News

This month my co-owners and I have been celebrating a special anniversary – 30 years since our founder, Philip Baxendale, took his family owned business into employee ownership.  Like most organisations we’ve seen our fair share of changes and challenges over the years, but our co-owned model has given us a freedom that most other traditional business models can’t offer.  From our origins as a leading boiler manufacturer to the business advisory and investment specialists we are today, the Employee Benefits Trust at the heart of our Partnership has given our co-owners a voice and a share in the wealth we create for three decades.  Just as we have benefited from the model, so too have a growing number of organisations in the UK and beyond.  I’d like to reflect on some of those success stories, and the sustainable nature of employee owned business.

The Sunday Times recently published its 2013 ‘100 Best Companies to Work For’ list, and three out of the top ten are employee owned companies.[1] This outstanding news is hardly surprising considering the overwhelming evidence which shows that staff working in employee owned companies are happier, healthier and more secure than those without a stake in their company. As a result, employee owned firms have shown on average, 4-5% higher productivity than other businesses and 98% of co-operative start-ups are still trading after their first three years, compared to 65% of all businesses.[2]

Baxi Partnership has been selected as a government provider on a fund designed to support social ventures prepare themselves to secure social investment and increase their public service revenues.

The ICRF Fund is designed  to help social ventures access the quality, specialist support required to get attract investment and win new contracts.  The fund’s unique approach means that social ventures apply in partnership with approved providers like Baxi Partnership to access grants or loans between £50,000-£150,000.

Baxi Partnership’s new status on the fund will mean more social venture businesses across the country will be able to access the highly specialised support that social ventures can find difficult to fund.

In the past 13 years Baxi Partnership has helped more than 80 organisations at various stages of their journey into employee ownership through specialist advice and funding.  It has led and leveraged investments of £72 million and created over 2500 employee business owners in the process.

Baxi’s team of specialists combine expertise from inside Whitehall and senior public sector commissioning appointments, to commercial roles in leading consultancies and across the social business and enterprise sector.

Baxi Partnership offers the following support to social ventures

• Access to capital
• Development of sustainable business models
• Bid writing and business development
• Commercial and innovation capability
• Developing a passionate, engaged workforce
• Positive social and environmental impact measurement

Baxi Partnership are a partner in the Mutuals Information Service, and are one of the Official Cabinet Office Mentors to the first wave of Public Service Mutuals Pathfinders in 2010.

For more information about how we can work with your social business to access this exciting fund contact Ceri Jones on 0203 59 899 82 or email ceri.jones@baxipartnership.co.uk

Deputy Prime Minister Nick Clegg today called for the growth of employee ownership in the UK and congratulated Baxi Partnership on its 30^th anniversary in employee ownership at the inaugural Robert Oakeshott memorial lecture.

Speaking at the Law Society on Chancery Lane, London, Clegg championed the employee owned model and backed the Employee Ownership’s Associations calls for a threefold increase in the value of employee owned first to UK GDP by 2020.  Clegg called for co-ownership to be “hardwired into the British economy” and said “up and down the country, across public and private sectors, people-centered workplaces are contributing more and more to the economy and, through tough economic times, these firms can outperform others.”

Specific announcements in the speech included:

• That the Government will inject £50m unto the sector, “making it easier for staff to take over the running of companies and for new firms to set up under employee owned models”.
• A reiteration of last week’s Budget announcement that Capital Gains Tax relief will be introduced for those who sell a controlling stake in a company to their employees.
• That it is vital in growing the sector to raise awareness amongst business advisors, lawyers and accountants, who until now have too often ignored this business model
• That the Government will publishing a consultation that will assess the impact of a range of options to make sure the right people benefit from any tax changes

During the Q&A after the speech, Campbell McDonald, Director at Baxi Partnership thanked Clegg and the Government for standing by its own rhetoric and introducing changes to encourage greater ownership by individual employees.  He also called on the business reporters in the room to help in spreading awareness of the co-ownership model amongst business advisory, lawyers and accountants.

Baxi Partnership welcomes today’s Budget announcement, which outlined a number of ways in which the Government will do more to support employee ownership.

The Chancellor announced in his budget speech additional incentives to be made available in 2014 to help businesses transition to employee ownership.  This will include a provision of £40 – 50 million annually from tax year 2014-15 to encourage uptake of employee ownership structures for businesses.

This fund will be used to support:

(1) A new capital gains tax relief on the sale of a controlling interest in a business to an employee ownership structure. This relief is related to the development of an “off the shelf” employee-owned company model by the Department for Business, Innovation and Skills and the Implementation Group on Employee Ownership (of which Baxi Partnership is a member). The intention is to introduce legislation for the relief in Finance Bill 2014.

(2)  Responses to recommendations in the Nuttall review of employee ownership (see the response here) and to proposals from other employee ownership advocates.

The government will also consider further incentives in this area, including measures targeted at indirect employee ownership models.

The chancellor also announced that Government will consult on introducing a new tax relief to encourage private investment in social enterprise by this summer, with a promise to introduce the relief in the Finance Bill 2014.

Welcoming these changes, Baxi Partnership’s Legal Director Ewan Hall said:  “We will not know the details of these proposals until the Finance Bill 2014, however this is potentially a major boost for employee ownership in the UK.  Baxi Partnership have for some time been lobbying for a capital gains tax incentive for transitions to employee ownership which will give business owners and their advisers a powerful incentive to consider employee ownership.”

Baxi Partnership Director Campbell McDonald said: “The Government has shown commendable foresight in acting now to incentivise a growing and dynamic social investment market. The UK is now the pace setter for mobilising social investment as a powerful force for good in a financially constrained world.”

To find out more about Baxi Partnership’s approach to supporting the policy agendas described above, please contact us on 0845 680 6702.

This year, the Baxi Partnership is celebrating the 30th anniversary of its transition to employee ownership.

In 1983, Philip Baxendale sold his family owned company to its workforce, forming the largest employee partnership of its kind in the UK. Since then, Baxi Partnership have led more than 80 organisations to employee-owned status, and led investments of £72 million in maximising their social and economic impact.

Festivities were hosted at Cass Business School in London, on Tuesday 12th of March. Highlights included an exclusive screening of US-produced employee ownership documentary “We the Owners”, a vibrant panel discussion which drew together a quartet of leading lights from the employee-owned sector, and an obligatory toast raised both to the Baxi Partnership, and employee ownership models in general. Almost 100 guests attended, and helped us mark this special event.

“We the Owners” highlights stories from the founders and employees of leading US-based employee-owned firms New Belgium Brewing, Namasté Solar, and DPR Construction, showcasing the workers’ perspectives on shared ownership structures, empowering corporate cultures, linked reward and risk incentives, and human-capital innovation models. The film follows as decisions are made from the creation of an employee-owned company or establishment of an employee share scheme, through to recruitment, succession, and expansion. A palpable demonstration of the socioeconomic benefits of handing employees a stake in their places of work, the film also discusses the surprising history of employee ownership: whilst employee share schemes are thought of as a relatively recent innovation, the film revealed that employee-owned models actually predate the very formation of the modern United States, with King Arthur Flour adopting an employee-owned structure in 1790.

The presentation was followed by a special panel dialogue, featuring appearances from such luminaries as Mary Ann Beyster (executive producer of “We the Owners” and President of the Foundation for Enterprise Development), Professor Joseph Lampel (Professor of Strategy and Innovation, Cass Business School), David Erdal (author of “Beyond the Corporation” and former MD of employee-owned Tullis Russell) and Peter Stocks (Managing Partner, Baxi Partnership). The foursome tackled an ambitious array of topics, including:

- Evidence for employee-owned businesses outperforming their FTSE100 counterparts
- Approaches for engaging staff whilst transitioning to employee ownership
- Strategies for empowering staff to understand ownership, and behave like owners
- Interest from overseas governments in employee ownership
- Employee ownership models as part of international development policy

As part of our 30th celebrations, our founder Philip Baxendale (3rd from left) paid a welcome visit to our London office

For many businesses and workers, employee ownership is uncharted territory. Baxi Partnership has seen a lot of changes over the last 30 years, but our anniversary is a reminder of the sustainability of employee ownership and the values and benefits that underpin it.

• Baxi Partnership is running a free seminar on 25th April in London for businesses owners employee ownership. For more details and to book your place, please email support@baxipartnership.co.uk, or call Denise Logan on: 0845 680 6702
• To learn more about We the Owners, watch the trailer, or order the film, please visit www.wetheowners.com
• To enquire about screening rights for UK screenings of We the Owners, please contact Bianca at blipshitz@fed.org

2012 saw the publication of the Nuttall Review which made a number of recommendations to help promote employee ownership in the UK.  The government is looking to implement a number of these recommendations, the latest being changes in legislation to simplify the rules on share buybacks and treasury shares for employee owned businesses.

In a share buyback, the company buys the shares from the shareholder and the shares are then cancelled and cease to exist.  This can be a very useful way of the company funding the acquisition of its own shares.  However, share buybacks are subject to a number of rules.  These include:

• The shares must be paid for immediately in cash.

• A 75% majority shareholder vote must approve the buyback.

• One shareholder resolution is needed for each buyback.

• The company must usually pay for the buyback out of distributable reserves.

The proposed new changes are designed to help make this process easier where a buyback is related to an employee share scheme (which will nearly always be the case for an employee owned company).

The key new changes for employee share scheme share buybacks allow for:

• Share purchases to be paid for in installments

• Buybacks only need to be approved by a majority vote.

• Multiple buybacks can be approved in advance in one shareholder resolution,

• It is easier for companies to pay for the buyback, even where they do not have the distributable reserves.

These changes should make it a lot easier for employee owned companies to implement a share buyback.

However, companies do not always want to use a share buyback to purchase an employee’s shares.  By cancelling the shares, the shares cease to exist which changes the number of shares in issue and the value of those shares.  It also makes it harder to make the shares available to other employees.  This is one of the reasons that an employee owned company often uses an employee benefit trust to purchase the shares.

This is where the new rules on treasury shares may be useful.  Currently, public companies (who are usually companies with their shares listed on a stock exchange) have the ability to hold shares that have been purchased in a share buyback and instead of cancelling them they can be held as treasury shares.  These shares are held by the company and are available to be issued to future shareholders.

Up until now, private companies have not been able to hold their own shares in this way.

The proposed changes will allow private companies to hold their own shares and remove the requirement to cancel the shares following a buyback.

This could be a very useful option for some employee owned companies.  It may mean that some companies no longer need an employee benefit trust to make their internal share market work.

None of the above changes are in force yet.  The legislation to implement the changes is due later in 2013.  We will let you know when a date has been confirmed.

If you would like to read the full details of the proposed changes, you can find them here.

Ewan Hall, one of the UK’s leading employee ownership lawyers, has joined the Baxi Partnership. Ewan has over 10 years of experience working with employee owned businesses and cements our team’s position as the UK’s go-to advisory for all aspects of employee ownership and alternative business models.

Ewan has helped more than a dozen organisations move into employee ownership, worked with a large number of established employee owned businesses throughout the UK and joins us from Wright Johnston & Mackenzie LLP where he was head of the corporate department.

Ewan’s knowledge and experience covers not only the technical legal aspects of employee ownership, but also the practical and cultural aspects that are often critical for the success of an employee owned business.

When asked about his appointment, Ewan said “Working with employee owned businesses and businesses considering employee ownership is an incredibly rewarding experience. However, these businesses sometimes find it difficult to find advisers who really understand their organisation and the challenges that they can face. Here at Baxi Partnership we have a unique collection of skills and experience that can hopefully make the process a lot easier for clients.”

If you would like to contact Ewan, you can email him or call him on 0131 652 7360.

In March this year, Baxi Partnership is celebrating its 30^th anniversary – 30 years since our founder, Philip Baxendale took his family-owned business into employee ownership.

As part of our celebrations, we are proud to collaborate with the Foundation for Enterprise Development in presenting the London premiere of We the Owners, a US-based documentary film on employee ownership.

“What does it mean to be an owner? In We the Owners, employee owners from New Belgium Brewing, Namasté Solar and DPR Construction answer this important question.

The film captures the inspiring stories of employee owners and founders from three companies by following their decisions on expansion, succession, recruitment and internal communication. Learn about the cultural challenges of sharing responsibility, distributing leadership, and linking risk and reward. Hear approaches to working collaboratively to be profitable, innovative, sustainable, and to creating prosperity and opportunity through employee ownership.

As the stories in the film show, employee ownership comes in a variety of shapes and sizes. But the core message from all of these companies rings out loud and clear: the power of the voice, vote and shared ownership of employees cannot, and should not, be taken for granted”

In addition to the screening we will be hosting a panel discussion on employee ownership.  The panel brings extensive experience of leading employee owned organisations both in the US and the UK and will host an informal discussion on employee ownership, our collective ambitions for its role in today’s economy and what the UK and US can learn from one another.  The panel includes:

-          Mary Ann Beyster, executive producer of “We The Owners”

-          Professor Joseph Lampel, Professor of Strategy and Innovation, Cass Business School

-          David Erdal, author of “Beyond the Corporation” & former MD of employee owned Tullis Russell

-          Peter Stocks, Managing partner of Baxi Partnership

The screening will be held on the evening of 12th March at Cass Business School, London and we have a limited number of free places available for members of the public.  If you are interested in attending please contact us on support@baxipartnership.co.uk

To view the film trailer, please click here

Margaret Elliott and delegates

Leaders from 100 of the UK’s most dynamic employee owned and co-operative businesses gathered yesterday to exchange best practice at this year’s EOA Annual Conference in Birmingham.

Baxi Partnership’s Leadership Masterclass was facilitated by the Partnership’s Managing Partner Peter Stocks, with roundtables being led by eminent figures from right across the employee ownership sector including:

• Hugh Facey, Chairman of Gripple – four time Queen’s Award winners for UK exports
• Margaret Elliott OBE–founder of outstanding employee owned home care provider Sunderland Homecare Associates
• Fred Bowden, Managing Director of Woollard and Henry, the Scottish manufacturer whose profits increased four-fold after becoming employee owned in 2002
• Dr. David Erdal, former Chairman of Tullis Russell and author of Humanity Working

Delegates examined the most critical areas of leadership affecting the employee owned business sector, now equivalent to more than 3% of UK GDP.  Lively roundtable discussions captured the considerable expertise of everyone in the room, and returned fresh solutions for optimising the impact of leaders in employee owned businesses.

Content for the session was informed by data shared by alumni to the Oxford Leadership Masterclass since 2007 – the UK’s only accredited leadership event designed specifically for employee owned and mutual business, by employee owned specialists at Baxi Partnership.

The next Oxford Leadership Masterclass is taking place on the evening of Thursday 21^st February and all day Friday 22^nd February 2013 at the Oxford Examination Schools. Senior leaders from Unipart, John Lewis Partnership and Care Plus Group are confirmed guest speakers.

To find out more about the Masterclass, and why 100% of attendees from 2012 said they would recommend attendance to colleagues – download the brochure or contact course director: Annette Rowe, Annette.rowe@baxipartnership.co.uk, or call 07913681778.

Are you a leader in an employee owned business? Read the top tips from the Leadership Roundtables:

Innovation – facilitated by Hugh Facey

• Take people with you on the journey to employee ownership: Scottish textiles manufacturer Scott and Fyfe, handed out aeroplane style boarding passes with the company’s brand on as a tangible way of communicating to employees they were on an ownership journey, and would now have a stake in the business earlier this year
• Performance manage your innovation levels and incentivise innovation through dedicated seed funding: 3 years ago employee owned manufacturer Gripple set ambitious targets for itself to hit 25% of total revenue through new product sales. They have since exceeded this by allocating dedicated funding and staff development time

Recruitment – facilitated by Margaret Elliot

• Grow your own: proactively identifying talent and developing internal hires through the business can be an extremely cost effective way of engaging and retaining employees long term
• Don’t interview in the conventional way: interviews aren’t necessarily the best way of measuring how effective a candidate will be at a new role, many leaders at the roundtable preferred on-the-job observation as a method for selecting the right candidate
• Recruit for values: working in an employee owned business assumes staff will act like owners and prioritise ethical behaviour, so why not recruit against the key values that underpin your business?

Best Practice Sharing – facilitated by Peter Stocks

• Allow everyone in the business to have one good idea every week: freeing up communications in the company to consistently hear the views of partners will help to solve problems and save money
• Seek feedback from your peers: putting simple processes in place to routinely capture the views of suppliers and customers, will give you an aerial shot of how your business is doing
• Create a forum on which to share best practice: hosting surveys, message boards or face to face meetings on a regular basis will generate a storehouse of information to learn from and replicate

Leadership Succession – facilitated by David Erdal

• Structuring how employees hold shares is crucial for the long term stability of ownership –an Employee Benefit Trust can be an excellent way of holding some of the employees shares on their behalf, which effectively stops staff from being tempted into selling the business out to private ownership for short term gain
• Recognise the need for change amongst your leadership team to prevent inertia: as a business evolves, its executive board needs to recognise the need for change early on, ideally reviewing succession plans every six months to ensure fit for purpose business leaders are in place

Rewarding your Employees – facilitated by Fred Bowden

• Work out what actually rewards people: if people feel that they have a fair wage, then cash rewards become far less important and can even cause a negative effect. Woollard and Henry managing director, Fred Bowden observed that in his business, staff had become more rewarded by feeling they are actively participating in a positive, happy workplace and handing this legacy down to staff, than financial bonuses per se
• Work out what actually motivates people: for rewards to be effective you need to understand what motivates the individual. One suggestion was structuring staff rewards on the basis of 80% salary, 20% other forms of compensation i.e. gym membership, travel costs, purchasing business shares or enhance pension contributions
• Rewards might not be the best terminology: employees rights might be more appropriate when talking about what employees can expect in return for working hard in an employee owned workplace
  

  Hugh Facey, Nick Kuenssberg and delegates

Britain’s most impressive mutuals were recognised last night at Britain’s only dedicated awards celebrating mutual & employee ownership, with companies from every corner of the economy taking home accolades.

The Philip Baxendale Awards, which are co-organised by Baxi Partnership and the Employee Ownership Association, showcased the very best in British employee ownership, and last night’s winners are driving the momentum the model has gathered over the last 12 months – particularly new mutuals coming out of the public sector.

Tricia McGregor, Central Surrey Health & Campbell McDonald, Baxi Partnership

Taking home the award for outstanding employee engagement was Central Surrey Health (CSH), an employee owned community nursing provider that delivers NHS services to 280,000 patients across the county. After spinning out in 2006 as one of the first ever public sector mutuals, CSH have used their mutual ownership model to drive outstanding improvements in quality; notably boosting productivity on Epsom General Hospital’s stroke ward by 41%, finding room for 76 more treatment slots per week.

Accepting the “Employee Ownership Rising Star Award” was SEQOL, a social enterprise that spun out of NHS Swindon and the local council in 2011 and now provides health and social care services to patients across the borough. SEQOL received warm praise from the judges for its impressive swiftness in developing a highly effective organisation with a strong culture of meaningful employee ownership.

Denise Anderton, City Healthcare Partnership & Dr Rannia Leontaridi of the Cabinet Office’s Mutuals Team

In another win for the health sector, City Healthcare Partnership CIC received the Cabinet Office’s Public Sector Mutual award, intended to recognise the most impressive group of employees to have spun out of the public sector into an Employee-Led Mutual Organisation. The Cabinet Office was represented on the night by Rannia Leontaridi, Head of the Mutuals Team, who praised the organisation for its outstanding commitment to improving service delivery, and its success in using the mutual model to engage and motivate employees.

The night also saw wins for two vibrant and high-performing Scottish businesses that have recently moved into employee ownership. Dick Philbrick of engineering firm Clansmen Dynamics was awarded the “Outstanding Leadership Award” for the inspirational role he has played at the head of that company, and the clear productivity gains since becoming employee owned, and Michelle Quadrelli of textile manufacturer Scott and Fyfe received the “Employee Innovation” award for the exciting and effective approach she has taken since the business’s transition.

Graeme Nuttall

The Philip Baxendale Fellowship Award, which celebrates the outstanding total contribution of a single individual to the cause of employee ownership, was presented to Graeme Nuttall, who was recently appointed by Government to act as an Independent Commissioner responsible for supporting activity to promote employee ownership on the back of publishing a review earlier this year into supporting the growth of employee ownership across the economy.

For a full list of winners and highly commended organisations, click here: http://www.baxipartnership.co.uk/what-we-do/awards/

The Awards judging panel was made up of eminent figures from right across the employee ownership sector; including David Erdal, who took Scottish paper manufacturer Tullis Russell into full employee ownership; Dr Rannia Leontaridi of the Cabinet Office’s Mutuals Team; Patrick Lewis of the John Lewis Partnership; and Margaret Elliott of outstanding employee owned home care provider Sunderland Homecare Associates.

Peter Stocks, Chief Executive of the Baxi Partnership, said:

“This year’s awards offer us a catwalk of high-performing businesses that are using an employee owned model to drive their success. These exemplar organisations delivering to both public and private sectors show us the best of British innovation and workforce passion. It has been an incredibly exciting twelve months for employee ownership in the UK and, given the potential in our growing sector, the best is yet to come.”

Nick Hurd, Minister for Civil Society, said:

“It’s really exciting to see so many pioneering public service mutuals nominated and winning in this year’s Baxendale awards. Congratulations to all the nominees and especially to the winner of the first Cabinet Office Public Service Mutual Award – Hull’s City Health Care Partnership CIC. They are a deserving winner having made real improvements to local services while at the same time delivering better value to taxpayers. Their success is evident in the range of new business they have attracted, proving that employee led mutuals can drive competition and set the standard for others to follow.”

Iain Hasdell, Chief Executive of the Employee Ownership Association, said:

“This is a fantastic year for employee ownership and it is great to see so many employee owners and employee owned businesses being recognised for the hard work they put in to grow and excel as successful businesses, and engaged employers. UK PLC can only benefit from the innovation and excellence nurtured and achieved by our members across the country. And here’s hoping that in time we can realise our goal of 10% of UK business being in employee ownership in the near future.”

Since the last Philip Baxendale Awards took place in Autumn 2011, Nick Clegg has announced a range of proposals to help create a “John Lewis economy”, the Cabinet Office has committed further resource to encourage the spread of “public sector mutuals”, and two major reports have been published on encouraging the spread of the model in the public and private sectors respectively. Last night’s awards moved the spotlight onto the companies at the crest of the employee ownership wave and showcased the commitment and passion at the heart of the movement.