‘Employee ownership can unlock innovation across Scotland’

John Swinney
John Swinney

Employee ownership can be the key to unlocking innovation in companies, according to a cross-sector group of influential Scottish business leaders.

Figures from manufacturing, agriculture, oil and gas and textiles have come together on Employee Ownership (EO) Day to encourage owners to consider the benefits of the model, with evidence showing EO businesses are 5-10 per cent more productive than traditional companies.

And with innovation named as one of the four main themes in the Scottish Government’s latest Economic Strategy, Deputy First Minister John Swinney has shown his support for employee ownership as a key driver.

He said: “Employee ownership is a great option for businesses. This model enables companies to focus on creating long-term value for their employees, their customers and their partners. This approach inspires employees to be more engaged and motivated, which benefits everyone.

“The Scottish Government is committed to supporting all of our people to unleash their full entrepreneurial and innovative potential. The employee ownership business model demonstrates the Scotland CAN DO spirit. Our vision of Scotland is a world-leading entrepreneurial and innovative nation – a CAN DO place for business.”

With researchers from the University of Stirling and University of St Andrews estimating that more than 16,000 SMEs in Scotland will consider an exit strategy in the next five years1, EO ambassadors for Co-operative Development Scotland have described how the business model has helped their businesses thrive.

Nick Kuenssberg, non-executive chairman of Tayport-based technical textiles firm Scott & Fyfe – was the architect behind their move to employee ownership in 2012.

He said: “Recent findings from an employee survey have confirmed the intuitive belief that a sense of ownership and a genuine understanding of and commitment to an innovation-led strategy would enhance performance and thus the longer term future of the company.”

In 2010, the family owners of South Lanarkshire-based agricultural merchants Galloway and MacLeod considered their exit options and chose to sell the business to employees.

Ralph MacLeod, chairman of Galloway & MacLeod, said: “When structured correctly, employee ownership can unlock innovators within the business and reward them correctly.

“This is having a huge impact – differentiating us from competitors, identifying new markets and improving margins for stakeholders and customers in a responsible and sustainable manner.”

The research shows that family-owned businesses are most likely to consider employee ownership, with around 3,000 in Scotland having older entrepreneurs who will look to exit in the next five years.

Sarah Deas, chief executive, Co-operative Development Scotland said:“With businesses across Scotland celebrating EO Day, now is the perfect time to consider the benefits of employee ownership.

“Not only does it act as a driver of innovation, it also helps root businesses in their local area and rewards employees for their commercial success – while owners can achieve a competitive price for their company and manage their exit over time.

“Finding the correct succession solution for your business is vitally important to protect its future, so owners should start considering their options at the earliest possible opportunity – even if it feels like retirement may be some years away.”

Scottish business owners interested in the model will be able to hear more at the Inspire EO conference announced today, which is being run in collaboration between John Lewis Partnership, Royal Bank of Scotland and Scottish Enterprise.

Speakers at the event – which will be held on October 26 at RBS’ Edinburgh headquarters – are set to include Sir Charlie Mayfield, chairman of the John Lewis Partnership, and Alison Rose, CEO of commercial and private banking at RBS.

Co-operative Development Scotland is hosting a number of ‘Successful Succession’ events across the country this year, with the first taking place this morning with sustainable seafood firm Aquascot in Alness, Ross-shire.

Dick Philbrick, managing director of robotics firm Clansman Dynamics said: “Cynics predicted that in an employee-owned business there would be a cautious attitude to technical development. The cynics were wrong – 2014 was our busiest year for technical developments.”

Alan Spence, co-founder of oil and gas firm Accord Energy, said: “At Accord, we believe that investing in people and giving them space to think outside the box not only benefits them but also the company. Over the past five years, our employees have developed and presented a number of new and exciting approaches to oil and gas allocation.”

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