Shared Responsibility, Shared Reward

Shared Responsibility, Shared Reward

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Can a business profit by putting the happiness of its employees at the heart of everything it does? The John Lewis business model, developed in the UK in the early 1900s, proves that this is indeed possible.

It gives each employee part-ownership of a company, a share of its annual profits, and a say in how it’s run. In theory, it makes employees more invested in their work, and so heightens productivity and profits.

It’s a model that Amanda Wilde applied when she acquired a healthcare business in 2008 which distributed Convatec products in South Africa. It had a R26 million turnover and zero profitability.

“It’s an excellent model to apply here, given that BEE legislation is not succeeding in changing business ownership as effectively as government would like it to,” says Wilde.

Employee happiness

According to the model, 100% of capital value and ownership of the business goes into a trust for the benefit of its employees, and there are no external shareholders. At the centre is the happiness of employees, achieved through worthwhile and satisfying employment in a successful business.

Wilde has run Umsinsi according to the John Lewis model from day one. In the first year, it achieved a 15% profit margin which, she explains, was still low because the business was upping its staff numbers. In 2012, turnover hit R54 million.

Wilde remains the sole shareholder at present, but refers to herself as a guardian, rather than an owner, her goal being to complete a full trust transfer within the next two years.

“We’re focused on getting people’s heads in the right place and ready to take responsibility,” she says.“To employ the right staff, we spend a lot of time watching people in the industry. In four years, we’re profitable and we are predominantly young, black and female.

 

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“We’re now aiming to grow from 28 to around 40, which will give Umsinsi a solid number of likeminded employees who are willing to do their part to ensure success.”

Related: Shiny, Happy People

The nuts and bolts

Critical mass is important in this model as it ensures that one or two bad apples can’t spoil it for everyone else.

“The point is that it’s possible for everyone to profit from a great business. This is not communism or socialism because the business has to be profitable for the model to work.”

As the MD of the business, Wilde points out that she holds the reins, along with her management team. “We don’t hand over decision-making to the employees.

“Rather, it’s about cultivating a sense of personal satisfaction on their part because they are members of a co-owned enterprise in which they have worthwhile, secure and fulfilling employment.

“To do that, our strategy is to make enough profit to sustain our commercial vitality and distinctive character, allow for continued growth and distribute a share of profits each year, consistent with the ‘partners’ expectations (which have to be reasonable).

“We have their commitment because they have a vested interest.”

Vital stats

 Related: Great People Are the Foundation of Great Businesses

 How do you usually try and increase staff productivity?

Monique Verduyn
Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.