the model to public sector spin outs has understandably been a little more controversial, but I would argue that the early results posted by some of the 'right to request' organisations, who are now providing NHS services, speak volumes for its application in the sector. If you doubt how innovative an employee owned company can be in its approach to care provision go and see what Care Plus Group, owned by its nurses, are achieving around Grimsby. If you're lucky enough to meet their Chief Executive, who's still a practicing nurse, his passion will knock your scepticism from you and leave you vying to get out on the streets campaigning to replicate what they're achieving.

Accepting that employee ownership can help private and public sector companies better engage staff, should the same principles be applied to the charitable sector too? For an organisation like the one I represent, Alive & Kicking, which works on business principles, the transition is not hard to imagine. But what of the larger charity providers that couldn't offer financial ownership to their staff. Many of the biggest, particularly those that operate internationally, are the focus of fierce criticism similar to that hurled at the public sector - they are often accused of being wasteful, inefficient and slow to innovate. Could and should these charities look to better engage their staff in a search for innovation and to improve their services? I would suggest they should, and whilst they won't be able to offer their staff financial rights, they will be able to offer other rights associated with ownership such as rights to information and rights to be heard, as well as the responsibility that comes with being a member of charitable company. Used correctly these changes could allow charities to take the first step in employing better engaged staff and achieving better results as a consequence.

Whilst our politicians push employee ownership as a societal fix we must remember that it's not a panacea. What has stuck with me from Baxi's course is that employee ownership on its own will not provide the engagement needed in order to realise all the benefits described above. It represents a significant step towards meaningfully engaging employees but must be followed up by a range of management measures that will vary depending on an organisation's needs. What is certain is that companies, public sector bodies and charities that invest in employee engagement are going to be the organisations we all want to work for in the future, and that will outperform their competition as a result.

For advice and support on employee ownership or on how to transition to an employee ownership model check out the Employee Ownership Association (@employeeowned) as well as Baxi Partnership (@BaxiPartnership).