Have your successors instilled your company values?
5 min read
24 May 2019
Succession planning isn't an easy decision to make especially if you've built your business up from nothing. One of the many questions you might be asking yourself include, 'have my successors instilled my winning company values?'
Every SME owner will eventually face the thorny question of succession. Some simply build up a business with the eventual aim of selling it on for a healthy profit, others will wish to hand over their life’s work to the next generation or perhaps consider a management buy-out.
Richer Sounds owner is handing the business to his staff
Last week Jonathon Richer, the owner of Richer Sounds, took the highly unusual step of handing over control of his highly successful business to its 531 employees.
That’s a huge decision when you consider he was 19 when he founded the hi-fi and TV chain, a business that last year achieved a gross turnover nearing £200m.
He is selling 60% of his shares back to the John Lewis-style employee-owned trust for which he will receive £9.2m – much less than the market value.
A percentage of profits will be donated to charity while he is gifting £3.5m to his staff, each of whom will receive £1,000 for every year of Richer Sounds service.
The ’employee-owned business’ philosophy
The 60-year-old is following his own maverick business philosophy and freely admits he doesn’t expect many entrepreneurs to follow his lead.
In fact, many I’m sure will question the wisdom of failing to cash-in. However, Richer says he already has more than enough money and, with no children to take over the reins, he wants to secure the future of those who work for him.
In particular, he doesn’t wish to see his business or his staff, left to the tender mercies of venture capitalists. I commend both his social responsibility and his obvious deep-seated care for a company famous for its high level of customer service and for those who delivered it.
At Pimlico Plumbers, I’ve already integrated my children into the business
I know what it’s like to create a successful business empire from nothing – in my case starting out with a battered van and a bag of second-hand tools – and I also appreciate the choices facing those when it’s finally is time to bow out.
For my part, I’m very fortunate to have another two generations of the Mullins’ family, together with two sons-in-law and two daughters-in-law, working in the business.
While I’m not quite ready for a life of afternoon bingo sessions just yet, I’m secure in the knowledge that I have a strong line of succession.
Furthermore, they all work closely with me and are familiar with my vision and family values which are embedded in the firm.
So, when the time comes to hang up my monkey wrench, I’ll do so in the knowledge that Pimlico Group is in the safest of Mullins hands.
A balancing act between onboarding family and ensuring staff feel just as valued
That’s not to say I don’t appreciate the rest of the people who have made Pimlico such a success by delivering high standards of customer service day in day out.
Like Julian Richer, I know the value they bring which is why I’m so dedicated to creating a real Pimlico spirit by providing such benefits as the subsidised staff canteen, free gym, and massage sessions.
If you’re without a successor, make sure you trust your staff and keep them happy
We both realised long ago that a well-treated and therefore happy workforce is a true driver of success. For those without an obvious line of succession, the employee-owned trust prove to be an increasingly attractive way forward.
Although there are currently only 250 such employee trusts, mostly SMEs with fewer than 250 workers.
I’ve seen first-hand one successful example of this model. Union Industries, based in Leeds, came down to our London HQ a few years ago to fit two of their high-speed doors to our vehicle garage and workshops.
Union always benefitted from a committed workforce but says that after becoming employee-owned, its qualifying staff were further empowered and incentivised.
Some battle-scarred businesspeople may have their misgivings about such trusts, but Julian Richer has acted in what he feels is the best long-term interests of the company and its employees which have contributed so much to his success. He is indeed richer in spirit.