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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:

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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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OPM Public Interest Seminars: Employee and user owned public services

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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OPM Public Interest Seminars: Employee and user owned public services

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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