Partnerships, people and performance
Definition: A partnership is an arrangement in which parties agree to cooperate to advance their mutual interests.
Motivation of staff is a topic which crops up regularly in HR and business management circles. How to hire and retain motivated, hardworking staff is an issue for many businesses, large and small. But have they all overlooked a vital factor? Is there a difference in motivation for those who are traditional employees compared to those who are ‘partners’? And how does that affect the results of the business as a whole?
At TTP Labtech we recently published some good news about our improved performance and revenues, particularly in our key product ranges.
Our managing director, Jas Sanghera, was quoted as saying, “We have a team of passionate, talented and dedicated individuals behind each product and a collaborative relationship with our customers – something that differentiates us from other technology-based companies.”
Like all of TTP Group, TTP Labtech is formed as a partnership, or employee-owned business (EOB), where the staff have the option of shared ownership of the company and therefore a say in how it is run. At TTP Group we believe this is the origin and driving force behind the ‘passion and dedication’ of the team. It recognizes the fact that the Company is a team enterprise and enables all staff to share in the success of the business. Perhaps this is a business model more companies should adopt.
There’s no doubt that people who own their own business work hard to make it a success; investing their time and effort to achieve business goals – for a large partnership business does this translate into everyone in the company working harder?
An example of a successful employee-owned business is the John Lewis Partnership, the high street department store where all employees are also partners. Here employees are listened to and share in the profits.
At TTP Labtech we certainly believe there are a number of substantive benefits that employee ownership has been shown to deliver time and again. However, these benefits are often hard won and do not materialize simply because an organization is employee-owned.
Jas Sanghera says, “It is the combination of employees feeling they have a meaningful stake in their own organization, alongside a culture that gives them a greater say in how the organization is run, that has the potential to unlock the kind of success enjoyed by the likes of the John Lewis Partnership.”
As Sanghera implies, the stimulus for staff is far more complicated than purely financial; motivations include having a challenging or interesting role, good work-life balance, feeling valued and a multitude of smaller benefits that can add up to create both the ideal job and ideal employer.
However, there is a significant and increasing body of evidence indicating that a combination of shared ownership and employee participation delivers superior company performance compared to limited companies of a similar size. This evidence includes the facts that employee owned businesses.
- outperform more traditionally structured firms in times of recession
- report increased productivity levels, between 9 and 19% higher than traditionally structured similar businesses
- create more sustainable enterprises, as decision-making is focused on promoting long term success over short term risk-taking to the benefit of external shareholders
A report from Matrix Evidence on “The employee ownership effect: a review of the evidence” shows that partnerships tend to have high employment standards, are more transparent and give people a stake in the business. Partnerships have a culture of participation in running the organization. From a recruitment and retention perspective this translates into good recruitment and retention levels
- highly committed staff
- high staff satisfaction and reduced absenteeism
- often being the employer of choice in their sectors
Sanghera believes, “Our staff are more innovative, entrepreneurial and committed to the company and its success, sustaining a culture of peer-challenge and continual improvement which adds enormous benefit to the business and contributes to our ongoing growth even during the recession.” He adds, “Due to the way they are run, employee-owned businesses tend to enjoy stronger customer and supplier relationships, and this is another factor in our continued business success.”
Essentially it is the overall company culture that makes staff, whether employees or partners, feel valued and rewarded. The hard to define, intangible quality of a good culture tends to come from the example set by the executive and management teams of the company.
In the case of partnerships, it would appear from the evidence that a culture of inclusion and empowerment are already an integral part of the structure, and therefore this mode of organization has a head-start in terms of staff motivation and other business benefits. The Cass Business School report (see report summary) supports this and results show that benefits are particularly evident in those businesses with fewer than 75 people, and in the knowledge and high-skill – sectors in which TTP Labtech operate. Clearly the employee-owned model has served TTP well, with a successful and growing group of businesses that includes TTP Labtech.
From “Report on Model Growth: Do employee-owned businesses deliver sustainable performance?” – Cass Business School.
“The employee-owned sector – comprising companies that are wholly or substantially owned by their staff – is worth around £25 billion annually, accounting for 2% of UK GDP.
This report found that employee-owned firms create new jobs more quickly than conventionally structured businesses and demonstrate the same levels of profitability. Employee-owned businesses are more resilient: their performance is more stable over business cycles, and they have outperformed the market during the downturn.
They are also more robust: employee-owned businesses have a lower risk of business failure. The employee ownership model offers particular advantages to small and medium-sized businesses and in knowledge and skill-intensive sectors, where employee-owned companies significantly outperform competitors.
Employee-owned businesses also add more value to output and human capital. They recruit more employees at a faster rate and reward employees with higher wages.”