Sarah Anderson is a director at the RM2 Partnership and author of Employee Share Schemes for Private Companies.
In what ways does employee share ownership serve a useful purpose?
I believe that one of the most important functions of employee share ownership is to forge a strong link between business owners and their employees, thus narrowing the divide between “us and them” that can otherwise exist. If everyone in the business is working towards a shared goal, this pays dividends (literally!) – in terms of individual reward, company growth and profitability and, ultimately, the wider economy.
Individual reward, also, is not limited to financial reward. Share ownership can create a sense of pride and belonging to a company that goes beyond mere financial return.
How can we widen and deepen the adoption and use of employee share ownership?
There are plenty of ways. We must continue to tell the many great stories associated with employee ownership – ranging from the financial windfalls for ordinary employees benefiting under SAYE schemes in larger listed companies, to the sustainable successful long-term businesses that are owned entirely by the workforce. Tax advantages attached to government recognised plans are a great incentive for businesses to adopt them but they should never be the driver behind the implementation of a scheme – we need to get business owners to understand the wider advantages behind employee ownership – motivated, rewarded people creating successful, profitable businesses.
What would you tell someone on the fence about introducing employee share ownership to their company?
I tell them my story. The reason I am working in this industry, and the reason I became a lawyer, is because I was given an opportunity to own shares in my company. That had two outcomes – first, it meant I had a genuine sense of ownership and loyalty to that company, which meant I probably worked harder, and stayed longer, at the business than I might otherwise have done. Secondly, when my shares were sold, I was able to pay the college fees enabling me to qualify as a lawyer. Without employee ownership, I would not be doing the job I do today (which, by the way, I love!).
What do you think will change about employee share ownership over the next five years?
I think that introducing share plans generally will become easier and cheaper as legal services become increasingly commoditised. This can only be a good thing, particularly for private companies wishing to incentivise their employees in a cost-effective way.
I think that the new(ish) Employee Ownership Trust will increase in popularity. I would like to see vast numbers of mini-John Lewis Partnerships throughout the UK!
What has been the most important development in employee share ownership during your career?
On the plus side, the introduction of EMI, SIP and EOT – arrangements that provide a massive range of equity based arrangements for employees to suit almost every eventuality, with significant tax benefits attached.
On the negative side, the whittling away of HMRC staffing levels – particularly the Employee Share Schemes Unit, once awash with knowledgeable and supportive technical staff whose expertise was second to none, and now a shadow of its former self. And I mean no criticism of the remaining staff at ESSU – there are simply not the resources available any more.
Which change to employee share plans legislation, in the UK or elsewhere, would you most like to see?
I’m actually quite contented with the current legislation. I think the minimum values relating to some of the plans should be updated more frequently, but the range of plans available here in the UK is pretty good.
Why do you think employee share ownership has enjoyed cross-party support in the UK?
Because employee ownership cuts both ways from a political perspective – on the one hand, you have the co-operative “let’s all share together” viewpoint; on the other hand, you have the capitalist “let’s make lots of money” aspect. Employee share schemes meet in the middle – perfect.
Which aspect of the Esop Centre do you most value?
The extraordinary breadth and detail of the monthly newspad. Everything in the share plans world is there!
Which aspect of the Esop Centre would you most like to change?
I wish newspad was a bit easier to read! Scrolling up and down two columns of the PDFs sends my eyes funny!
What is your idea of perfect happiness?
Swimming, in the sea, in the sun, with no deadline to get out.
What is your most marked characteristic?
I talk too much. On the other hand, I can be decisive when I’ve finally stopped talking.
What do you consider your greatest achievement?
Working full time while studying for my legal practice course in the evenings over four years which started when my first child was nine months old. Obviously, that achievement was in large part down to my husband, rather than me.
What historical figure do you most identify with?
Boudicca. She was probably pretty decisive as well.
Which living person do you most admire?
My mum. For just being incredible in the face of everything.
Who are your heroes in real life?
Anyone who is genuinely kind, and non-judgmental. I am not one of those people. I wish I was.
Which word or phrases do you most overuse?
A variety of profanities. Also, “sorry”.
What is your most treasured possession?
The ring my husband bought me on our first ever holiday. It’s a piece of old tat, really, but it’s worth more than anything.