Staff can help turn succession into success as employee ownership gathers momentum in NI
17th Jul 2024
The concept of employee ownership (EO) was top of the agenda at a series of events this week as business owners gathered to learn about the model as a succession solution. Organised by DLD Fund alongside the Chartered Accountants Ulster Society, the Ownership Succession events in Newry, Cookstown and Belfast sought to highlight EO as a concept that Northern Ireland business owners should be considering as part of their future planning. Guest speakers were leaders of businesses who have successfully made this transition, including Relinea, White Ink Architects and S&W Wholesale. Glen Dott from Scottish Enterprise and Andrew Harrison from Co-ownership Solutions also spoke about the benefits that the EO model offers.
EO can be a successful way of selling a business or can act as a partial exit strategy by owners. An Employee Ownership Trust (EOT) is typically set up, meaning employees acquire a stake in the business as a group. The trust holds these funds and employees become more involved in decision making and the direction of the business. There are around 1,650 employee-owned companies in the UK, a figure which is growing by around 35% per year, particularly in Scotland.
Minister for the Economy Conor Murphy attended the Belfast event and shared his views on the concept of employee ownership.
Minister Murphy said: “The ‘People Powered Growth Report’, which underpins today’s event, makes for inspiring reading. It highlights the contribution of the employee ownership model to driving productivity, to creating more good jobs, and to investing in the skills of their workforce; all key objectives of my plan for the north’s economy.
“My department is currently working to align its activities with my economic objectives. As part of this, we have set up a Social Enterprise Group made up of practitioners. This provides a forum to highlight ways in which we can build social enterprise, including models of employee ownership. To inform that work, my department is commissioning research on employee ownership. At the moment, across the north, the number of employee ownership businesses is small. But I am hopeful that, by working with the social enterprise sector, building the evidence base, and engaging at events such as this – we will support local workers and companies to better understand all options open to them.”
Event organiser Aidan O’Neill, DLD Fund said: “As someone who is passionate about the strength of retaining local business ownership and protecting the future of family-owned companies, I wanted to bring together people who are knowledgeable and experienced in EO to let the business community here learn more about it and consider if it might work for them.
“People who are personally engaged with the future of a business will adapt, innovate and pivot to survive if things get tough. That ethos doesn’t always remain when a business is sold to an overseas owner. Benefits of EO have also been proven to include enhanced staff engagement, performance, loyalty and retention.
“I appreciate that EO isn’t an option that would suit every business. However, there are so many companies that should be considering it as a viable solution, particularly within the manufacturing sector. Otherwise, we run a real risk that within the next decade, we will see some incredible, locally-owned businesses being sold to global owners,” Aidan O’Neill said.
Claude Maguire, director at Belfast-based White Ink Architects, made the transition to employee ownership in 2021. “As founding directors, we are very proud of the company we’ve built and the strong client relationships we have formed over the last 24 years. When thinking about succession planning, it was very important to us that we not only protected White Ink’s culture and legacy but also acknowledged the contribution of our team to White Ink Architects’ success. “The employee-owned model was therefore an obvious choice for us. The new ownership structure removes barriers to succession, ensuring that the choice of future leaders will be determined solely on talent, ability, and the drive to deliver White Ink’s vision,” Claude Maguire said. Relinea, a specialist manufacturer of alternative structural composite solutions based in Crumlin, was the first manufacturing company in Northern Ireland to move to employee ownership in 2022. As sole shareholder, Karen Maguire comments: “In succession planning, I did not feel comfortable selling to a third party as I believed the long term future of the business in the local area could be at risk. I also wanted to ensure that the team, that had helped me and the business to succeed, could benefit. Employee ownership was an exit option that delivered on both these aims.
“Since moving to employee ownership, we have seen tangible benefits both operationally and commercially. The business has seen significant growth with improvements in productivity and overall our workforce is more engaged. Events like this are so important to get the message out there that EO is a viable exit option. Northern Ireland has so many great companies that contribute significantly to our economy and it saddens me to see an exodus of skills and future potential when these companies are sold to external parties. It is really encouraging to see more support and understanding of EO and how it can benefit Northern Irish businesses.”
Invest NI outlined their interest in supporting the model as a succession solution. Jeremy Fitch, Invest NI adds: “As a region made up of predominantly SMEs, a good many of which are family owned and operated, we are always looking for solutions that will help these businesses to scale and grow. Employee Ownership is one such option and certainly something we would encourage companies to explore. This event has been very useful to hear from those that have taken this approach.”
