Ethics matters more to managers in employee-owned companies

Embargoed 00.01am 25 September 2015

Managers in employee-owned companies are more likely to apply personal ethics to their professional lives than their counterparts working for companies with other forms of ownership, new research published today [25 September] reveals.

According to a survey of 1,019 workers in employee-owned companies, managers are less likely to make business decisions based on ‘blind’ obedience to corporate rules and are more likely to take into account the interests of their colleagues, customers and communities.

The research reveals that a ‘culture of equals’ results in more consistent decision making by all workers in employee-owned companies. Managers and non-managers are more likely to share the same ethical considerations in their decision making at work compared to employees in companies with other forms of ownership.

Workers are also more likely to rate the leadership of employee-owned companies more favourably. Nine in 10 (90%) experience high-performing, ‘democratic, visionary, affiliative, and coaching’ leadership styles compared to just six in 10 (57%) workers in non-employee-owned businesses.

The findings of the survey have been compiled for a new report, The MoralDNA of Employee-Owned Companies, produced by the Chartered Management Institute (CMI) and business psychometric specialists MoralDNA, with support from Fieldfisher and the eaga Trust. The report was launched at a management industry gathering at law firm Fieldfisher, long-term supporters of employee ownership.

The new report compares the experiences of 1,019 managers and non-managers working for employee-owned companies to similar workers in a cross-section of companies with other forms of ownership.

Ann Francke, chief executive of CMI, commented on the findings:

“I urge company owners looking at new ways to improve business performance to read the report and its great case studies on flourishing employee-owned companies.

“The evidence here is that employee ownership improves employees’ commitment, positively shapes their thinking about ethical decisions and influences management action for the better. We should have more employee-owned companies and we should learn from their success.”

In other findings, 95% of workers in employee-owned companies report the ownership model having a positive effect on the workforce’s commitment to their company; 91% say it has a positive impact on their organisation’s performance; and 87% say that it enhances their company’s ability to attract new talent.

The report’s lead author and MoralDNA founder, Prof. Roger Steare, Corporate Philosopher in Residence at Cass Business School, said: of MoralDNA

“This research into the MoralDNA of employee-owned businesses clearly shows the benefits of applying the fundamental human rights of democracy and justice to the workplace. The modern joint-stock corporation is a feudal and autocratic anachronism in which fear is the dominant emotional driver of behaviour. It is no wonder that systemic corporate deceit, dishonesty and the destruction of all that we value are revealed to us on a daily basis in the news.

“In contrast, employee owned companies embody the humanity, integrity and sustainability vital to our prosperity. The shareholder value they create is truly one of “sharing" and I am delighted that in this research, we have been able to support the ideal that the best form of capitalism is one where workplace culture is rooted in those same moral principles that underpin democratic and fair societies.”

Graeme Nuttall OBE, Fieldfisher partner and the government's independent advisor and author of Sharing Success: The Nuttall Review of Employee Ownership, said:

"This important report on the MoralDNA of employee-owned companies sends a strong signal to other businesses: employee ownership helps develop and sustain strong employee engagement, encourages long-term decision making and promotes a commitment to customer satisfaction. What's more, employee owned businesses are in a strong position to attract, and retain, committed staff. In short, adopting the employee ownership model is a step towards long term success for your business, regardless of industry."

To download a copy of The MoralDNA of Employee-Owned Companies and case studies visit: www.managers.org.uk/moraldna. Join in the conversation using #CMIethics.

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Notes to editors

Employee-owned company case studies in The MoralDNA of Employee-Owned Companies:

· ARUP – Trustee Sir Philip Dilley talks about how Arup’s 45-year-old defining philosophy still underpins the company’s values today

· OPM – OPM’S Chair Lucy Farrow explains that every level can lead – and there isn’t one cookie-cutter route to success

· Useful Simple – Operations Director Tim Hurstwyn talks about founding a company on the basis of well-being, empowerment and doing good work

· MAKE – Partner Laura Cooke explains how a democratic working environment attracts, retains and develops talent

· SHCA – Trustee and Board Advisor David Wheatcroft about the impact of well-trained staff on teamwork, standards and commitment

· Accord – Managing Director Alan Spence talks about the power of people as the engine room of the company

· Scott & Fyfe – Chairman Nick Kuenssberg explains how all employees share in the success of the company

· 3BM – Managing Director Andy Rennison about working with a shared sense of togetherness and purpose

About the research

The empirical research for this report was conducted by moral philosopher Professor Roger Steare, psychologist Pavlos Stamboulides and leadership consultant Peter Neville Lewis in partnership with CMI. Originally designed by Steare and Stamboulides, MoralDNA™ was adapted for this research in partnership with CMI in 2014 with the addition of questions relating to respondents’ experience as professional managers – and adapted again for this research with questions specifically relating to employee owned companies.

MoralDNA™ is an online psychometric profile that measures two aspects of human morality: how we prefer to make moral decisions and what moral values we prefer to consider when doing so.

829 respondents from 14 companies which are owned through employee trusts completed the adapted version of the online MoralDNA™ profile during May and June 2015.

CMI

CMI – the Chartered Management Institute – is the only chartered professional body for management and leadership, dedicated to improving managers’ skills and growing the number of qualified managers.

Our professional management qualifications span GCSE to PhD equivalent levels, including the unique Chartered Manager award which increases earnings potential and improves workplace performance.

We provide employers and individual managers with access to the latest management thinking and with practical online support which helps them embrace change, create high performing teams and keep ahead of the curve.

With a member community of 100,000 managers and leaders, we promote high standards of ethical practice through our Professional Code of Conduct, and help managers build their expertise through online networks, regional events and mentoring opportunities.

About Fieldfisher

Fieldfisher is a European law firm with market leading practices in many of the world's most dynamic sectors including Energy, Financial Services, Government & Public Services, Hotels & Leisure, Life Sciences, Media, Telecoms and Technology. Clients choose to work with the firm because it delivers commercial, pragmatic and innovative solutions through exceptional legal expertise and experience, on time and on budget.

The firm has more than 400 lawyers working with large businesses like the BBC, Pearson, Citigroup and Accenture, with government and the public sector, and also with private wealth and social enterprises as trusted advisers, providing highly commercial advice based on an in-depth understanding of their needs.

Fieldfisher has been at the forefront of developments in employee ownership and mutual structures in the UK. The Fieldfisher team includes Graeme Nuttall OBE, who as the government's independent legal adviser on employee ownership authored the report "Sharing Success – The Nuttall Review of Employee Ownership" (BIS, 2012)

The eaga Trust

The eaga Trust was set up 1999 for the purpose of promoting employee well-being, engagement and ownership in the workplace in the belief that when employees feel like partners in their business, they deliver better day to day results which in turn produce a profitable, sustainable and fulfilling business to the benefit of all.

In eaga Trust’s experience, businesses operating under these principles have motivated employees whose sense of co-ownership means they take direct responsibility for helping drive long-term growth and financial success.

Nowadays, the eaga Trust still holds true the intent set out in a Trust Deed and provides a wide range of benefits including business loans, skills and training grants and business support initiatives to its beneficiaries.

The eaga Trust supports the growth of employee ownership and engagement/fairness in the workplace through, amongst other things, direct, long-term investment.

It invests in businesses and management teams that believe in and are committed to these principles. It has established the eaga Trust Portfolio Company (eTPC) as its principal vehicle to make such investments. eTPC has considerable flexibility in the size of investment it can make but our typical investment in any one business will be up to £2m.

For more information, please contact Richard Marr, Chief Operating Officer of the eaga Trust – richard.marr@eagatrust.com