How Employee Representation can give your business the edge
It’s no secret: if you’re an owner/founder or senior team transitioning your business to employee ownership, your diary will be pretty full. The legal and financial steps involved in shifting your ownership model will (quite rightly) consume much of your time. So if employee representation isn’t a legal requirement for your future, why should it be on your radar at all?
Good question.
Employee representation is good EO practice, sound governance and can bolster your ESG: that much is clear.
But an effective Employee Representative Group (ERG) and/or Employee Trustees can also drive your commercial performance, with their ability to share knowledge, unlock innovation and ‘temperature check’ your business just three of their core strengths.
The value of influence
They can challenge your thinking. An ERG isn’t a decision-making body but it can exert a profound influence on your decisions, while the value of Employee Trustees lies in their ability to sense check that your board’s decisions are being taken in the best interests of everyone in the business.
Together, ERGs and Employee Trustees can sharpen an organisation’s performance by enabling leaders to engage effectively across all areas – strengthening accountability, relationships and results.
As Associate Libby Unsworth puts it: ‘You’re employee-owned – why wouldn’t you want to listen to your employees’ useful insight and use their good ideas to support your company’s growth?’ Why not indeed.
Putting representation on the radar
So where do you start when there’s no ‘one size fits all’ group or forum or framework for employee representation?
Although some organisations use an ERG to engage their employees right at the start of their journey into transition, for most founders/owners it may not be a top priority at this time.
At JGA, we understand this. That’s why we advise clients that it’s enough, at this busy stage, to include employee representation as an intention – then seek professional support from an experienced business later.
‘A company may think it can go from being owned to being employee-owned without any impact, and initially it might feel as if nothing has changed,’ Libby reveals. ‘But over time there will be a difference as owners focus on what transition means for them personally, their people and their business as a whole.’
This is the point at which JGA’s support can be particularly useful, as we enable clients to understand how EO feels in reality and to unlock the benefits employee representation can bring.
‘Seeing the energy, enthusiasm and pride as individual employee owners grow over time – in their new roles, alongside their business – is one of the things I enjoy most,’ says Libby.
‘A company may think it can go from being owned to being employee-owned without any impact… But over time there will be a difference as owners focus on what transition means for them personally, their people and their business as a whole’
Libby Unsworth, Associate
What should you do next?
Establishing effective representation requires time, vision and energy. Every business will do it in their own unique way.
Here, Libby shares the five practical steps leaders can take to get the ball rolling and build momentum on the road to success:
Be clear about your ERG’s role and responsibilities – what they are and what they’re not. Work with it, trust it and value the connection it provides with your employee owners.
Encourage your ERG to influence leadership decisions. It isn’t a decision-making body but ensure you listen to what it brings and, if you don’t agree, explain why.
Prioritise honest and transparent communication with your ERG. Share what can safely be shared about business decisions and finances (the good and the bad) in an accessible format to foster engagement.
Be ready for (appropriate and professional) challenge from your ERG. In elections, your Board may not get the ERG it ‘wants’ – this may feel uncomfortable but will ensure things are lively and make you think twice.
Be open to being held to account for your decisions by your ERG. Employee representation is about working together, challenging, influencing and asking questions. If you do this, you will be confident that your decisions are well thought-through, transparent and fair.
Want to know more about how JGA can support you to develop effective employee representation?
To find out more about employee representation, read our guest blog for Postlethwaite here.