One For All, All For One Leads to More Profit
There is every likelihood that sole proprietors of American retail chains would regard Toby Blackwell's succession plans with skepticism. His determination to ensure that the family's name remains "above the door" has led the 81-year-old book retailer to devise plans for giving the business to his employees.
Founded in the 19th century, and passed on since then through the Blackwell family, the original bookshop in Oxford expanded its reach to London and the World Wide Web. For a time, there was also a publishing division but this was sold in 2007. According to The Guardian, Mr. Blackwell "is determined that the company founded by his great-grandfather remains independent" and wants to harness the "unrivalled specialist knowledge" of his booksellers to ensure its future.
The new business format will keep "voting shares, which have no dividends attached" in a trust. "The wealth shares will go into another, employee, trust. ... There will be an annual bonus, paid out of profits, and the chairman will get the same percentage [payout] as the part-time lady on the till in a store."
There is method to what some -- including the aforementioned American proprietors -- may consider madness. Research by the Cass business school says there is evidence that staff-owned firms perform far better than shareholder-owned firms. Joseph Lampel, a Cass professor, said they were also "more stable in a downturn and should be encouraged. In the current economic conditions, business leaders and policymakers should be looking again at the resilience associated with the employee ownership model and how it could benefit the economy as a whole."
Mr. Blackwell’s plans are based on good practice as demonstrated by department store chain John Lewis, which owns supermarket Waitrose and is reportedly the largest employee-owned business in the U.K. They have proved far more resilient than many other businesses through the recession, and have outperformed most of their high-street rivals, says the newspaper.
Discussion Questions: What are the advantages as well as disadvantages of employee-owned retailers? What do you think of employee-ownership as a succession strategy?