Organisational ownership, ethics and performance - Business Works
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Organisational ownership, ethics and performance

by Ann Francke, CEO, Chartered Management Institute Managers in employee-owned companies are more likely to apply personal ethics to their professional lives than their counterparts working for companies with other forms of ownership, according to Ann Francke, Chief Executive of the Chartered Management Institute (CMI). The findings are from our latest research and reveal that managers in employee-owned companies are less likely to make business decisions based on 'blind' obedience to corporate rules and are more likely to take into account the interests of their colleagues, customers and communities.

The findings of the survey have been compiled for a new report, The MoralDNA of Employee-Owned Companies, produced by the Chartered Management Institute (CMI) and business psychometric specialists MoralDNA, with support from Fieldfisher and the eaga Trust. It compares the experiences of 1019 managers and non-managers working for employee-owned companies to similar workers in a cross-section of companies with other forms of ownership.

The research reveals that a 'culture of equals' results in more consistent decision making by all workers in employee-owned companies. Managers and non-managers are more likely to share the same ethical considerations in their decision making at work compared to employees in companies with other forms of ownership.

MoralDNA looks at people's decision making preferences, both in their personal and their professional lives. At a personal level, the MoralDNA scores of people working in employee-owned companies are consistent with the moral norms of our global database of 130,000 people. Overall, the deterministic culture in many workplaces tends to increase robotic compliance with rules and suppress care and empathy for others. However, these negative effects are significantly less pronounced within employee-owned companies than in other forms of ownership.

The findings show that there are significant differences between the two samples in five values: People working in employee-owned businesses demonstrated significantly higher scores in the values of fairness, trust, excellence, humility and courage.

high-performing 'democratic, visionary, affiliative and coaching' leadership

Workers are also more likely to rate the leadership of employee-owned companies more favourably. Nine in 10 (90%) experience high-performing, 'democratic, visionary, affiliative and coaching' leadership styles, compared to just six in 10 (57%) workers in non-employee-owned businesses.

This compares to only 58% of managers working in a comparable cross-sector group. Similarly, only 10% of employee-owned company managers experience poor-performing, command and control or pacesetting leadership styles, compared to 42% of those in the cross-sector comparison group.

I urge company owners looking at new ways to improve business performance to read the report and its great case studies on flourishing employee-owned companies.

The evidence here is that employee ownership improves employees' commitment, positively shapes their thinking about ethical decisions and influences management action for the better. We should have more employee-owned companies and we should learn from their success.

In other findings, 95% of workers in employee-owned companies report the ownership model having a positive effect on the workforce's commitment to their company: 91% say it has a positive impact on their organisation's performance and 87% say that it enhances their company's ability to attract new talent.

the modern joint-stock corporation is a feudal and autocratic anachronism

"This research into the MoralDNA of employee-owned businesses clearly shows the benefits of applying the fundamental human rights of democracy and justice to the workplace," says Professor Roger Steare, Corporate Philosopher in Residence at Cass Business School and report lead author. "The modern joint-stock corporation is a feudal and autocratic anachronism in which fear is the dominant emotional driver of behaviour. It is no wonder that systemic corporate deceit, dishonesty and the destruction of all that we value are revealed to us on a daily basis in the news."

"In contrast, employee owned companies embody the humanity, integrity and sustainability vital to our prosperity. The shareholder value they create is truly one of 'sharing' and I am delighted that in this research, we have been able to support the ideal that the best form of capitalism is one where workplace culture is rooted in those same moral principles that underpin democratic and fair societies."

"This important report sends a strong signal to other businesses: employee ownership helps develop and sustain strong employee engagement, encourages long-term decision making and promotes a commitment to customer satisfaction," says Graeme Nuttall OBE, Fieldfisher partner. "What's more, employee-owned businesses are in a strong position to attract, and retain, committed staff. In short, adopting the employee ownership model is a step towards long term success for your business, regardless of industry."

The evidence here is that employee ownership improves employees' commitment, positively shapes their thinking about ethical decisions and influences management action for the better.



For more information and to download a copy of the report, please visit: www.managers.org.uk/moraldna



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