OPM Public Interest Seminars: Employee and

user owned public services

OPM was pleased to welcome a panel of prominent speakers to its public interest seminar
on employee owned public services, which took place on 9 March 2010. The panel included:
• Patrick Lewis, Partners’ Counsellor and a Partnership Board Director for the John Lewis
Partnership, the largest employee-owned company in the UK.
• Margaret Elliot OBE, founder and executive director of Sunderland Home Care
Associates, which has gained national and international recognition for its employee
ownership and participation model.
• Ed Mayo, chief executive of Co-operativesUK, the central membership organisation for
co-operative enterprise throughout the UK, and itself a fully member-owned organisation.
• Philip Blond, director of ResPublica think-tank and author of The Ownership State, who
contributed to the seminar in a pre-recorded video interview. The video may be viewed
here: http://opmnetwork.wordpress.com/2010/04/22/phillip-blonds-presentation-video
Panellists and participants enjoyed energetic discussion about the political, social and
economic drivers of this policy agenda; different models of employee and user ownership
and what makes them work; and what potential role these may play in the future for public
services and if so what factors might be in play in transitions. This note summarises some of
the key messages which emerged from the debate from these.

Political, social and economic drivers

Though employee and user owned organisations have received renewed attention recently,
these models go back many decades and have their roots in 18th century friendly societies.
History offers us evidence of well-established approaches to employee-owned organisations,
and a track record of successful outcomes.
Now back on the agenda for all major political parties, speakers identified benefits and
drawbacks to employee and user ownership (or mutualism’s) current profile. These models
are felt to have much to offer, particularly during a period when the dominance of corporate
models and private sector markets are being increasingly challenged, and when arguments
for the need for radical new settlements for public services are being made. However, there
is a danger that employee-owned or mutual models might be treated as ‘quick fixes’ and that
the high profile of these approaches could result in them being applied reactively and without
a long term commitment to making them work.
Not just a model for the private sector, employee or mutual ownership has potential to
expand the range and diversity of models used for delivering public services. It has potential
to increase the resilience of our society and local communities. It might also play an
important role in strengthening contestability in public services and in improving outcomes
delivered.
As seen over the past few years, mutuals in the banking sector have been more resilient and
better able to respond to in-sector challenges (as evidenced by larger building societies
being able to take over smaller ones, without government financial assistance).

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Models which combine accountability to both users and communities through appropriate
user representation can also offer additional benefits, including:
• improved responsiveness to the changing needs of users and communities
• a counter-weight to potential for ‘provider capture’ of solely employee-owned models
• a more strategic and enabling role for the centre – national or local – focusing more on
strategic commissioning and regulation, and less on short term contracting.
In addition, employee ownership has the potential to re-professionalise public services
because it can put individuals back in touch with the values which first attracted them to their
roles.
Finally, as was clear from the example of Sunderland Home Care Associates, social
enterprise models can bring additional benefits of enhanced employment, skills development,
and increased social capital in the local communities in which they are based.

Models and making them work

There are a number of different models for employee ownership and speakers agreed that
‘one size would not fit all’.
Nonetheless, integrity within models is important: legal structures need to reflect and
reinforce the desired organisational culture. Trust structures like those used by John Lewis
and OPM are appropriate for organisations which want a strong collective culture. Employee
owned companies provide more flexibility than co-operative models in terms of how rewards
can be shared with employees.
Whilst acknowledging the diverse models for employee ownership, discussions identified a
number of key characteristics of successful employee owned organisations. These include:
• a commitment to building work environments which provide fulfilment for staff, often
including engagement and volunteering in local communities. As was evident from the
examples discussed at the seminar, this is true of national corporations like John Lewis
and regional organisations like Sunderland Home Care Associates;
• good leadership, with leaders who want to be open about sharing information, who are
prepared to be challenged, and who want to delegate. Leaders also need to behave in
ways which demonstrate an understanding that they are ‘employed’ by their teams;
• a culture which emphasises ownership and responsibility for organisational outcomes.
This relies partly on all employees understanding what success looks like. In retailing,
this can be readily captured to an extent by profit. Measures of success in public
services delivery may be more complex;
• confidence in dealing with poor performance and, if necessary, staff reductions. In
employee owned organisations, a sense of ownership and pride in quality delivery and
outcomes can result in peer pressure on poor performers. Balanced with care about how
staff are treated in processes for managing poor performance, employee owned
organisations can be as effective or better than organisations using other ownership
models.

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Potential for public services?

What does all this mean for the role that employee and user owned organisations might play
in the development of public service delivery?
Speakers agreed that employee ownership should not be seen as a quick fix: work,
determination and experimentation are necessary to build successful models. Time is
needed to build the trust necessary to sustain these models, particularly when difficult
decisions need to be made.
The conditions for the success of employee ownership models therefore include:
• preparedness to take a long term view and tolerate experimentation
• sustained commitment from determined leaders
• any difficult short-tem budget issues being tackled before, not after, setting up new
models
• freedom from day-to-day political intervention.
As discussed earlier, employee owners also need to understand what constitutes
success for the organisation. Achieving this is arguably more challenging in public service
organisations which employ a wider range of success measures and often with longer
timescales.
For some organisations delivering public services, access to investment will be needed.
New enterprises will not have a track record and so traditional borrowing may be difficult.
However, new community-based models may offer new potential sources of investment
(such as local investment bonds).

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