There’s been a lot in the news in recent times about the sheer volume of money sloshing around the system and how it is being put to use. In our opinion at WEAll, nowhere near enough of it is finding its way to productive regenerative activities.
Money is finding its way into many areas of the economy that do not take a long-term nor a wellbeing view. Take for example how so much of bank lending since the 2008 Great Recession has in fact found its way back into the housing sector…the very sector at the heart of that crisis…or into sending personal debt to levels higher than they were in the run up to the crisis, or simply being used in share buy-back schemes.
This focus on rentier returns – compound interest derived from mortgages or interest rates on private debt (credit cards, loans for cars, education etc.) – or simply concentrating wealth through returning business ownership to private hands is stifling the transition to a truly sustainable and stable economy that truly has the wellbeing of all at its heart.
In this context, it was incredibly heartening, although a relatively rare news item, to read the other day that the founder of a successful UK based audio and visual goods retailer – Richer Sounds – is not extracting the maximum personal wealth from selling his company but investing in its long-term future by handing over a controlling stake in it to an employee owned trust.
Employee owned trusts are not a new invention, but the rarity of this news in today’s economy is striking. The scarcity of the act should not diminish the significance, however.
It’s significant for a few reasons. Firstly it is a recognition by the founder – Julian Richer – that the business’s employees are a key part of the business’ previous and future success. Politicians love to talk about ‘wealth creators’ as though entrepreneurs operate in a vacuum receiving no support from outside. Undoubtedly entrepreneurs are a vital part of the success of any organisation and the business world, but not the only one.
Secondly, it is also a recognition that giving employees a stake in their own financial future makes long-term financial sense for an organisation. Making explicit the link between individual performance and organisational financial health can be motivational. Employees, now also owners of the business, also get to share more parts of the economic pie and one sees higher retention and lower attrition rates. Richer himself has previously recognised (through his management book) how providing secure, well-paid jobs with a happy workforce is key to business success over the long-term.
Thirdly, it provides a level of empowerment that is strongly connected to wellbeing. I recall a time when speaking with employees of a well-known UK employee owned business who said ownership was important for them because it gave them a chance to participate in the decision-making process, not simply for the additional financial rewards that the model provided to them.
Cooperation and Collaboration is a key building block of a wellbeing economy. Sharing the wealth among all stakeholders, not simply shareholders, is a key tenet of the wellbeing economy and employee ownership is one way to begin to achieve that. Going further however, we must ensure that business has a purpose that truly identifies environmental and social aims within its DNA and by the nature of its work is regenerative to society and the environment. It is this challenge that we all need to embrace and WEAll looks to amplify when great examples of such ways of work emerge.
Michael Weatherhead is the Development and Practice lead for WEAll, and coordinates the WEAll business cluster. Employee ownership, as discussed in this blog, will feature in the forthcoming WEAll publication ‘Alternatives to Business as Usual’ being developed by the cluster