Graeme Nuttall OBE is a partner in the Fieldfisher tax and structuring group and head of Fieldfisher’s Employee Ownership and Mutualisation team. Also, as the UK Government’s independent adviser on employee ownership, author of the Nuttall Review of Employee Ownership.
In what ways does employee share ownership (ESO) serve a useful purpose?
ESO, even through an all-employee plan, is often mainly about financial participation. This helps achieve the combined goals of better business performance and happier staff. But my belief is that this “win-win” situation is best secured through employee ownership (EO). This means a significant and meaningful stake in a business for all its employees. What is ‘meaningful’ goes beyond financial participation. The employees’ shareholding must underpin organisational structures that ensure employee engagement.
How can we widen and deepen the adoption and use of employee share ownership?
The benefits of ESO need to be understood and repeatedly demonstrated by success stories, backed up by research. The Coalition Government focused on promoting EO but we can adapt the EO health check in the Foreword to the Nuttall Review One Year On Report to promote all forms of ESO alongside EO.
What would you tell someone who is ‘on the fence’ about introducing employee share ownership to their company?
In my experience owners generally know when the time is right to introduce employees as shareholders and will recognise the right way to do it once they have the choices. The role of the adviser is often as much about building confidence as giving technical and practical assistance.
What do you think will change about employee share ownership over the next five years?
Instead of using share plans as an add-on to conventional business models we will see more employee-owned companies. As a result of the findings of the Nuttall Review the Finance Act 2014 introduced tax exemptions for employee-ownership trusts (“EOTs”). These tax exemptions are having the desired effect of raising awareness of EO in all its forms.
What do you wish other people knew about employee share ownership?
ESO should not be just about financial participation. Whatever the percentage of share capital, the employees’ individual and total shareholdings should be used to underpin employee engagement. The best outcomes are achieved through employee financial participation combined with individual and collective employee voice.
What has been the most important development in employee share ownership during your career?
The most important UK development is clearly the Government’s 2012 decision to promote EO as a mainstream business model. This achieved a major boost to awareness of the commercial benefits of EO, which continues through the introduction of EOTs. Every adviser must now mention the possibility of an employee-buy out as a business exit route.
Which change to employee share plans legislation, in the UK or elsewhere, would you most like to see?
I would like to see greater worldwide recognition of the employee trust ownership business model. This would be a powerful UK export.
Why do you think employee share ownership has enjoyed cross-party support in the UK?
Every party can claim ESO as their own idea. Conservatives will emphasize entrepreneurialism, Liberal Democrats want to ensure that power and opportunity are not hoarded by the few and the Labour Party will refer to co-operative ideals.
Who would be the guest of honour at your fantasy dinner party?
A pioneering physicist, say, Richard Feynman.
Which book has most changed your life?
I wonder if Small Is Beautiful: A study of Economics as if People Mattered – EF Schumacher (1973) had a subliminal impact on me in my teenage years.
How do you relax?
I am a serial hobbyist with contemporary art as a mainstay.