Why Employee Ownership Drives Inclusive, High-Performing Cultures

Are employee-owned organisations the key to inclusive, high-performing teams?

In this episode of the Inclusive Growth Show, Toby Mildon is joined by Jeremy Gadd, Partner at Telos Partners and former senior leader at the John Lewis Partnership. Together, they explore what it really means to be an employee-owned organisation and why this model is gaining traction across the UK.

Jeremy draws on over a decade of experience helping businesses transition to employee ownership, offering insights into the practical, cultural, and performance-based benefits this structure can bring.

Key takeaways:

• What defines an employee-owned organisation—and the different ownership models.
• Why businesses are turning to employee ownership for long-term sustainability.
• How ownership structure impacts inclusion, engagement, and trust.
• The role of leadership in fostering inclusive, purpose-driven cultures.
• Why co-creation and shared responsibility are vital to success.

Guest Highlight:
Jeremy Gadd is a Partner at Telos Partners LLP
and has 30+ years' experience with employee-owned organisations, including the John Lewis Partnership.

👉 Visit Jeremy’s LinkedIn

If you're enjoying this episode and looking to boost equity, inclusion, and diversity in your organisation, my team and I are here to help. Our team specialises in crafting data-driven strategies, developing inclusive leaders, designing fair recruitment processes, and enhancing disability confidence. With a blend of professional expertise and lived experience, we're ready to support you on your journey. Reach out to us through our website. 

If you want to build a more inclusive workplace that you can be proud of please visit our website to learn more.

Transcript

Welcome to the Inclusive Growth Show with Toby Mildon: 3:06

future-proofing your business by creating a diverse workplace. Hey there. Thank you ever so much for tuning into this episode of the Inclusive Growth Podcast. I'm Toby Mildon, and today I'm joined by Jeremy Gadd, and we're going to be having a really interesting conversation about employee-owned organisations. Now, you may have heard some famous employee-owned organisations in the UK like the John Lewis Partnership or Arup, which is the global engineering firm, but we're going to be talking about what does it really mean to be an employee-owned organisation? If you are not an employee-owned organization, what can we learn from these businesses in terms of creating great cultures and having high-performing teams? And what are some of the mindset shifts that leaders need to have in order to include people around purpose so that everybody can contribute? So Jeremy, it's lovely to see you. Thanks for joining me. Toby, good morning. Pleasure to be here. Really looking forward to this conversation. Jeremy, before we dive into the main questions of today's conversation, can you just give us a bit more background as to who you are, what you do, and how you got into the world of employee-owned organizations? Sure, yeah. Really happy to do that. So Toby, I'm a partner at Telos Partners PLC, and we help organizations create long-term sustainable business... Business with purpose and business that goes on adding value to all stakeholders. I merged my own business earlier this year. I was the founder and Managing Director of JGAD Associates, and we help businesses transition into and lever the advantages of being employee-owned. So supporting founders as they explore what this really means, supporting leadership teams, helping to land the transition and the change, and supporting all the employees as stakeholder owners to help bring their business to life. And I've been doing that for over 12 years. We've been working with Telos for at least the last three, and it made real sense for us to merge as there's absolute alignment with our values. So that's going really well, and I'm delighted to share a little bit more about what that means. So fundamentally, employee ownership is about... Sorry, can I also add in... Yep. I'm also... Prior to that, I worked for the John Lewis Partnership for 32 years. I started off as a YTS trainee, which was, for those who remember back in the '80s, a job creation scheme, and when I left, I was in the senior leadership team, and my role there was reporting back to the chairman on the health and wellbeing of the John Lewis Partnership as an employee-owned organization. So were leaders leading their partners, as they call their employees, as owners? And were partners playing their role not just as employees but as owners, co-owners of the business, and contributing to the success and wellbeing of the business? Great. So what does employee ownership mean in simple terms? I think there's some confusion about what it is or what it isn't. And why do some organizations choose to become an employee-owned organization? Okay, so I'll give you a brief technical background first of all. So fundamentally, there is no legal definition of employee ownership, but there are two forms of employee ownership. There's direct ownership, where people... And the vast majority of employees... Have the opportunity to buy shares in the business, and therefore they are directly owning their business. And therefore one can call them employee-owned businesses. As the business does well, as shareholders, they will share in the dividend, as does any other shareholder. Some of those schemes are closed only to employees; others are open to non-employees. But if you have a large proportion of employees who have shares in the business, then that would be a direct ownership model. The other model, which has grown in popularity since it was introduced in 2014 following the Nuttall Review into the advantages of employee ownership to drive performance for UK PLC, is what's called an employee-owned trust model. And this is where owners, at the point of sale and their succession... Sometimes eventually out of their own business... Their shares are sold to an employee-owned trust and are held in trust on behalf of the employees. They have no financial risk or stake directly, but they benefit if the business does well. They can benefit from profit share. And currently at the moment, that's £3,600 tax-free. You can pay more than that if you can afford to. So there's an incentive there for employees to participate in their business. So those are the two extremes, and then there's mixed. So you can have some direct share and some trust as well. The key differentiator and the piece that drives the move to an EOT from a tax advantage... And there is some tax advantage for owners to sell to an EOT; they don't pay as much capital gains tax when they sell to an EOT... Is it has to be 51% owned by the trust. After that, the other 49% can be owned however seems sensible. And why do some businesses choose to go down the employee ownership route, other than the tax advantages that you've just outlined? But are there any other kind of key reasons? For sure, yes. For some, the tax advantages are very appealing, but for most, it's more about the advantages that employee-owned businesses offer for succession of the employees. So for example, if you've spent a lifetime building up a business and creating a reputation, creating jobs primarily in the UK, creating skills, then selling to the employees has some distinct advantages. One is they know the business, and they can continue to make it successful. You're more likely... And the research indicates you're more likely... To retain jobs locally. You're more likely to retain the skills locally. And the business... Employee-owned businesses... Tend to outperform non-employee-owned businesses in the key indicators like research, return on investment, happiness, staff retention, productivity, profitability. So there's some very strong commercial reasons as well as societal reasons as to why employee ownership is gaining in popularity. A lot of the people that we work with never intended to build really successful big businesses. They often had hobbies or interests or created something that they wanted to make successful, and they really wanted to enjoy. So for example, one of our clients was Aardman Animations. They just loved making animated films, and that passion and the quality of what they did created a really successful business. They were really keen that that remained in Bristol, in the UK, and they were fearful that if it was sold, it could eventually go overseas, and all that talent and that ability to create really interesting storytelling would be lost from the UK. So a really powerful message of actually wanting to retain that opportunity within the UK. That's really, really interesting, you know. But that was their philosophy. I like that a lot. Yeah, and others have that as well. Being employee-owned doesn't guarantee you success, but it limits the chances of you being taken over because it needs to often have the agreement of the vast majority of employees going forward. Most people would want to retain their own careers and their aspirations within an employee-owned business rather than see their business sold off. So it's also a simpler way of selling your business because you're selling to the people who work in the business. They understand it. The levels of due diligence that are probably required are less because you're selling to people who already understand what is set up and how they work. A trade sale will require far more diligence and investigation. Great. And from your experience of working with all of the various organizations... And it's great that you've got Aardman Animations in your roster; that's so great... So, you know, from your experience of working with these companies, what feels different to you in how people are included and valued in employee-owned organizations compared to, say, a non-employee-owned business? Okay, so I want to be clear. I'll generalize. There are some very good non-employee-owned businesses, and employee ownership is a form of ownership. Fundamentally, that's all it is. However, what it allows you to do is to engage with your employees at a different level. Because we're all going to benefit in this by shared effort, actually it allows you to have more adult conversations. It allows you to share information more effectively because you're sharing information because you want them to be more engaged with their business and more productive with the output. So what you're doing is having more honest, adult conversations. You're encouraging people at the front end to spot where things aren't working and to come up with suggestions in order to improve that, to improve customer service, to improve productivity, to improve quality of production, service, et cetera. And so what you tend to drive is a different kind of engagement with the people who are employed there because everybody is in it together. It's not just turning up to do your job and going. Now arguably, you could share information and try and engage people in a non-employee-owned business. Of course you can. However, you've got this wonderful lever that there's some additional benefit by being able to do that. One is the sense of job satisfaction. I'm actually now able to influence the business that I'm working in. I'm able to put right things that aren't working. I'm able to come up with suggestions and ideas, and actually I'm able to hold people to account that they perform as well because this is our business, not just somebody else's. When we were preparing for this conversation, you said something like, "Ownership is a structure, but culture does the heavy lifting." That was something that really stuck to me. So what do leaders need to do day to day to build an inclusive culture, whether that's within an employee-owned organization or not? I think first of all, you need to listen. I think one of the great skills of leadership is that ability to really listen and to understand. I think once you can listen, I think what you're then able to do is to really hear what's going on within your organisation. That allows you to shape and evolve your communication. Employee-owned businesses don't run as a commune. You still have leadership making leadership decisions, but actually the way in which you engage people in what the direction of the business and the responsibilities and expectations of all the fellow employees to help deliver that vision and that mission is really important. Being employee-owned allows you to have different conversations and more

conversations, which is really about: 11:30

are we delivering this well? How could we do this better, faster, quicker? What's working well? What isn't? Are we living our values? Now, all those questions can be asked in employee-owned and non-employee-owned organisations. So I think the humility to recognise you're unlikely as a leader to have all the answers... In fact, very rarely will that be, maybe unless you're self-employed... But actually it allows you to have a different conversation with your employees, with your employee owners, and help them or encourage them to help shape and deliver the direction of the business. Yeah, so I've worked with a couple of employee-owned organisations myself. One is a consultancy in the built environment industry; the other is a landscape architecture studio or firm. One thing I've noticed is that I like how the language is being used. So in one of those companies, everyone is referred to as a co-owner. So when you see documents, we're not talking about staff or employees; we're talking about co-owners. And I think that gives people a sense of we're all in it together; we've all got skin in the game. So I think that use of language is really important to helping to shape the culture as well. What do you think? Absolutely, I agree. And I think one of the things... Certainly I've worked with probably over 140 organisations in the last 12 years who at some point in their journey have gone into employee ownership... And one of the things that I was told and shared at a very early age, very early into this journey, was when you've met an employee-owned business, you've met one employee-owned business. They're all different; they're all unique; they all have their own culture. But names and labels are important. And for some organisations, "co-owner" is exactly the right word. As I said, in John Lewis, they call themselves partners. So being able to choose the right label that reflects how you look at your colleague employees... And often post a transition, it's quite useful to start using different language because you're defining that something is different. However, that has to be backed up by different expectations. That has to be backed up by clarity around the relationship between what you can get from the business... Let's call it the rewards; some people call it benefits... But also what are your responsibilities? Nature requires that everything is in balance. So that if you're going to... If there's an expectation that we're going to get a greater share, so that might be the ability to influence the business, may even be to influence... If it's a not-for-profit business, which can still be employee-owned... How we improve patient care, how we invest our surplus rather than it disappearing off to some big pocket somewhere else. How can we at a local level influence our patient care to a better level and bring our experience? All that is really enabled through employee ownership. What else could non-employee-owned organisations learn from employee-owned practices in terms of engaging people and sharing responsibility beyond the listening that you talked about just now? One of the characteristics of a successful employee-owned business is they tend to think much more long-term. They have a longer-term strategy, and therefore being able to share that with everybody so people can see what role and what responsibility they have within that makes that a more interesting place to work and also just broadens people's understanding of what an organisation is trying to do simply beyond "this is your responsibility; this is my nine to five," or whatever hours engaged with. So I think there's something... Now what we see... It's creating a different mindset. It's creating the mindset of ownership, and therefore you tend to share information more readily. You need to be mindful of the level of understanding and the detail of information appropriately, but fundamentally, however complex an issue is, most of us in our personal lives deal with some really complex and challenging situations, whether that be bereavement, moving house, divorce, things like that... So some quite complicated issues that we'll deal with... And we tend to work our way through. And I think the organisations that recognise they're working with adults and therefore, provided they share the information in a meaningful way, can be really, really helpful. And I think this is particularly interesting and where you notice it is when things are really tough. If you have mechanisms and ways in which you have created really effective engagement, and therefore the trust that comes from that, when things are tough, you can have much better adult conversations and explain to people why either tough decisions have to be made... Potentially redundancy or restructure because your market is now no longer there and you have to pivot the way the organisation faces. The greater the trust, the greater the engagement, the greater the commitment that you have between both leadership and employee owners or co-owners, then the easier it is to make those transitions and to make those pivots as and when they need it. Not only that, the likelihood is they will be coming to you earlier and saying, "We've got some problems; we've got some issues; we should be doing things." And what is the mindset that's needed from leaders to align people on purpose so that everyone's able to contribute? A couple of things. I think fundamentally, as a leader, it's that recognition that the people who work in the business are actually the owners of the business. And I think one of the biggest challenges often that when organizations move into employee ownership is to recognize that the people who are working there are now the owners. And that can be quite challenging for both the employees and the leadership. But I think if you're able to... And where I've seen it done really well... When you start to recognize that, and when you have difficult decisions, sometimes people feel, "Oh, I don't know if we should tell them; it might worry them." And my response to that, and where I've seen it done well, is to say, "Well, if they were the owner, if it was the owner who's asking you a difficult question or you needed to raise a concern, you wouldn't think twice." So actually, but of course, that doesn't happen overnight. You need to take time to get there, and you need to build up how you're going to do that. But I think there's something about developing the skills as leading people who are owners of the business is slightly different to non-owners. However, the approach can be very similar. This is what we're trying to achieve. These are the challenges that we're facing, and this is what... Help us do that. And this is what we require of you. What else should we be considering? What else haven't we thought about? Because you're at the front line; you're dealing with the customers; you're developing the vaccines; you're helping the patients; you're teaching the students, or whatever. So I know in the work that you do that you talk about assumptive thinking. Can you just explain that a bit more for us? Yeah, happy to. So when I first started the previous company, JGAD Associates, I also undertook a master's in coaching and behavioural change. I have a lot of background in coaching, but I recognised that actually employee ownership was probably going to be a lot about behavioural change. And during that process to produce my dissertation, which was on the impact on leaders when organizations become employee-owned, there was a common theme that was coming through that was interesting, that was coming through my practice as well. And that was everybody assumed that being employee-owned was a good thing, and it was assumed it was a good thing, but there's no conversation about how you bring that to life. How do you make it work? And often when we assume things, you and I could have a conversation and we could assume something, but your vision of what you'd assumed might be very different from mine. And then if the relationship or the outcome is not working, we don't know why. And actually, where I've seen and where we help support clients to really leverage the advantage of employee ownership... Which fundamentally is great engagement... It's around being really clear about what it actually means to us. So often when we work with clients, we use a very simple analogy about RAW. It's the relationship between responsibility and reward, and that gives you opportunity. And if you're really clear about what the responsibilities are, what's expected of you as employee owners, and what the rewards are... Whether that's rights to information, the right to influence the business, financial incentives that we've touched on, and just being part of an independent business that allows you to do the sort of work that you find really interesting and stimulating... That in itself can be a massive reward rather than a big, soulless corporation. Those are the sort of rewards. So the assumptive thinking is where people simply say, "Oh yeah, we'll become employee-owned; it'll be a good thing." And sometimes our work comes from organizations that might have transitioned two or three years previously, and they'll say things like, "It's not really working. The board don't really get it. The employees are saying, 'Actually, it's not as good as it used to be before. It's not as good as we thought working at John Lewis might be.'" And actually what sits behind that was there were a lot of assumptions about what employee ownership is. Toby, as we mentioned, as we discussed earlier, there is no legal definition about what employee ownership needs to be. You have to co-create that. And that actual behavior is really helpful because you're sitting down with people and you're saying,"This is our business. We're going to make it great, even better. Come with us on that journey." One of the challenges that we often see, and I think it's understandable, entrepreneurs who create great businesses and really understand their business and everything that goes in it inside out... When they transition their business, they're not comfortable sometimes in being asked questions they don't know the answer to. And they're going into a new territory. We encourage that. We think part of the benefit of building a really good employee-owned business is to be confident about the vulnerability of moving the business into this new model and actually saying to people, "We are going to become employee-owned. We want you to help us shape this. We're not entirely sure what that looks like, but actually we're going to try different mechanisms about how you can help influence, how you can help us make the business better. We're still going to be making widgets. That's not an option. We're still going to have the same leadership. Leadership are there to lead the business. How you're going to help us shape... We want to try, and we want you to help us make this business better." You start living the values of employee ownership, sharing that vulnerability, and encouraging people to participate as adults. Fail quickly and grow from that is a really important mantra within establishing a really effective employee-owned business. From an inclusivity perspective, that's music to my ears because that co-creation is about involving people. And in the disability rights movement, we talk about "nothing about us without us." It's a phrase that was really popularized in the '90s as we were campaigning for the introduction of disability discrimination legislation. But the phrase is really powerful because what it says is that you have to involve people who are ultimately affected by the processes or the policy changes that you are intending on making. So I love that co-creation philosophy that comes with co-ownership. I think that's brilliant. And if it wasn't unfair to copy that phrase... Had you guys not have got that, I think that would have been perfect for the employee ownership movement. I'm slightly sorry that you got there first, but I'm delighted that you did and you've had the success that you have. But actually, really encompasses, I think, what employee ownership is about. It's not about the level. It's not about the power that you are or the job or the role or whatever challenge you have within the organization. It's about saying that everybody's voice matters, and you have an opportunity to help drive and shape your business for the greater good of everybody, including yourself. Now, some people may choose to play a greater or lesser part. That's fine. But actually, that realization that everybody's opinion matters because we're working this together... I think it chimes really well with the employee ownership movement. Well, feel free to use "Nothing About Us Without Us" because I don't think it's trademarked. And I think the disability rights movement might have copied it from somewhere else. So if you want to use it in your employee-owned organizations, then go ahead. Brilliant. Now, watch this space, Toby. So the penultimate question that

I like to ask everybody is: 24:51

what does inclusive growth mean for you? I think we've probably started that conversation. It's a nice segue, isn't it? I think it is about really, realistically... So not in a trite way... Realistically valuing everybody's contribution, recognizing that actually the way in which you include people is being very clear about what your purpose is, what your vision, what your strategy is, and how people participate in delivering that and being open to them challenging either to understand or to improve your ideas and thoughts and embracing them to move the organization forward. I think one of the things that I have learned about this over the last 12 years is there's nothing wrong with people coming up and challenging what you're thinking. There's nothing wrong in saying, "I think there's a different way in doing it." There is always more than one way of skinning the proverbial cat. It's having the clarity to say,"We thank you for your ideas. We recognize those. We're going to act on those because it'll make it better," or "Thank you for that. That is an alternative, but we're sticking with it for this reason." So you encourage adult conversations, but you encourage people to be curious, to get involved, to ask questions, and to increase their contribution to the business. And that way, fundamentally, you'll improve their psychological ownership and their discretionary effort. Great. Now, before you go, Jeremy, if the person listening to us right now wants to learn more about becoming an employee-owned organization, maybe they just want to pick your brains about what it involves, how can they get that information? Well, I mean, probably one of the easiest ways is to go onto our website at telospartnersllp, or I'm available on LinkedIn. I'm really happy to link in with people. I'm really happy to have a conversation. As I say, there are many ways in which you can become employee-owned, and at Telos, we don't just work with employee-owned organizations. We work with businesses that are trying to create meaningful, long-term, sustainable business... Business with purpose... Where all stakeholders can benefit. Brilliant. Well, Jeremy, thanks ever so much for joining us today. It's been lovely to catch up with you, and I've really enjoyed our conversation about all of the benefits of being an employee-owned organization. Toby, listen, thanks again for the invitation. I've really enjoyed it. Perhaps we'd love to come back at some future date. Yeah, definitely, definitely. Thank you. And thank you for tuning into this episode with Jeremy and myself. Hopefully you've learned some new things. It's also... It's really great to just get some clarity on what an employee-owned organization is or isn't. It's also good to understand the benefits that come with being an employee-owned organization, or at least following some of the principles of being an employee-owned organization, even if you aren't or don't have any intention of becoming an employee-owned organization. And some of the... I suppose like the mindset shifts that leaders can have to really improve the culture and performance of your organization. So hopefully you've taken away something

interesting. I just want to leave you with a short coaching question: 28:05

What really stood out for you from today's conversation? And what five-minute chat could you have with a senior member of your leadership team in terms of applying some of what we talked about today to your own business to help create a more inclusive, high-performing culture in your organization? If you do need support on your equity, diversity, and inclusion journey, then we're only an email away. Go to our website or follow me on LinkedIn if you need any further help and support. Until next time, I look forward to seeing you on the next episode, which will be coming out very soon. Take care. Bye-bye. Thank you for listening to The Inclusive Growth Show. For further information and resources from Toby and his team, head on over to our website at mildon.co.uk.