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Employee Engagement In Decision-Making: A Key To Success?

Reasons to choose Wilson Browne

Empowering employees to participate in an organisation’s decision-making process can promote a progressive and innovative workplace, increasing levels of employee satisfaction and productivity.

There are many options for creating a more participative workplace. One of those options is the creation of an Employee Ownership Trust (EOT). EOT’s even have their own national day!

What is an EOT?

An EOT is a government initiative which promotes employee ownership. It is particularly useful where existing shareholders of an organisation are considering selling their shares in the most tax-efficient way. An EOT, which is a form of trust, can be set up by the organisation for the benefit of employees – the existing shareholders would sell their shares to the EOT free from capital gains tax. The employees will not directly own the shares; they are beneficiaries of the EOT that owns the controlling interest in those shares. Employees may, however, also be elected as trustees of the EOT; this role ensures the organisation is being managed competently.

A very well-known example of a successful EOT is John Lewis, with total trading sales of over £12.3bn and a workforce of 80,000!

Click here for further information on Employee Ownership Trusts

What other options are there?

Despite their many benefits, EOTs may not work for every organisation. One alternative, which does not have the ownership element, is a ‘Works Council’ (‘Council’). Councils are quite common in many European countries. The UK likewise encourages organisations to set up Councils – also known as domestic/national works councils.

What is a Works Council?

Works Councils are a consultative body, usually made up of management and employee representatives. However, there are no specific requirements as to its composition, the number or method of selection of representatives. It really is a matter of individual choice for each organisation.

Councils give employees, via their representatives, a voice on strategic issues. They also act as a conduit through which employees can be informed and consulted about major business proposals/changes. In turn, employees can readily give feedback and raise any concerns about those proposals or changes; this can help an organisation to make a more informed decision on whether proposals should be progressed, revised and/or implemented. Equally, Councils enable employees to raise issues/suggestions in the first instances, which can be readily raised with senior management teams, thereby potentially heading off problems in the longer term. Ultimately, Councils can create an effective forum of dialogue between management and employees which overall encourages collaborative effort with everyone working together for mutual benefit. This overcomes the traditional ‘them and us’ workplace relationships.

Do Councils require a formal agreement?

Arrangements for Councils can be set out in a formal agreement. Certainly, if there are 50 or more employees in an organisation and certain criterion is met, employees have the right to request a formal agreement is implemented. The advantages for an organisation to take a proactive approach and set up a Council before it is formally requested to do so under the current legislation are numerous. Not least, it introduces a relationship of transparency and openness.

Agreements can be tailored to suit the needs of each individual organisation.

It is, therefore not difficult to see how employee engagement by Councils can improve productivity, and lead to greater innovation and problem-solving. Therefore, the advantages of getting employees more involved with the strategic and business direction of any organisation cannot be underestimated!

For further advice on Works Councils and/or Employee Ownership Schemes, please call us at 0800 088 6004.