Hi-fi and TV retail chain Richer Sounds has joined a growing number of companies that are giving their employees a stake in the firms they work for.
This week, Richer Sounds founder Julian Richer announced that he would be transferring a 60 per cent stake in his company – said to be worth £3.5m – to an employee ownership trust. Each of the retailer’s 531 employees, excluding executive directors, will also as part of the announcement receive a bonus of £1,000 for each year they’ve worked – the average bonus will be worth £8,000.
Richer, whose company has built a reputation for quality customer service, has long been an advocate for treating staff well – he has rejected the use of zero-hours contracts, and is one of the few companies whose pay gap favours women. Employee perks include the use of 12 company-owned holiday homes in cities like Barcelona and Paris, with 70 per cent of staff using at least one property each year.
Richer, who set out his business philosophy in a 2001 management book, The Richer Way, told the BBC, “I’ve been running my business for 40 years and the overriding thing I’ve learned is that it’s all about the people. If you treat your people right, then they are going to be happier, give a better service, stay with you, they are not going to steal.”
According to the Employee Ownership Association (EOA) 300 businesses have adopted the employee ownership model, covering about 200,000 employee owners. Such businesses are growing at a rate of 10 per cent each year – with growth rapidly accelerating since 2014.
John-Lewis, which runs department stores and the supermarket chain Waitrose, is the largest company owned by its more than 80,000 employees – owner John Spedan Lewis handed over his company to workers nearly a century ago in 1929.
Other businesses in recent years that have embraced the employee ownership model include Riverford Organic Farmers and Aardman, an animation studio in Bristol whose credits include Wallace & Gromit, Shaun the Sheep and Morph.
Both companies have transferred a 75 per cent stake to their employees, who will be awarded a share of the profits. At Riverford Organic Farmers, for example, its 650 staff will share 10 per cent of annual profits generated by a £60m turnover.
Shadow chancellor John McDonnell, who last year met with Julian Richer to discuss concerns over rising inequality, hailed Richer’s decision to hand his company over to workers.
“Great commitment by Julian Richer to his workforce,” McDonnell tweeted. “He has used his income over the years without seeking any publicity to quietly fund causes that many others would not touch. I salute him for the role he continues to play on social justice issues.”
Unite assistant general secretary Steve Turner likewise praised Julian Richer.
“More companies should follow the example set by Julian Richer – it is no coincidence that Richer Sounds offers great customer service, as the workforce feel they have a significant stake in the company’s continuing success,” he said.
“It is an indictment of other large corporates where the top executives pocket fat salaries and eye-watering pensions, while holding down the wages and salaries of the workers who contribute so much to a company’s success,” he added.
“A future Labour government should look at Julian Richer’s social justice agenda and examine how it could be used to break down the ‘them and us’ culture that bedevils so much of UK industry and commerce.”