The Department for Business and Trade has engaged management consultancy BCG to examine options for turning the Post Office into an employee-owned company.
According to research by accountancy firm Lubbock Fine, published on 7 October, the number of companies transferring ownership to employees through employee-ownership trusts (EOTs) has increased by 27% in the last year. Meanwhile the number of new EOTs has increased by 2,750% in the last five years.
The mutualisation model being proposed for the Post Office would create an EOT, similar to that implemented by John Lewis, Sky News reported.
EOTs could benefit large employers looking to share ownership with employees, according to Ifty Nasir, founder and CEO of sharetech platform Vestd.
“Employee-ownership trusts are the most common and are an increasingly popular, indirect employee-ownership model,” he told HR magazine.
“Under an EOT, companies transfer shares to a trust, which holds them on behalf of employees.
“Employees benefit from a say in how the business is run and a share of company profits which are passed to the trust. The benefits for employees are typically small but consistent. For example, employee benefits from an EOT could consist of an annual bonus proportional to profits.”
Read more: Post Office executive threatened to resign over “intolerable” pay, HR claims
According to Sky News, calls for a review of the company’s ownership model have increased amid the fallout from the Horizon IT scandal.
EOTs allow employees to have more influence over how a business is run, Sharon Bowles, non-executive director at employee-ownership platform Valloop, told HR magazine.
“The icing on the cake is that by giving employees a voice, both company and the wider community find a more prosperous future, with more doors opened to personal development.”
HR teams should collaborate with leadership to ensure their culture is ready for an EOT model, Bowles advised.
She added: “HR professionals can assess whether employee ownership is right for their company by looking at the organisation’s readiness to transition, the values in place, and whether the senior leadership team is willing to empower the employees and own the journey.
“If the company has a clear understanding of the benefits, such as increased motivation and retention, as well as the challenges, culture shift, for example, this will help with the readiness to move to employee ownership.
“Instilling values such as empowerment and innovation into the communication strategy can help ensure everyone is on the same page and with a strong leadership behind the move, the organisation should be in a very strong position.”
The EOT model, however, could benefit business owners more than employees, suggested Nasir.
“They are particularly popular with mature businesses which are progressing towards ‘legacy’ status, where the owners and shareholders are happy to wind back their involvement in the business, without allowing it to be sold or taken over,” Nasir commented.
“For owners of large businesses looking to relinquish control without major changes to its running or reputation, indirect ownership through an EOT could be the most appropriate model.”
Read more: The Post Office scandal proves we need to listen to grievances now more than ever
The news followed Nick Read, Post Office CEO, announcing in September 2023 that he would be stepping down after allegations of bullying were raised against him. The accusations were brought by ex-chairman, Henry Staunton, who was sacked by the former business secretary Kemi Badenoch, for serious governance failings in January 2024.
CWU national officer, Andy Furey, told HR magazine an EOT model would only work at the Post Office if its governance system was redesigned.
He said: “The CWU would naturally support the concept of a workers’ cooperative, but before this happens, there needs to be a total overhaul of its governance system, with more say in the strategic decisions by those committed to providing a great frontline public service.
“The continued top-down attitude of the Post Office board in knowing what’s best has delivered the crisis it is currently facing, and there must be full accountability for the mess so many directors have left the Post Office in.”
