Revitalising your governance at key stages of being an EO business
Is your EO business set up to withstand tough times? Checking in on your governance might not be top of your ‘to do’ list right now, but revitalising it will strengthen your commercial resilience for the months ahead.
Just ask Lisa Fryer, JGA’s Operations Manager and governance ‘pro’.
‘Governance might have a reputation for being a bit dull,’ she concedes, ‘but it’s simply good organisation. It’s about having sound structures in place to ensure your business can do what it needs to do.’
In uncertain times, ensuring your governance is strong provides reassurance and stability, while safeguarding your reputation. It also creates opportunities to connect more deeply with clients and employees.
So how do you revitalise your governance at key stages of being an EO business?
Lisa shares her practical tips here…
Stage 1 – Revitalising your governance during EO transition
During EO transition, you’ll be preparing the ground for your legal and financial transaction and ensuring that your business, leaders and employees are ready for your company’s sale to an EOT (Employee Ownership Trust).
Your Board
You may already have an Executive Board, but does your senior team have the capability, experience and skills to lead your organisation through its EO transition and support employees through an extended period of change? Undertaking a Board diagnosis could give you invaluable insight and options through external appointments, internal promotions and NEDs for permanent or interim roles.
Your Employee Forum / Council
If you already have an employee forum or council, do they have a role to play during your EO transaction? Very few will be a formal part of your governance structure, with decision-making powers, so this may be the time to review whether your current set-up is the right one for your employee-owned future. It’s also worth supporting your forum members’ understanding of what employee ownership is (and what it isn’t), as well as consulting and involving them in the transition if you can.
Your EOT
If you’re setting up an EOT (Employee Owned Trust), how is the trust being supported in its duties from the outset? Do its members have access to effective independent advice in addition to training on fiduciary responsibilities? Are they appropriately insured and have they considered how they would like to operate?
If you’re appointing an Independent Trustee, how will you do this? Using your network may not ensure you secure the diversity of thought and experience your trust needs to be truly effective in the longer term. Consider the value of appointing an Independent Trustee with experience of leading in an EO organisation in the early stages, as this is when your employees’ experiences of EO will start to be formed.
Stage 2 – Revitalising your governance in the early years of being EO
Post-transition, the focus shifts to embedding your employee ownership: putting down foundations, educating employees about their ‘new’ business, launching (or strengthening) employee representation and establishing sound structures and routines.
1. Take your time, don’t set unrealistic targets and continue to access specialist advisors. Use their wealth of knowledge to provide options, and consult with co-owners on what and how they expect to be involved. The clue is in the name: you’re employee-owned!
2. Do your research and don’t be swept up by what look like ‘perfect solutions’. EO is a diverse and growing sector, so there’s no one size fits all. Beware rushing to get things ‘nailed down’ or creating something so rigid that it can’t be easily adapted further down the line.
3. Whatever you establish, allocate time to review and adapt. After meetings or presentations, check in and make sure you celebrate what worked well and pick up any challenges or frustrations.
4. Invest in developing your Executive Board and other leaders to enhance their ability to support and empower your new co-owners.
5. Support your Trust Board to become truly effective. Although its key focus at this stage is to ensure the debt repayment is fulfilled, its job isn’t quite as simple as that. The Trust Board will be busy developing their relationships and skills while acting as a ‘critical friend’ – particularly on matters impacting employees’ experiences – to your Executive Board.
Stage 3 – Revitalising your governance as an established EO business
Now comes the ‘accelerate’ stage, when things have clicked into place, most employees and leaders understand (and value) the EO model and you have a clear vision or purpose in place. Things seem to work smoothly and there’s strong collaboration across the company.
This is the time when everyone feels ready to build up speed, but you’ll still need some support to keep your high performance vehicle running smoothly.
‘In uncertain times, ensuring your governance is strong provides reassurance and stability, while safeguarding your reputation’
Lisa Fryer, JGA Operations Manager and governance pro
1. Make sure you’ve always got the right team in place. Things move on, different skills are developed or needed, and some might decide it’s time for a change.
2. Manage your succession, particularly at Executive and Trust Board level. Have a plan and agreed processes and stick to them. Appointing senior leaders should be done with transparency so everyone has confidence in the decision and the candidate gets the best start to their role.
3. Apply the same approach to the Trust Board. Make sure your Trustees have the right mixture of skills and that relationships aren’t too ‘cosy’. If it starts to feel like this, or you’re a new Trustee joining an established Board, ask again about the processes and routines. If it sounds as though a lot goes through ‘on the nod’, you may not be as effective as you could be.
4. By now, your organisation should have developed effective tools or processes to gather employee input and feedback. Make sure your Trust Board is aware of these and ask what the Executive Board does with this information. There’s no point gathering opinion if you’re not prepared to listen to what is said.
Want to know how our Transition, People and Governance services can support your employee-owned business? Get in touch to arrange a no obligation meeting now.