Corporate “guinea pig” sets the trend

Citation

(2004), "Corporate “guinea pig” sets the trend", International Journal of Productivity and Performance Management, Vol. 53 No. 5. https://doi.org/10.1108/ijppm.2004.07953eaf.005

Corporate “guinea pig” sets the trend

An award winning company is using itself as the “guinea pig” to test a far-reaching alternative model of how employees, management and investors relate to one another in a corporate structure. The changes that directors are introducing represent the ultimate antidote to the fat-cat pay controversies that beset many companies – among other things, under the new system share-owning elected workers’ representatives will have power in hiring, firing and deciding the pay awards of the managing director.

The changes reflect current company directors’ deeply held beliefs about the importance of stakeholder ownership and involvement and they are being implemented, developed and monitored in a joint research project with academics at Sheffield Hallam University. School Trends Ltd is testing whether entrepreneurial and socially responsible behaviour can be fostered under a new system of corporate ownership and governance and ultimately if it will hold the key to high levels of productivity, turnover and both employee and customer satisfaction (an area where the company has already won prizes).

The School Trends Community initiative is based on reflecting the value that the company places on its people in the stake that they are given in both the decision-making and the shareholding structure of the organisation. One of the first steps that School Trends managing director Peter Beeby is taking in 2004 is to set up an elected governing council which involves employee representatives and will have the powers to appoint and remove him.

The council will also be empowered to make policy and procedural decisions on areas such as fair pay. This will be reflected in a Community Company ownership model. Directors Peter Beeby and Ric Norris have been working with the university to develop the model for some time.

“At its heart the Community Company model offers everyone involved with our organization a framework for agreeing shared values and using business opportunities to realize them. The payback here is that it leads to a coherence based firmly in values rather than products. This provides competitive advantage for the company”, explains Peter.

Professor John Cullen of Sheffield Hallam University, a specialist in governance structures, explains that changes in existing assumptions about governance and entrepreneurship are needed.

“Government ministers have said that entrepreneurship is essential to the country’s social and financial well being and we are exploring whether community interest in a trading organisation is best achieved by giving recognition to skills and interests of the people through which an entrepreneurial culture is developed. This project offers an unusually valuable opportunity to combine rigorous academic research with the model being actively used by a market leading company”.

The Department of Trade and Industry’s Partnership Fund is contributing over £17,000 towards the project in the form of a grant. Speaking when the successful tenders for grants for projects aimed at improving working conditions in charities, hospitals, offices and factories were announced, Employment Relations Minister Gerry Sutcliffe said: “Good employers know that only by valuing people can you boost productivity and encourage innovation. Working together makes good business sense and is essential for companies and industries committed to success”.