LET THE STAFF OWN YOUR FIRM

There are many ways to give your staff incentives, but John Bennett, boss of online jewellers Gemporia.com and Gems TV, reckons the best is to let them own the business. Here he shares his tips on setting up an Enterprise Ownership Trust.

Consult your staff We’ve always preferred the term ‘team member’ to ‘employee’, but changing the ownership structure to majority employee ownership was still a big deal. We spent time consulting with the team which included face to face groups with our senior directors. It’s been a highly rewarding process and it’s provided a renewed impetus for the whole business.

Choose the right type of employee ownership Finding the right adviser gave us a head start. We worked with a consultancy called RM2 and chose an Employee Ownership Trust, an indirect form of ownership managed through a trust. This gives every qualifying employee the same benefits. Since 2014 an EOT also enables a tax-free employee bonus to be paid up to £3,600 annually. The EOT route also avoids employees having to buy shares from their own funds (or a loan) and takes away the administrative burden of having to transfer shares when someone leaves or joins.

Make it complement your staff performance structure This was critical for us because we already had a very effective existing performance management structure – an Employee Benefit Trust. We wanted to preserve that along with individual and team targets, performance related bonuses and so on. So we maintained the EBT as a minority interest trust and the EOT took over majority ownership.

We had the advantage of having had our toe in the water of employee ownership before we became majority employee owned. But I would recommend EDT to anyone who wants to cement and reward employees in their business.