The workplace is a very different place today than it was a generation ago.
Fundamental changes in the way we work now need a fundamental change in how businesses are structured. Luckily, there is an answer.
Over the last decade there has been a huge increase in the number of people who are self-employed.
According to a House of Commons briefing paper, as at 28 December 2017 there were some 5.7m businesses in the UK. Of these, around 4.3m were non employing, that is, self-employed. In 2000, those figures were 3.5m, of which 2.4m were self-employed.
In the 18 years between 2000 and 2017, therefore, the number of employing businesses went up by 300,000 while the number of self-employed went up by 1.9m.
Why are so many people choosing to leave their jobs for the relative insecurity of self-employment?
The changing nature of work
In his book Drive, Daniel H Pink describes how the type of work we do has changed over the last few decades away from ‘algorithmic’ (following a set path to reach an answer) to ‘heuristic’ (having no set path and instead having to find solutions).
This change has been driven by the fact that algorithmic work has slowly been outsourced to cheaper labour overseas, and through replacement by computers.
Heuristic work tends to be more fulfilling as we are seeking to use our own skills and talents rather than just following someone else’s prescribed route. As a result, the rewards and motivations of such work are also different.
Where the carrot and the stick creates appropriate motivation for algorithmic work, a sense of purpose, ownership, and responsibility are far greater motivating factors for heuristic work.
Fulfilment is the carrot that modern employees seek.
Putting these two factors together leads to the conclusion that the nature of work has changed, whereas the nature of rewards has not. A huge number of people have chosen to go self-employed rather than work for companies that don’t offer them fulfilment.
Yet as the nature of our work has changed, our ownership structures and management systems have not.
The fact that 1.9m people since 2000 have chosen to work solo rather than work for someone else suggests they are not getting the required rewards from their employment. Rewards that, for heuristic work, are less about money and more about fulfilment.
One managing director friend of mine (non-financial services) reported the change he implemented which was the most popular with his employees was to get rid of the bonus scheme. Rather than dangling the carrot of a bonus to individuals to make them work harder, he used the money to provide a range of other incentives, including being able to take birthdays as a holiday and a profit which was shared equally.
If ownership and management systems are failing employees, with the result they feel there is no option but to set up on their own, is there a business structure that solves this problem?
Yes! The Employee Ownership Trust (EOT) came into existence in 2014. The beneficiaries of the trust are the employees of the company. The employees therefore have a say in the running of the business, and get to share in the profit the company makes.
The EOT is set to revolutionise how businesses are owned. It offers owners a way to sell their business at a current market value, and yet see their businesses continue; for them to leave a legacy.
A company that is controlled by its employees, by being owned by an EOT, needs to be different in more than just its legal structure, however.
An EOT business can deliver fulfilment to its employees by allowing them a real say in the running of the business; to give them a contribution to making business decisions. This requires a complete culture change within the business. There is a lot of work to do before a business is ready to become employee-owned.
And a major part of this is putting in place the structures that will ensure employees can gain fulfilment from their jobs, and entice them back into the workplace.
Companies that are owned by an EOT offer owners a way out, but they also offer the employees a new way of working. Being beneficial owners and controllers of the business they work for aligns the interest of the business and the employees – something that is very much in line with the modern heuristic way of working.
Chris' book, The Eternal Business, is about employee ownership, and is also available as an Illuminate branded book. More information on his new consultancy business and online programme can be found here