Sarah Deas, chief executive of Co-operative Development Scotland, discusses how you can unlock innovation through employee ownership.
Innovation is a key priority in the Scottish Government’s refreshed economic strategy, given the role it plays in establishing “long-term competitiveness and sustainable growth”.
In the same way that innovative businesses have a stronger chance of success when entering new markets, economies supported by innovative businesses are more likely to show resilience to shifting economic conditions.
In July, we celebrated the third annual Employee Ownership Day, which gave us the opportunity to reflect on how the employee ownership model serves as a catalyst for innovation, thereby boosting the Scottish economy.
An employee-owned business is, quite simply, one in which the employees hold the majority of shares, either directly or through an Employee Benefit Trust.
It gives employees a meaningful stake in their organisation, together with a genuine say in how it is run.
As a business model, its benefits are numerous, and have been explored widely in recent studies, including one from Cass Business School which showed that employee-owned companies were more profitable, had higher levels of job creation and exhibited greater resilience during the economic downturn.
Within the business, employee ownership helps to create a wider and deeper pool of talent, experience and knowledge, all of which allows innovation to prosper.
By having a stake in the business, employees have a vested interest in increasing productivity and driving innovation.
This sense of ownership leads to employees being more willing to contribute ideas, from developing new products to identifying new markets.
Across the Highlands and north-east of Scotland, there are many excellent examples of how this business model has helped to unlock innovation.
In Aberdeen, engineers at Accord Energy Solutions – the first company in Scotland to be employee-owned from startup – have been instrumental in developing new approaches to oil and gas allocation.
Indeed, its model means it is far more likely to retain staff – potentially their biggest asset in the highly competitive energy sector. Every year, each employee receives a personal development allowance to spend on training of their choice.
This reinforces employees’ individual contributions to the business and their own career progression.
Another success story can be found at Woollard & Henry, the Dyce and Turriff-based manufacturing and engineering business.
In the 12 years since becoming employee-owned, they have seen turnover grow from £900,000 to £5.9million – an increase of over 600%.
They have undergone a highly successful diversification strategy, moving into the energy sector, with only 25% of turnover now coming from traditional markets. This involved developing innovative new products.
Finally, in Alness, sustainable seafood company Aquascot – which is set to complete the transition to 100% employee ownership by 2017 – has found that by selling to employees it has secured the future of the business for the long term.
By placing the business in the hands of those who have the success of Aquascot at heart, employee ownership has enhanced innovation, productivity and profitability, fuelling business growth.
In fact, the company’s success was celebrated on Employee Ownership Day, with Aquascot welcoming employee owners, local business people and local MSP Rob Gibson to its premises to share its success story.
Aquascot’s biggest customer, Waitrose, forms part of the John Lewis Partnership. As the UK’s best-known employee-owned company, it inspired the company to consider the model and, in October, it will aim to do the same for other business owners at the Inspire EO event being held in Edinburgh in conjunction with RBS and Scottish Enterprise.
These are but a few examples where innovation has thrived within employee-owned companies in the Highlands and north-east.
Increasingly, Scotland is being heralded as an example of best practice, with representatives from throughout the globe coming to learn from us. This is because employee ownership has delivered so many benefits, not just for individual businesses, but for the wider economy, too.
Innovation is what makes nations stand out on the world stage and, by continuing to develop new ways of working that harness this quality, such as employee ownership, Scotland can achieve the long-term competitiveness and sustainable growth it strives for, and a prosperous future.