Richer Sounds founder Julian Richer made quite a splash when he announced that plans to share the company’s wealth by handing control of the business to its staff through the creation of a John Lewis style trust. His workers’ cups runneth over because they are also to receive bonuses.
Some 60 per cent of the company is being transferred into an employee trust. The business is paying him £9.2m for this, but some £3.5m of that is being handed back to staff who will receive £1,000 for every year of service. The average payout amounts to £8,000.
It’s perhaps not as surprising as it looks. Richer Sounds has long been a notably progressive company. It has a page on its website devoted to extolling the virtues of paying tax. It’s also a vanishingly rare retailer that boasts accreditation from the living wage foundation, and it shuns zero hours contacts. Richer himself has campaigned against them.
But it’s still a stunning move, all the more notable coming as it did within a couple of days of Uber’s fairly disastrous New York flotation – an exemplar of the worst kind of capitalism. The taxi firm’s business rests on the ruthless exploitation of its nominally self employed drivers, who sometimes make less than the minimum wage. The float made a billionaire of founder Travis Kalanick and put share options worth hundred of millions into the pockets of its over paid executives.
Richer’s move suggests that, yes, it is possible to have a better kind of capitalism than the one envisaged by the high priests of trickle down economics like those who run Uber.
And it is not alone. Other notable converts to the cause of employee ownership include Oscar winning animator Aardman, of Wallace & Gromit fame, and Riverford, which delivers organic vegetable boxes.
Mulling succession, Riverford boss Guy Singh-Watson said selling his company “as a tradable chattel, whose purpose would be to maximise short-term returns for external investors, feels to me a bit like selling one of my children into prostitution”. So, with those children uninterested in following his footsteps, he chose to sign the business over to its employees.
The Employee Ownership Association, set up to represent businesses like these, says the number of firms like them is growing at an annual rate of just under 10 per cent. It now has more than 350 members.
This comes at a time when there is, at least in some quarters, a recognition of the urgent need for reform if the world’s dominant economic system wants to avoid collapsing under its own weight, perhaps violently.
Nobel Laureate professor Sir Angus Deaton, launching a review into inequality, sponsored by the Institute for Fiscal Studies and funded by the Nuffield Foundation, noted that “in much of the rich world… one or more of politics, economics and health are changing in worrisome ways”.
“If working people are losing out because corporate governance is set up to favour shareholders over workers, or because the decline in unions has favoured capital over labour and is undermining the wages of workers at the expense of shareholders and corporate executives, then we need to change the rules.”
Regrettably, people like Richer and Singh-Watson, while growing in number, are still relatively rare. Most of Britain’s public companies have proven depressingly reluctant to even concede that employees should be given a voice, something that is common in Europe, in response to the government’s tepid corporate governance reforms.
But perhaps change is coming there too. Capita, which hasn’t always been the most progressive of companies, announced the appointment of not one but two employee directors yesterday.
They weren’t selected via an election, which is disappointing. But their installation on the board still represents an important step for a company of its size and example for others to follow. It might ultimately lead to Capita, which has slipped on more than a few banana schemes in recent years, becoming a better business.
The company’s two employee directors could offer its bosses perspective they lack, and help it avoid controversies, such as the ones that have been created through Capita putting itself in the vanguard of the government’s cruel and regressive disability benefits testing policy.
Pirc, which advises shareholders in pubic companies on voting decisions, has also taken up the cause of employee directors, as has Vince Cable, the Liberal Democrat leader.
He made the case in a column for CityAm saying that while putting workers on boards “is far from being a panacea” it could be “a useful antidote to the current poisonous sense of distrust and malaise hanging over our many big companies”.
In the midst of a truly vile political culture, with Nigel Farage and his charmless mob threatening to torch everything that’s decent about the country, Richer’s decision, and those like it, could be said to serve as rare green shoots poking through hard ground. Corporate Britain should take note.
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