Written by Chris Budd….
One question that comes up often is the role of the trustees in an EOT owned business.
As the EOT owns the shares, the trustees affectively act like shareholders. As such, they have three main roles to play:
- Work with the board in achieving the business plan
- Represent the interests and views of the employees on ownership issues
- Ensure the flag is being kept alive within the business
It is the third of these that I wish to address in this article.
We use the term ‘the flag’ to refer to the purpose of the business. It is the flag in the ground around which everyone gathers; the flag in front of the marching band that everyone follows.
Having really clear purpose is, we believe, key to the success of an EOT own business. Employee engagement is vital for the EOT and for the business to prosper, and that means employees need to believe in the business.
This therefore requires the purpose of employees to match with that of the business.
This is only possible if the purpose of the business is articulated and communicated with great clarity.
Founders and the flag
The flag often comes, in the first instance, from the founder of the business. It is often implied – more than one owner has told us that everybody thinks the same way and believes in the same things. When we have asked the employees, however, the messaging can be subtly – and often significantly – different.
Having a clearly expressed flag is also important to enable the owner to let go of control. Worrying how the employees will treat the business after they’ve gone is a major reason why founders struggle to let go. Having a clear flag which the trustees are committed to upholding can help the founder to move away.
Expressing purpose is one thing, however. Living it is can be another thing entirely.
One comment that you see on many websites is companies boasting that they are ‘different’ from their competitors. This rarely comes with any indication of how they are different; even less frequently is there any form of proof.
One exercise we take companies through, therefore, is to ask them to explain the purpose of the business, and then asking them to provide examples. You say you are different from competitors; prove it. You say you exist to make customers lives easier; prove it. You want to ‘Help clients to lead their best lives’ or ‘Create peace of mind’*? Then can you list everything in your business that helps to achieve this. Is there anything that works against this?
Trustees and the flag
Given the importance of the flag to inspiring employees, and to enabling owners to let go, we believe it is one of the duties of the trustees to ensure that the flag really is being kept alive within the business.
As such, we suggest that the trustees regularly ask the ‘prove it’ question of the board. This might not be a roots and branch review, but
The Crucial Role
The trustees communication in two directions at once. They hear the views of the employees and represent these to the board. At the same time, they hold the board to account and report back to the employees.
Keeping the flag alive is the responsibility of everyone in the business. It is part of the role of the trustees, however, to make sure that responsibility is carried out.
*Actual straplines found on two financial websites in the USA