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At the end of 2017, Auchrannie resort on the island of Arran in Scotland became the first Scottish resort to transition to a model of employee ownership. A trust now owns 100% of the company’s shares on behalf of its 160 employees.

The co-founder, and Managing Director since 2010, Linda Johnston said of the employees in relation to the transfer:

“They realise that what each of them does will affect the future success of the business and that this is directly linked to their own success, so they have already become more engaged in making the business better and understand the power and influence each and every one of them now has on their own future.”

 

New targets for the business

New efficiency targets for the business, agreed by the ‘new owners’, created the conditions to become a Real Living Wage Accredited Employer in April of 2018.

While the efficiency targets helped boost profitability, paving the way for the introduction of the Real Living Wage, there was also a recognition that the introduction of the wage would in and of itself support further financial benefits. These included lower staff recruitment costs (due to higher retention), greater productivity and increased occupancy from an improved reputation.

Linda Johnston, MD of Auchrannie resort

“Employee ownership will give the whole Auchrannie team a stake in the continued growth of the business. All of us will work together to build a more efficient, sustainable and profitable business.”
explains Linda Johnston

 

Since the acquisition of a 16-room guest house in 1988 by Linda and her late husband Iain, the resort has become home to two 4-star hotels, 30 5-star self-catering lodges, 14 luxury ‘Retreats’, two leisure clubs, 3 restaurants, children’s playbarn, a destination spa and outdoor adventure company.

 

Ownership transfer as an exit strategy

The ownership transfer was born of a desire for an exit strategy by the Johnston family (sole owners of the resort) that would allow the business to continue to flourish as well as upholding the ethos of the company, maintaining and motivating the team plus continuing the community’s access to the facilities of the resort.

“We are confident that the collective efforts of our fantastic team will continue to strengthen Auchrannie’s customer care and community focus as well as improving the sustainability of the business going forward.”
adds Linda Johnston, MD and former owner of the resort

Crucially, the transfer arrangements were designed for it to be affordable to the business to be able to reinvest in the future as well as financially reward the employees after the transfer. The previous shareholders will be paid out of the profits of the business over the next 25 years.

  • This is an extract from the forthcoming ‘The Business of Wellbeing – Alternatives to Business as Usual’ Guide, launching in January 2020. For more extracts, please click here
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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.

Democratic ownership

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.

Collaboration

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