Going the extra mile: staff-owned firms can improve public services

Charles Leadbeater from Guardian:

"The public sector needs more organisations in which employees have a stake in delivering better outcomes for people.

This approach flies in the face of the reforms of the past decade, which shifted power away from frontline producers to consumers, managers and target setters in the central government. The last people who could be trusted with a service were those delivering it.
Yet detailed case studies of leading co-owned public services - Eaga, the energy agency based in the north-east, Sunderland Home Care Associates, community health provider Central Surrey Health, and Greenwich Leisure, which provides services to boroughs across London - tell a different story.

Organisations owned by their staff are less risk averse and more committed to innovation than pure public sector organisations. Staff in the former have a stronger shared interest, which promotes the collaboration often lacking in the silos of public services.

Co-owned organisations are more mission driven than private sector providers, which run contracted-out services with little incentive for innovation. The social mission of co-owned organisations drives their search for innovation, even if there is not much money to be made. Co-owned businesses also have advantages over the pure voluntary sector: they have an entrepreneurial outlook and can raise capital to match their ambitions.

The most important strength of co-owned organisations is their open, egalitarian culture, which encourages the lateral communication that allows people to combine their ideas easily, seek partnership with customers, and mobilises the "can-do" commitment needed to turn ideas into action. Staff in these organisations, because they are co-owners of the business and so have more freedom to respond, often speak of "going the extra mile" for consumers.

The opportunities to create more co-owned public service organisations are huge. In social care, Sunderland Home Care Associates provides a model for motivating low-paid and low-skilled public service staff that many other authorities could usefully follow as they seek more effective ways to meet the needs of an ageing population.

Indeed, co-owned organisations may make sense in some of the most troubled public services: social work with children, and families at risk and in care.
Imagine that, instead of local authority social work departments, the authority contracted out services to a set of competing, employee-owned social work practices, run rather like general practices, with perhaps eight to 10 social workers in each. Social work needs to retain and motivate skilled and committed staff. The co-owned culture of collaboration, peer-to-peer accountability and responsibility to clients is often lacking inside the public sector.
One response to the case of Baby P should be to pilot the creation of co-owned social practices that are owned by the staff but accountable to the public through local authorities that commission their services.

As politicians cast about for new recipes for less bureaucratic, more localised, personalised approaches, co-owned public service organisations should be part of that mix because they do something really potent: they motivate frontline staff to want to deliver a better service.


• Innovation Included: Why Co-Owned Businesses are Good for Public Services, by Charles Leadbeater, is published by the Employee Ownership Association (employeeownership.co.uk)