You have to hand it to the government for trying. On the face of it trying
to improve productivity by enhancing employee engagement through employee
ownership is a good idea; even an exceptionally good idea. (Certainly it is the
fulcrum of my own endeavours!) Yet points
for trying is about all this "camel-as-a-horse-designed-by-a-committee" effort
scores.
Such is the empty promise behind Chancellor George Osborne’s scheme that – in an earlier era – it would likely have
the acerbic satirists of the day penning rhymes along the lines of “Georgie-Porgy
kissed the girls and made them cry!” Perhaps it is all you could expect from a
chancellor who has little or no commercial work experience and whose career
prior to office was spent mainly as a political party policy advisor.
Nevertheless, one would have hoped he was surrounded by more experienced and
astute advisors and thus expected more.
Let’s try to envisage how the scheme came into being.
A depressed economy, making life uncomfortable for the Chancellor, draws demands
that he “do something” to stimulate growth. At a loss, he convenes his most trusted
advisors and they all put their heads together. One ponders. “What would Mrs
Thatcher have done?” Another responds that she built economic success by making
more people owners. Someone puts a damper on this, pointing out that government
does not have many operations left that it can sell. But no-one else has any
other ideas and so eventually they all come back to it and start questioning, “How
else can we make people owners?” A number cite the example of the John Lewis Partnership
and how employee ownership has created such out-of-the-ordinary results there. Feeling
that this – at last – is leading somewhere, the conversation shifts to how more
organisations need to adopt this model and the search begins in earnest for a
way to make this happen. One cynic points out that businesses already have
owners, and if these owners wanted to give away part of their business they
would already have adopted the John Lewis model. This logic strikes a chord and
momentum slows until the focus shifts to finding a way that will making giving
up shares in the business acceptable to the owners. And, to cut a long story
short, the way found to do this is by considering the issue of shares as an employment
cost and finding a way to reduce other employment costs.
Thus the “Employee Shareholder Contract” was born; entitling employees to £2,000-50,000
shares in return for foregoing certain legal safeguards of employment.
This article gives a good indication of why this scheme is unlikely to be a
success. One point that it fails to make, however, is that it is an imposed
solution in an era when command-and-control management is passé. Furthermore, what
you have here is perhaps typical of what happens when policy takes precedence
over principle.
You see, employee ownership is a principle that entitles employees to the
same rights as any other owner. It is empowering recognising that the employee
is both entitled to a say in the running of the business as well as a share of
the rewards. It invokes a pride of ownership that inspires considerably greater
employee engagement than you would get from an employee who is not an owner and
whose input is therefore, explicitly and implicitly, worth less. The “Employee
Shareholder Contract” scheme misses this point completely. And it compounds
this error, by removing other rights that have been incorporated into employment
after decades of struggle. These could not have come about if they did not
offer some economic and commercial value.
Thus, in one fell swoop, the government has put policy before principles, achieved nothing and
actually done a disservice to both parties.