EO transition: Practical tips - from a business that's done it
NC2 knew becoming EO would be a journey, but didn’t realise how valuable the learning would be – until the pandemic hit.
Here, Financial Controller and Employee Trustee Abi Knight reflects on their first 18 months (and counting) as an employee-owned business – and shares practical tips for those considering the same.
‘Don’t do it during a pandemic!’ is one of Abi Knight’s practical tips for founder/ owners transitioning their business to employee ownership. And yet, the timing of NC2’s own transition – mid-national lockdown and major shift to remote working – created a unique opportunity to learn for the software company’s team.
NC2’s previous co-owners – Neal Criscuolo and Neil Crawford – had already decided to complete the legal transaction first, then give themselves and the business a year to ‘make EO work’, when they signed the company over in May 2020.
Pre-transaction discussions focused on fostering the right levels of employee owner influence. ‘Studies show that EO is good for a business and good for the economy,’ says Abi. ‘The challenge is understanding how to reach that point without becoming an organisation where you can’t make a decision unless everybody agrees.’
So how do you do that?
Here, Abi reveals what’s worked for NC2 in its first 18-plus months – and how a clear process and structure has created a lasting result. These are her practical tips.
1. Get involved with the EOA
Joining the Employee Ownership Association (EOA) – with the practical advice and networking they have – connects you with other companies in transition or further down the road. I also read books such as The Employee Ownership Manual (Robert Postlethwaite with Jeremy Gadd) and listened to podcasts.
2. Seek expert professional help
Every transition is different but you don’t have to do this alone. For NC2, J Gadd Associates’ guiding support was incredibly useful in shaping our project and focus. They patiently encouraged us to work out our own answers, so we were responsible for and fully managed our own EO transition. So get help, whether that’s from the EOA, J Gadd Associates or an equivalent service provider.
3. Set up your EO transition as a properly resourced and timed project
After the transaction, we gave ourselves a year to work out what EO meant for NC2 and were clear with our team that nothing would change on day one. Then we set up our EOT project. J Gadd Associates helped us create this structured approach – with a clear plan, workstreams and a Steering Committee sub-set of ‘volunteers’ who became the ‘opinion’ of NC2. You don’t have to stick rigidly to it, but the project structure, process and drumbeat of a regular meeting really focuses the mind.
‘Every transition is different, but you don’t have to do this alone. So get help, whether that’s from the EOA, J Gadd Associates or an equivalent service provider’
Abi Knight
‘Studies show that EO is good for a business and good for the economy’
Abi Knight
4. Be clear about when you want influence/opinion and when you’re asking people to make a decision
It won’t all be plain sailing – things were tough for us at times, especially with so much remote working. But understanding the difference between influence and decision-making, and the level of employee owner input you want, is important.
5. Communicate clearly, regularly and be honest
We had no agenda for what our project’s output would be, but we knew we’d get there by working together. We shared monthly updates, were honest about what we didn’t know and assured our employee owners we’d try to find out. As Financial Controller, I was initially concerned that being more open about our financials would mean people would challenge all sorts of decisions, but this didn’t happen. Treat people like adults and they’ll behave like adults.
6. Trust your judgement
We all want to get things right, but occasionally it’s okay to say let’s do it like this for now, and if it doesn’t work we’ll change it. At one point, our senior team were still worried about which decisions should involve employee owner influence, but we have to trust we’ll know when we get there.
So what now?
Abi concludes that one positive (and lasting) impact of the way NC2 has transitioned is the useful structure it’s brought.
‘Becoming EO has forced us to grow up as an organisation,’ she says. ‘Previously, we were very ‘laid back’, but we’ve learned that people do like some structure, do like some boundaries and do like some process. All those things will serve us very well for the future.’
If you would like to know more about how JGA can support you with your Transition, People and Governance services, please get in touch here