Handy Brand, a company renowned for its high-quality printed labels, stickers, and swing tags, embarked on a significant transformation under the leadership of Martyn Kilford. Transitioning to an Employee Ownership Trust (EOT) model, Handy Brand sought not just to reward its dedicated team of eight but to foster a culture of innovation, engagement, and shared responsibility.
This bold move aimed to ensure the company’s longevity and spur a deeper connection between employees and the company’s success. In this interview with Martyn Kilford, we delve into the motivations behind this pivotal shift, the journey’s highs and lows, and its profound impact on Handy Brand’s culture, performance, and outlook.
Can you provide us with a brief overview of Handy Brand’s journey and what led to the decision to transition to an employee ownership structure?
My journey began in 2007 when Handy Brand was born along with our two other trading companies, Handy Labels and Handy Tags. Handy Brand UK became a Limited company in 2013, and over the years, we’ve built a strong foundation with a very talented team within the niche sectors of high-quality printed labels, stickers, and swing tags.
The idea of transitioning to an Employee Ownership Trust (EOT) came about because I truly believed in the potential of our small team of employees. I wanted a structure that encouraged a sense of ownership and responsibility for the company’s success. As the sole business owner, the level of responsibility and time needed to invest within the business grew yearly. The opportunity to gift 51% of the business share to our small team of 8 hard-working, loyal employees seemed the natural thing to do.
Some of my key reasons behind the decision were:
- Employee Engagement: By becoming employee-owners, everyone has a stake in the business. This incentivises participation, innovation, and a drive for long-term success.
- Stability and Growth: EOTs promote a long-term vision for the company. We’re not bound to short-term pressures or potential outside ownership changes, which allows us to focus on sustainable growth and reinvest profits back into the business.
- Decision-Making: While leadership is still in place to manage day-to-day operations, employee ownership offers a more collaborative environment. Our employees have quickly transitioned their mindset from employees to business owners who now make informed decisions, allowing them to grow in confidence.
Can you walk us through the process of transitioning to employee ownership? What were some of the challenges you faced, and how did you overcome them?
The transition was an exciting, quick, and fairly straightforward process, with very few challenges compared to a third-party business sale. From concept to completion, the whole process took around four months.
Planning and Education: It all began with thorough planning. We brought in legal and financial advisors specialising in EOTs to assess our company’s suitability and design the specific structure. We held employee meetings to explain the EOT concept, its benefits, and how it would impact them. Addressing their questions and concerns openly was crucial for building trust and buy-in to the EOT.
Valuation and Funding: Determining a fair valuation for the company is a critical step. We worked with professionals to get an accurate assessment considering future growth potential. Funding the EOT purchase can be more challenging if you cannot use profits accrued within the company. Fortunately, many years of saving and running a ‘tight ship’ alleviated this scenario.
Legal and Structural Setup: Establishing the legal framework for the EOT involves various steps, such as establishing a Trust Deed and appointing Trustees. The Trustees, who are responsible for managing the EOT on behalf of employees, need to be independent and understand their duty.
Challenges and Overcoming Them:
- Employee Understanding: Not everyone initially grasped the financial aspects of EOTs, which led to scepticism and a lack of enthusiasm in a few staff members. We addressed this through clear and ongoing communication, using simplified explanations and visualisations to ensure everyone felt comfortable with the transition.
- Leadership Adjustment: Shifting from a traditional ownership structure to an EOT requires both owner and employee to adapt. I must liaise with the Trustees before making important decisions that were previously solely my responsibility, and the employees need to think like business owners; both mindsets needed to adjust and continue to do so.
How has the shift to employee ownership affected Handy Brand’s company culture?
The transition to employee ownership at Handy Brand has been a breath of fresh air for our company culture. It offers a more engaged and collaborative environment where everyone feels a deeper sense of connection to the company’s success. This shift is noticeable; it’s moved us away from a traditional “working for” mentality to a more empowering “working with” approach.
The employees are no longer passive observers. They actively seek out opportunities to improve processes, identify areas for growth, and implement innovative solutions. This proactive approach stems from a deeper understanding of how their contributions directly impact the company’s performance, which ultimately translates to their own financial well-being through profit sharing.
This newfound sense of ownership also translates to a culture of open communication. Employees feel empowered to voice their ideas, suggestions, and concerns in a safe and open environment where valuable perspectives from all levels are considered, leading to better and more informed decision-making. For instance, a recent suggestion from our customer service team regarding a loyalty program enhancement was implemented, leading to a significant increase in customer retention.
It’s a culture where initiative is encouraged, ideas are valued, and everyone feels a sense of ownership in the company’s success. This collaborative spirit benefits the company’s bottom line and allows for a more fulfilling and engaging work environment for our employees.
Have any notable success stories or positive outcomes emerged among your employees since the shift?
Yes, it has brought a wave of positive changes for our team, extending far beyond the financial aspects. While profit sharing has undoubtedly been a significant win, personal stories truly showcase the impact.
This newfound ownership has empowered many team members to achieve life goals they might have previously considered out of reach. The financial security that comes with profit sharing, particularly during challenging times like the pandemic and cost-of-living crisis, has been instrumental. Several colleagues have realised their dream of buying their first home, a significant milestone that wouldn’t have been possible without the additional financial support. Similarly, others have used their share of the profits to invest in themselves, pursuing education and acquiring new skills that directly benefit their work. This commitment to personal growth not only enhances their job satisfaction but also translates into a more skilled and knowledgeable workforce, ultimately leading to increased customer satisfaction.
The additional perk of a tax-free bonus of £3,600 per year adds another layer of security. It’s a welcome financial boost that can be used for various purposes, from covering unexpected expenses to pursuing personal passions. This feeling of financial stability gives a sense of peace of mind, allowing employees to focus their energy on delivering exceptional service and innovative solutions for our clients.
In essence, employee ownership has become more than just a financial benefit. It’s a model that encourages personal growth, empowers employees to achieve their goals, and fuels a dedication to excellence that ultimately benefits our team and customers.
How has transitioning to an employee ownership model impacted Handy Brand’s performance in the market?
Transitioning to an employee ownership model at Handy Brand has positively impacted our market performance. We have grown a culture that prioritises long-term client relationships, service excellence, and shared values.
This shift has led to a more stable workforce. Reduced employee turnover allows us to build a team with deep product knowledge and a consistent understanding of client needs. This translates into a more reliable and consistent service experience for our clients, who appreciate the ability to develop long-term relationships with familiar names and faces.
Furthermore, the focus on employee ownership gives a sense of purpose that extends beyond just profit. Our team members are passionate about growth and innovation, driven by a desire to see the company succeed. This dedication translates into a higher standard of service and a commitment to finding new and improved ways to serve our clients.
Another key benefit is the emphasis on shared values. Employee ownership often leads to a clearer definition of the company’s core principles, which tend to align with those of socially responsible clients. This creates a natural synergy between clients and employees, prioritising quality, fair practices, and responsible business conduct. Clients who value these principles are increasingly drawn to Handy Brand, recognising us as a company committed to more than just the bottom line.
In essence, employee ownership at Handy Brand has created a virtuous cycle. A stable and passionate workforce delivering exceptional service, attracting clients who share our values. This, in turn, fuels our continued growth and success, creating a market advantage in today’s competitive landscape.
What are your long-term goals for Handy Brand under this new ownership structure?
Our long-term vision is multifaceted. First and foremost, we’re committed to solidifying our reputation within our existing niche markets. We have a loyal customer base that’s been with us for over 15 years, and we deeply value that trust. Our focus will remain on consistently exceeding their expectations through unparalleled quality and exceptional customer service. This dedication to excellence will be a constant driving force as we progress.
However, our ambitions extend beyond simply maintaining our current position. Employee ownership offers a spirit of innovation, and we’re eager to leverage this collective energy to explore strategic diversification. One exciting possibility is expanding into new, complementary niches like printed paper bags. Potential ventures will be carefully evaluated to ensure they align with our core values and the expertise of our team.
Sustainability is also a top priority. We’re committed to implementing eco-friendly processes and materials wherever possible. This commitment reflects our environmental responsibility and a growing market trend. By embracing sustainable practices, we ensure that Handy Brand remains at the forefront of our industry for generations to come.
Ultimately, the transition to employee ownership empowers our team to be not just employees but active participants in shaping Handy Brand’s future. We’re energised by the opportunity to build upon our strong foundation, innovate strategically, and ensure Handy Brand remains a leader in quality, service, and environmental responsibility for the long term.
Based on your experience, what advice would you give to other business owners considering a similar transition to employee ownership?
In my experience, transitioning to an employee ownership model (EOT) has been a resounding success for Handy Brand. However, the decision to pursue this path isn’t a one-size-fits-all proposition. I advise other business owners to consider their unique circumstances and long-term goals carefully.
There’s no denying the potential benefits. EOTs can offer a cleaner, quicker and more emotionally satisfying exit strategy compared to traditional sales to third-party entities. You gain the peace of mind knowing the business you built remains in the hands of its dedicated employees. And let’s not forget the tax advantages, such as the exemption from Capital Gains Tax upon selling your controlling stake to the EOT.
However, the true magic of EOTs lies in their impact on the company itself. Our experience has shown an increase in employee retention and engagement. Team members become more invested in the company’s success, leading to higher sales growth and a more dynamic and innovative work environment.
Of course, there are challenges to consider. The transition process itself requires careful planning and professional guidance. However, for businesses seeking to create a sustainable and people-driven culture, the advantages of employee ownership far outweigh the initial hurdles.
So, to those contemplating a similar path, I say this: conduct thorough due diligence, understand your personal and company’s unique needs, and, most importantly, believe in your team’s potential. If you share our vision of future-focused employee empowerment, shared success, and a commitment to long-term growth, then employee ownership might be the key to unlocking your company’s full potential. Just remember, the decision ultimately rests on your specific circumstances and goals.
As we conclude our conversation, what final reflections or key takeaways would you like to leave our readers about the journey towards and the benefits of employee ownership at Handy Brand?
Our journey to employee ownership has been a resounding success. We’ve witnessed a dramatic shift in our company culture, with a newfound sense of engagement, community, and a focus on the business’s long-term success. This transformation is a direct result of the ownership and shared purpose instilled in our employee-owners. It’s a powerful testament to the potential of a people-centric business model. While this is a young, ongoing journey, we, the employee-owners of Handy Brand, are incredibly enthusiastic about the future.
Reflecting on the insightful conversation with Martyn Kilford, it’s clear that Handy Brand’s transition to employee ownership is more than a business strategy; it’s a testament to the power of trust, shared vision, and collective effort.
The positive changes in company culture, increased employee engagement, and impressive market performance underscore the potential of the EOT model to redefine business success. Martyn’s journey with Handy Brand illuminates a path for other companies considering this transformative approach, emphasising that the key to sustainable growth and innovation lies in empowering those who are most invested in the company’s success: its employees.
As Handy Brand continues to navigate its future with its employees at the helm, it stands as a beacon of inspiration for businesses worldwide, proving that shared ownership can indeed create shared success.
Learn more and visit https://www.handybrand.co.uk
