A Moseley reader draws attention to a report that Julian Richer, CEO & founder, is handing control of Richer Sounds, the hi-fi and TV retail chain of 53 stores to staff, transferring 60% of his shares into a John Lewis-style trust. His staff will also receive £1,000 for every year they have worked for the retailer.
In line with Corbyn/McDonnell policy proposals, Richer refuses to use zero-hours contracts and is one of the 14% of companies with a pay gap that favours women. Employee perks include access to company holiday homes and the company donates 15% of profits, which last year stood at £9.6m, to charity.
Wisely, the trust will operate according to a set of principles designed to ensure it continues to follow the course set by Richer over the past 40 years.
A colleague advisory council will be established to represent the interests of employees and shape the company’s future. Richer said the arrangement meant the company would avoid an “aggressive” outside investor “changing the strategy”.
A Financial Times article agrees that employee involvement on a voluntary basis is ‘a superior idea’ and stands a greater chance of reforming how businesses are run, adding “No form of control is perfect, but societies and economies gain from diversity of ownership including by employees”.
More than 350 businesses have now adopted the model – for example the 134-year-old Essex jam-maker Wilkin & Sons, whose employees own almost half the company through a trust. Many staff live in company accommodation on the estate surrounding the Tiptree factory, with trading profits used to buy back shares for the trust. Profits also go to support local projects including sports and arts organisations. At least 50 more are said to be preparing to move into employee ownership..
The Co-operative News presents the Shadow Chancellor’s proposal
At the Labour Party Conference last October, shadow chancellor John McDonnell announced that the Labour Party would legislate for large companies to transfer shares into an Inclusive Ownership Fund:
‘Decisions taken in boardrooms affect people’s pay, their jobs and their pensions. Workers deserve a real say in those decisions. . . The shares will be held and managed collectively by the workers. The shareholding will give workers the same rights as other shareholders to have a say over the direction of their company. And dividend payments will be made directly to the workers from the fund. Payments could be up to £500 a year. That’s 11 million workers each with a greater say, and a greater stake, in the rewards of their labour.” Labour also plans for a proportion of revenues generated by the “inclusive ownership funds” to be transferred back to public services as a social dividend
The Financial Times’ editorial board compares Richer’s ‘attractive arrangement’ with Labour’s proposed use of ‘force’ under Jeremy Corbyn.
“Whereas Mr Richer and others have been incentivised by the UK’s new employee ownership trust (EOT) structure, which allows entrepreneurs to pass majority control to a trust without capital gains tax, if elected, the Labour Party wants to ‘force’ all UK companies with more than 250 employees to move gradually into employee ownership. This would involve diverting 10% of their equity to “inclusive ownership funds” that would divide the dividends between staff and the government.”
It recommends a tax incentive instead of a ‘tax grab’