When Workers Take Over

An unusual British retailer is handing over ownership of the company to its workers. It’s a reminder that worker control can work — but don’t expect many other firms to follow suit.

Richer Sounds, Church Street, Preston, 2014. Rept0n1x / Wikimedia

What do you do when the business you’ve spent years building is thriving, but you realize your age means it’s time to hand ownership to someone else? Usually, put it up for sale to the highest bidder — but Julian Richer, the owner of London-based home electronics company Richer Sounds, had a different idea. He’s handing control of the company to the workers. All employees will be given shares in the company, they will join a council to discuss how it is run, and will also receive a £1,000 windfall for every year they have worked at the company. Around forty employees have worked for the company for twenty years and expect huge sums, though the average payout will be £8,000. The service length payout is funded, again, by Richer: he sold the company to a trust for £9.2 million to facilitate employee ownership, but Richer gave back £3.5 million to the workers to fund the windfall.

Richer has always acted differently in business: he is outspoken about tax avoidance, funds Taxwatch, a nonprofit organization that investigates the finances of multinational companies, and is currently considering funding a test case against zero-hours contracts. Richer Sounds refuses to use zero-hour contracts and has a 14 percent gender pay gap — in favor of women. The company follows the principles of a book Richer wrote in 2001, arguing that the key to business success is secure, well-paid jobs and a happy workforce. Perks for employees include holiday homes in cities across Europe including Paris, Venice, and Barcelona. Richer Sounds also donates 15 percent of its profits, which last year stood at £9.6 million, to charity.

Richer Sounds is one of the biggest companies to embrace employee ownership in the United Kingdom, but a few others are doing so as well, including food delivery service Riverford Organics and Scottish beer company West Brewery. Doing so can make sense in business terms: workers feel more involved and invested in the company, the move is an ethical one and is always praised by the public, and it prevents predatory outside investors taking over the business. Around 350 companies in the UK are owned by their workers according to the Employee Ownership Association (EOA), and the number is growing by 10 percent per year. Surveys of employee-owned businesses record higher productivity, greater resilience to economic turbulence, and greater innovation. Workers were less stressed, more engaged and committed, and said they felt more fulfilled. Deb Oxley, the chief executive of the EOA, said of the Richer Sounds move, “We’re delighted to see it secure its future independence with a focus on its people and an eye on the future world, a world with a more inclusive economy where more businesses are doing well while doing good.”

The UK has a huge productivity problem; that goes hand in hand with the boom in zero-hour contracts and the proliferation of low-paid, unfulfilling work. Huge companies pay their staff the bare minimum to increase profits, even though well-paid employees show greater productivity and are more committed to their workplace when they feel they have a stake in it. Speaking from personal experience, I hate buying headphones, but when you enter a Richer Sounds store the remarkably knowledgeable staff seem genuinely happy to help and never pushy. While most big companies try to hire as cheaply as possible and make it easy to fire them, Richer — unusually — treats its staff with respect. And at least in this case, proper pay doesn’t seem to be harming economic success. Richer Sounds is booming at a time when many other brick-and-mortar shops are failing to compete with online stores.

The capitalist class as a whole is unlikely to follow Richer’s example by euthanizing itself and handing control to workers. But at a small scale, it’s a model that offers a partial glimpse of how a different system could work.