George Osborne's comments last week on Conservative plans to give public sector employees the chance to form co-operatives to run public services, strengthens opinion that shared-ownership and mutuality is back in vogue.
The role co-operatives and mutual organisations, like ourselves, can play in providing and funding such services is not widely acknowledged and, given our heritage of mutuality, we believe this role needs to be expanded.
We welcome the current policy debate around shared ownership.
The nature of shared ownership is numerous and varied. It can be described best through three main definitions which relate directly or indirectly to the financial stake an employee is offered. These are: 'employee ownership,' 'co-ownership,' and 'employee share ownership. '¹
Each definition is characterised by the amount of control the collective employees hold within a business. It is measured on a sliding scale, where more than 50% of employees have a vested interest it is classed as employee owned. John Lewis is a well known example of an organisation adopting this approach. When a substantial yet minority stake is held (more than 25%) it is known as co-ownership and if equity share is minimal, employee shared ownership applies.
All of the above are based upon seven principles of co-operation, which include open and non-discriminative membership; independence and democracy of member voice and a commitment to foster their member community.
Research has shown that companies experience a productivity boost when a shared ownership model is introduced. The model positively impacts staff turnover, absenteeism, company loyalty and performance - as employees have more motivation to succeed. This is best achieved when the culture of ownership is marked by active involvement within the decision making process, where the collective voice is heard.
Every member has a role to play
Regardless of job title, every member has a role to play. It is critical that the concept of shared ownership, and all that entails, is adopted at board level. Board members must recognise their responsibility to embed this culture from the top-down. This means regularly engaging with staff, having an awareness of employee-related concerns and critically listening to the collective voice. If this is successfully achieved it can be implemented company-wide.
Managers will also become accountable to staff via the democratic process. Human resource personnel will be responsible for encouraging staff participation and implementing channels for regular engagement, with the wider workforce. The knock-on effect will create a culture of transparency and enable all staff to participate in making day-to-day decisions. Only then can shared ownership be measured as a true success, epitomised by effective partnership working, good communications and above all real teamwork.
As we approach a general election, it is hardly surprising that politicians are looking at shared ownership as a solution to reducing central government support of the public sector and improving efficiency and productivity of frontline workers.
What ministers must remember is translating theory into practice - introducing a new system of working in the public sector - poses a number of stumbling blocks.
Pension schemes
These include implications on receipt of state-funded pensions. Should the organisational nature of public sector change, for example, what impact will this have upon workers access to existing and new pension schemes? In a workforce that is characterised by longevity of service, pension provision is key incentive in public sector recruitment and retention.
Likewise the varied types of contractual agreements offered by the sector could become problematic. Temporary, part-time and flexible working contracts will need to be reviewed in regards to equity share in the business in comparison to full-time employee stake. Can this be achieved without undermining the principles of co-operatives?
There are also real issues around raising capital. Employees must feel that shared ownership is an attractive investment. If the public sector is to be sustained through reduced central funding, opportunities to raise capital must be provided. In the US this has been successfully achieved by the introduction of tax measures that exempt company owners from paying capital gains if they sell more than 30% of their business to employees.²
As a mutual organisation ourselves we recognise that moving towards a shared-ownership model offers many benefits in terms of service quality and efficiency and a collective concern for custody and investment in the organisations assets.
In our case it also offers the potential to generate additional funds for healthcare. While the model may never replace tax funded provision of public services it certainly offers the potential of significant supplementary funding which could be harnessed to improve the quality of public services for everyone.
Ken Hesketh is chief executive of Benenden Healthcare Society
Footnotes
¹Employee Ownership Association, 2007
²NHS Mutual – engaging staff and aligning incentives to achieve higher levels of performance, by Jo Ellins and Chris Ham
Staff
You have characters left
Please read our community standards.
Closing this window without pressing "Post your comment" will result in your words being lost.
Are you sure?
Thank you for your comment. This has been submitted for moderation.
Your comment has been successfully posted.
Sorry, something has gone wrong and this action cannot be completed. Please try again later.