Mike Armitage, Managing Director of Derby-based commercial cleaning company Clean Slate explains the benefits to businesses of employee ownership in light of the recent announcement by Deputy Prime Minister Nick Clegg.
“Nick Clegg recently announced plans to encourage more companies to operate a model closer to the John Lewis’ type where employees are part owners of the business that they work for. In my opinion these models should be embraced by many more businesses of all sizes and across all sectors. When done well, they improve morale, buy in, productivity and unlock growth.
When you visit a John Lewis store, everyone who serves you is effectively a part owner and I believe that this truly increases their enthusiasm to help you. Small and medium sized businesses should not be deterred by the size and scale of what John Lewis has achieved – there is scope for companies of all sizes to benefit from employee ownership as Clean Slate has already proved.
Five years ago, we launched the first wave of the employee ownership scheme – offering managers the option to buy shares in the business. The scheme grew over the next couple of years and we now have eight senior and middle managers who have a financial stake in the business.
Everyone involved in the scheme actually has a stake in the company and it is in their best interests for us to succeed in order to share the dividends from the profits made. This translates into real employee engagement in how to do things better and more efficiently and how to win more work.
We would certainly not have experienced the success we have over the past five years – growing the business to one of region’s leading commercial cleaning companies with a turnover of £1.3 million – without staff going more than the proverbial extra mile for the company.
Care does need to be taken when designing a suitable scheme and there has to be a plan of how it will improve the business. Clean Slate’s scheme was designed as a part of our “massive goal” programme which aimed to transform us from a local Derby family business into a major regional team managed company.
We have made good progress too in the last few years – we now have opened 2 new offices, in Nottingham and Leicester to add to our Derby base. The hugely increased workload that everyone now has is viewed by staff as a positive thing, as they benefit from a share of increasing profits.
Retention and productivity at Clean Slate was already high and we have always made visible the financial health of the business through charts and figures on the noticeboards so that they understood the bigger picture. Now this information is much more closely studied as staff are aware how their well being is directly influenced by the results of the business.
The biggest change that employee ownership has brought about at Clean Slate has been to encourage and reward staff for thinking outside the box. For example operational staff feed their ideas for potential leads into the sales team who in turn share their own ideas for improving quality of service delivery. They are certainly prepared to go more than the extra mile which was evident last week when they all turned out and worked extremely hard on a Sunday for a EZE Fitness who required their premises extensively cleaning before their official opening.
A potential stumbling block to Mr Clegg’s vision for ‘responsible capitalism’ through employee ownership is unfortunately the barriers put up by owner managed businesses who make up a large part of our business economy. Around 90% are owned by one person or a small number of family members and many are reluctant to release equity in their business.
They too need to recognise that they can follow the John Lewis model and that, by embracing initiatives such as this, they can raise capital needed to achieve growth as well as fully embracing and engaging with their greatest asset – their own people. If business success is improved by a scheme, then the owners will too benefit, by earning a smaller portion of a much larger cake.
We have not come across any negatives to introducing and employee ownership scheme and plan to expand it in the future. I would therefore encourage more businesses, particularly of our size, to follow suit.”
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