Besides the tax incentives, selling to an EOT rewards staff and secures a company’s legacy. But to fully unlock its benefits, employees need support understanding their new relationship with company and to feel confident to engage in driving future performance.
1. Provide financial education and guidance.
For many employees, having a long-term financial interest in the company can be daunting. The expectations to understand a business’s financial performance and participate in discussions around growth, investment, and sustainability can be overwhelming.
Make this transition easier by offering regular financial updates with context and hosting jargon-free education sessions tailored to different levels of financial literacy. This will enable employees to make more informed decisions that benefit the EOT’s long-term financial performance.
For Chris and Stephen Ball at Cost Advice Energy Specialists, financial responsibility was a mindset shift.
“The challenge has been getting them to think about things differently. What was once our financial problem [as the owners], is now the company’s financial problem. Staff need to think about that, and whether they can step up and bring the solutions instead of relying on us.”
2. Structure opportunities for involvement in decision-making.
Employees are more likely to get involved when the path to contribution is clear. Outline how they can participate in company decisions, including frequency and format, and make this part of your governance structure.
Options include employee voice groups, elected trustee representatives, and voting on key issues. These should be embedded in your EOT’s framework and reviewed regularly.
Stacy Phillips at Bullseye Superfactors Ltd found communicating these changes was crucial to getting their EOT to take off. Explore Bullseye’s EOT journey for more information.
3. Invite them to contribute towards company culture.
EOTs place employees at the heart of the organisation. They should drive the values and culture you want to promote in your EOT.
Trustees and trading board members can host open forums, collect regular feedback and organise workshops to help staff shape policies that reflect the company’s ethos. This gives your employees a shared purpose and higher engagement with the business.
“Legacy was one of the big motivators for our EOT and we are working to ensure that our structure provides the motivation, engagement and team spirit to underpin our business for many years to come,” explains Nick Pratap of Pratap Partnership. Learn how transitioning to an EOT helped Pratap Partnership better shape its culture and purpose.
4. Signpost opportunities to help drive innovation.
In an EOT, employees have greater responsibility to drive the innovation and future of the business. For employees though, they need to know how and when to share their ideas, especially in larger companies.
Make innovation part of the day-to-day culture by encouraging involvement in cross-functional projects, hosting R&D workshops, or adding feedback stages to processes for product or service launches. This can show how employee ideas are recognised and acted upon.
The employees at T Allen Engineering Services assert moving to an EOT has helped their business. “Ultimately people will now more than ever, all pull in the same direction, in the same direction as the core values of T Allen Engineering Services Ltd.”
5. Encourage employees to act as mentors.
EOTs generally offer higher levels of staff retention and can provide employees further benefits through peer-led skills development.
You can support staff in organising mentorship schemes, run training sessions, or cross-departmental development workshops.
Alongside developing their skillset, this approach also enables employees to have a higher level of holistic oversight across the business and identify skills gaps.
Jephson Shopfitters see this as a key benefit of EOTs. “He [the previous owner] is still there to counsel us. If we’re struggling with something, he is a sounding board. But we are now in charge of our own destiny more than we have ever been. We know we can push this business forwards and bring the people with us.”
Learn how EOTs can help your employees
An EOT can be a powerful way to engage employees. But communication before and after the transition is key to success. Planning how employees will be involved in strategy, culture, and innovation early on will help maximise the benefits.
Shorts can guide you on navigating the questions and delivery of EOTs to businesses. For more information, contact our Corporate Finance team or download the information pack below for more guidance on EOTs.
Adam Ames
During my career, I have gained an experience and an appreciation of the many issues and opportunities faced by businesses during all market conditions and economic cycles, which I use to provide invaluable advice to clients across all areas of corporate finance including EOTs, MBOs, acquisitions, disposals and finance raising assignments.
View my articlesTags: EOT
