If you’re thinking of making a structural change to your business, for example moving to an employee ownership model, you’ll be wanting to do so at the best available time. Any large project takes careful planning and the long-term consequences appreciated… at least, as much as is possible.
Business life-cycles
Analogies of journeys, life-cycles and so forth to describe the lifetime of a business are well rehearsed. Major changes to a business can be triggered by a change of personnel, a key contract, a family event or other. Other triggers can be more subtle.
To take Stephens Scown as an example. In 2015, the firm successfully ranked for the first time in the Sunday Times 100 Best Companies to work for list, which saw the start of seven consecutive years appearing in the list. The firm was on an exciting journey, investing in its people and implementing a raft of employee engagement initiatives.
Meanwhile, employee ownership was already being explored as an interesting business model to give everyone a real stake in the business, and felt like the next natural step for the business. With the transition to employee ownership officially taking place on 1 May 2016, Stephens Scown became the first large law firm to become employee owned. As a result, employee ownership became embedded in the DNA of the business at every level. It released some of the opportunities that employee ownership delivers, as observed by many within and outside the business, including year on year growth and a continuous focus on improving client service. This year, we were listed again in the Sunday Times Best Places to Work 2024 and employee retention continues to increase.
When is a good time to move to an employee ownership model?
Was is it a good time to move to employee ownership? Possibly. Might there have been other times to move to employee ownership? Probably. The point being that the business itself displayed features that enabled a move to happen naturally, smoothly, organically. And do so at its own pace. So, when thinking about a move, consider what engagement is already in place within your business. Could the information circulating around the business be more regular/transparent/accessible/relevant? Will any of the business leaders be leaving the business as part of the transition? If so, what management succession is in place and is anything required to strengthen the future of the business? And so much more.
To answer the question, a good time to move to an employee ownership model is when the business is ready to do so. As lawyers, we can help with the legal documentation, however there are plenty of other aspects that should be borne in mind, including those listed above as well as assessing the impact on customers and other stakeholders.
Oh, and there might also be some tax breaks to sweeten the deal.
Contact our Employee Ownership team to find out more.