Recently released figures show Gripple had a record-breaking year, with profits in 2017 soaring 21% to £6.5m. But profit isn’t the core driver behind the continued success of this Sheffield-based wire joining solutions manufacturer, 100% employee ownership is. Michael Hodgson explains.
Employee ownership (EO) has become something of a buzz word in British industry of late with John Lewis being the poster boy for many years.
Here at Gripple, being employee-owned is absolutely core to everything we do and believe. Far from being a token gesture, there are several core benefits to being an EO business, which can have a significant impact on all aspects of company performance.
Unlike most big businesses, we don’t have a board of financial stakeholders sitting at the top of the organisation, waiting for the profit to roll in, and subsequently taking that profit out of the business.
This brings a number of benefits; we can make longer term, more strategic and forward-looking investments. While we’re still focused on driving profitable sales which ensure healthy dividends, our people are invested in the business for the long-term, and happy to see a considerable portion of profits invested back into the business for the benefit of its growth and success.
It also allows much greater agility, essential in staying at the top of your industry. The lack of bureaucracy and minimal hierarchy means decision-making is a much quicker and slicker process. Investment approval or sign off of new product development is speedier than in other structures as there are far less hoops to jump through, leading to a much more responsive business.
As different areas of the business show potential for growth and long-term viability, they are rolled out to fend for themselves, win new business and become financially independent.
This also creates versatility and is best explained by comparing a large liner being slower moving, less dynamic and less decisive than a fleet of smaller, faster boats able to quickly change course and move freely.
Gripple is all about new and improved products; always working on the next innovation and for us this agility to act fast and implement change quickly means we can get new products to market much quicker than our competitors.
We can bring in the necessary resources to make new ideas a reality in a fraction of the time taken in traditional businesses.
Our founder, Hugh Facey OBE, set out a ‘Custodian Charter’ when we became 100% employee-owned in 2013. The aim is that all employees act as guardians or keepers of the company.
Collectively, these guardians are known as GLIDE (Growth Led Innovation Driven Employee Company) – an EO company that represents all the shareholder members who work in its partner companies. It sets out the principles, aspirations, drivers and how it should communicate.
For example, the charter states that decisions involving capital expenditure are made for the good of the business, rather than purely for profit. Profit is not the reason the business exists but is more a measure of progress. It encourages employees to challenge and question processes and come up with their own solutions.
However, this hasn’t stopped the company from being incredibly successful and the flexibility associated with being EO has played a major role in that success.
For example, one of Gripple’s most recent product innovations, UniGrip, went from conception to launch within a year, something likely to have taken three-times as long in a company with more red tape and processes.
In addition, when the need for a larger production site for one of the companies was identified, we were able to extend the site to double its original size. This was also completed within a year and meant we were able to seamlessly keep up with demand.
The financial benefits of this were that UniGrip is on track to beat its first-year sales forecast and grow the company’s M&E category solutions, and the site expansion meant financial targets were hit, profits increased, greater dividends were paid and ultimately increased the share price.
Employee ownership for all?
Clearly, being an employee owned company has a significant and direct impact on the bottom line.
So, there’s little wonder that the Labour party is drawing up a share ownership plan encouraging more employee-owned businesses and to see more UK businesses make the transition to share ownership.
Employees with a financial stake in the business are undeniably highly motivated and committed. They have a voice within the business but they also each have responsibility: it’s an incredibly empowering environment.
However, it shouldn’t be held up as the model to which all organisations should adhere. It is a very different culture to most businesses which may not suit all. The lack of formal structure may be freeing to some but unsettling to others. Gripple asks its employees to invest in the business after 12 months. Staff need to be fully bought in to the company’s ethos to make that kind of financial commitment.
Building for the long-term and growing a sustainable business that is always evolving is one of the wonderful things about EO businesses, but it’s important that its people grow with it or risk getting left behind. Being clear on the vision of the organisation at recruitment level is essential to attract and retain the right staff.
Employee ownership can be an incredible ethos, guaranteed you have the right employees!