Tag Archives: mutuals

Employee-owned mutuals: the most pressing issues

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The Social Enterprise Coalition Right to Run event last week was an opportunity for public sector employees to get practical support around creating new social enterprises and mutuals. OPM’s chief executive Hilary Thompson led one of the workshops and writes here about the issues raised by participants.

My workshop focused on the employee ownership model specifically, and attracted a lot of participants with a real thirst for understanding the options and key choices. Attendees were from a range of different public services and were mostly at the stage of finding out more about the potential journey. There was strong interest in:

  • How to combine employee ownership with a strong social purpose.
  • The benefits that employee ownership can bring, how these balance against perceived risks in moving out of the public sector and how to achieve longer term success.
  • Transferring employment terms and conditions (and the extent to which the TUPE regulations are an issue or barrier).
  • How to engage with decision-makers in the ‘parent’ body or with commissioners, who are often both new to the right to run agenda themselves and also preoccupied with other priorities like implementing budget reductions.

EOA case studies and OPM’s own research (for example our report Shared ownership in practice, and the case studies of five public service mutuals) provide examples of how different services have achieved a positive transition. But local negotiation is always important, so whenever working with leaders of potential mutuals we encourage them to identify key stakeholders and decision-makers and to open informal discussions with them as early as possible.

In relation to the points in the list above, Government policies are of course critical in shaping the appetite of public service professionals for change. Some specific new policies are emerging – for example on contracting with the public sector and, according to media stories, on transferring public sector pensions – but it’s the overall balance of policies that matters. The imminent public service reform white paper will help to fill in the some of the gaps in the current picture.

By Hilary Thompson, OPM chief executive

Hilary Thompson

Mutual support?

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The mutual model for organisations delivering public services is getting a lot of publicity, but is there a missing piece to this jigsaw?

Patrick Lewis, partners’ counsellor at John Lewis, and great-nephew of the original John Lewis who founded the best known employee-owned company certainly thinks so. His view is that time, care and commitment are required in setting up this type of organisations – but that support is the key.

We can’t expect public service managers and leaders – usually recruited for very different skills – to suddenly become experts at selling and structuring a new organisational form, marketing services in a competitive market and dealing with different forms of employee engagement and decision-making.

The recent report by the University of Birmingham into bids to set up social enterprises to deliver health services found that people leading initiatives of this sort felt isolated without the necessary support.

That’s not to say that there is no support for setting up mutuals but rather that too much of it is focused on the shape of the organisation and the legal and financial side rather than on the people ‘holding the ring’ who are vital in terms of energy and focus in making things happen. For the mutual sector to further flourish this needs to be addressed.

To help support new models of ownership, we are hosting accelerated learning groups for leaders and managers of organisations interested in or soon to become a social enterprise or mutual organisation.

By Bob Baker, OPM senior fellow

Bob Baker

What do you do if senior leaders are undecided about local authority mutuals?

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The first in an occasional series of posts from a member of OPM’s roving mutuals team

Presenting a new idea to your manager can be a scary proposition – especially if you don’t know your manager’s views on the subject. But to progress, you sometimes have to take the first step and make the case for change.

I’ve had the pleasure – and it really is a pleasure – of running workshops for a number of local authorities whose staff are thinking about whether mutuals are right for them. Workshop participants have included frontline staff, commissioners and service managers, and heads of service from different departments.

One question that comes up in every single case is: how can we go any further until we know what our senior managers and politicians think? (There are plenty of other questions, but I’ll leave those for future posts.)

It’s not surprising that council leaders usually haven’t made up their mind about mutuals, because as a reform programme it’s still in its infancy, and there are serious questions about the impact on staff, services and outcomes that can’t be avoided and take time to consider. But is nothing possible until decisions have been made?

Three scenarios

When it comes to senior backing I think there are basically three scenarios.

First, is where leaders are driving the agenda themselves. The most high-profile example of this is Lambeth’s Co-operative Council, which has been consistently and visibly championed from the outset by the leader of the council Steve Reed, the chief executive and the senior management team. Many of the Cabinet Office’s ‘mutual pathfinders’ have had strong leadership backing too.

Second, there are authorities where there is deep-rooted scepticism about the idea of mutuals among leaders, possibly born out of fear that shared ownership is no more than privatisation by the backdoor.

Third, are councils where leaders are neither actively hostile towards mutuals, but nor are they giving much support (yet) to developing them. This is usually because they’re still making up their minds, or aren’t quite sure about the implications of mutuals. This is where the majority of authorities seem to be at the moment.

To the staff member or manager who’s fired up by the idea of developing a mutual, the third scenario can be just as frustrating as the second. It can seem like there’s a bit of a vacuum and where ploughing time and effort into something goes nowhere.

We know from OPM’s research and practical experience that backing from senior people is vital to build a successful mutual. But the ‘Right to Provide’ announced by Francis Maude in November – while not on the statute books yet – makes it more likely that if frontline staff think they could deliver their service better as a mutual, their voices will be heard. More important than where a proposition comes from is how compelling it is.

No matter which situation you find yourself in, a number of key ingredients are crucial for developing a strong mutual proposition. You’ll need a thorough options appraisal to test whether a mutual is right for you and, if so, which kind. You’ll have to make sure that your mutual will be a viable business. And you’ll have to raise awareness among all staff and others who might be affected, and bring them on the journey with you.

Success can be as much about ‘making the case to’ as ‘waiting for a steer from’.

By Phil Copestake, OPM principal

Phil Copestake

Employee ownership in practice: play services in Rochdale

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This week, our case study of shared ownership focuses on the transfer of children’s play and resource services in Rochdale to a worker’s co-operative. A great example of truly bottom-up, staff-led shared ownership.

If you’re interested in reading about the experiences of other public services that have already made the transition to employee or community ownership, then you might like to read the report OPM published recently, which draws out the key practical lessons from seven in-depth case studies, including Rochdale.

The link to a free downloadable version of the report, as well as links to short reports of the Oldham leisure and North Dorset community services case studies can be found here.

Pearls Rochdale Co-op Case Study

Employee ownership in practice: Oldham Community Leisure

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As an employee-owned company itself, OPM has been doing a lot of work recently on the potential of shared ownership models – cooperatives, mutuals and the like – for public services, and exciting findings from our latest phase of research are now available.

Regular readers of this blog will know that earlier this year we published a practical guide to shared ownership (the PDF is available for download from our main website). Since then we’ve been conducting in-depth case study research with a number of previously state-owned public services that’ve already made the transition to employee or community ownership.

So it’s with some excitement that we’re able to publish the first output from this research: a short report describing the journey that Oldham Community Leisure has been on since moving to a cooperative model eight years ago. The report covers the reasons for the transition, the impact achieved (including halving of sickness rates and some brilliant examples of staff-led innovation), the key factors in making it a success, as well as the challenges faced.

Next week we’ll be publishing reports of other case studies, and later in the month we’ll be releasing an overview report which draws out the key cross-cutting themes from all of the case studies, so watch this space!

Oldham Case Study

Making new models of ownership a reality for public services

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The public sector is awash with talk about the opportunities for new forms of ownership in public services with evidence suggesting that alternative models of ownership can have tremendous advantages for public services.

But as OPM’s recent report shows, without ruthlessly clear motivations, purpose and a model that fits your circumstances, you risk significantly diluting those benefits or failing altogether. While there is broad appeal and potential, it is time to get into the detailed thinking about how to make this work …

Transforming public services

So how do we transform the public services in this way? What will new models of ownership look like on the ground? Where are public sector leaders and managers at in thinking about this? Crucially, what do employees (who will play an integral part in these changes) think?

OPM is 100 per cent employee-owned. So we are acutely aware of how important it is to get our model of ownership and governance right and to ensure it functions effectively. We understand the transition to a new structure and the nature of this journey, the ingredients for success and the benefits of employee ownership when it is done well. We also know the task is not easy and that new models of ownership are not a panacea that can solve all the challenges we face.

OPM ran the first of a number of workshops with leaders and managers across public services where we spoke as a group about the opportunities and challenges for organisations and groups of employees to transition away from state ownership.

The workshop provided an opportunity for learning and a forum to explore and distinguish basic structures from among the many labels, address some of the legal implications, discuss motivating factors, potential benefits and pitfalls, commissioning and the leadership qualities required to make these new types of organisations flourish.

The discussion was challenging, encouraging and stimulating. Everyone in the group had a unique set of circumstances, a different story and were at a different place in their journey with some very advanced and some only just beginning discussions. All were working daily to enthuse colleagues and leaders.

The common features they all shared was the desire to innovate from the bottom up, the desire to retain (in whatever organisational form) high-quality services and skilled staff and to get ahead of the game by thinking now about these new opportunities and ensuring they have a role and a voice in reshaping their organisations.

One size does not fit all

There is no one model or set of actions for public service leaders and employees – each circumstance is unique and will require bespoke planning and development. But during our discussions it became clearer to participants that the questions to ask, conditions for success, examples of good practice, though not simple, are applicable across the board. Everyone departed enthused and with a list of ‘next steps’ and developments.

The number of organisations looking to branch out beyond state control and set up under new models of ownership will burgeon over coming months and years, ushering in a new way of working for many in public services and an era of new relationships between the state, public sector workers, service users and communities. OPM are ensuring that we make the best use of our values, skills and experiences as an employee-owned (and not-for-profit) organisation to support those embarking on this journey.

By Sarah McDonnell, OPM senior researcher

Sarah McDonnell

How many quangos does it take to make a mutual?

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Launching the recent Cabinet Office mutual pathfinders, Francis Maude talked about:

‘… creating a genuinely ground-up movement where staff, who are the real experts, can come together to take over and deliver better services. The potential for public sector staff to spin out is enormously exciting.’

This appears to reflect a developing cross-party consensus, with the Labour Party and Liberal Democrats echoing similar sentiments in their respective manifestos.

Of course the real test will come in delivery. There is always the risk that the potential for mutualisation could fall short if ministers unwittingly let opportunities slip through their grasp, officials develop unimaginative procurement exercises and asset managers seek to sell to the highest bidders.

As we know, there are a range of organisations that are under threat in the current shake-up of the central government organisational landscape.  Given much of their work is in the public interest we could be considering a mutual or not-for-profit future for many of them, rather than reaching for the simple, and perhaps short-sighted, keep-or-cull switch.

Given the benefits different forms of collective ownership can offer, now is the opportunity to look afresh at the scope and potential benefits such approaches could offer to public service delivery.

The list below offers an guide to explore where potential lies, and where support may best be targeted.  We offer an initial view on bodies that could benefit from a mutual approach, recognising that some are closer to needing to, or wanting to, considering such a route.

This is an area of growing interest.  The recent report from OPM, New models of public service ownership: A guide to commissioning, policy and practice, identified potential new mutuals on the basis of employee, stakeholder or community ownership.

This piece is intended to contribute to discussions of the potential pathways available to the many specific agencies that the Government currently has under review. In doing so we have chosen examples simply to illustrate those that could be more readily mutualised, e.g. the Queen Elizabeth II Conference Centre to some form of community ownership, the audit function of the Audit Commission as an employee-owned model.  There are many more public bodies that are either being reviewed or may wish to reflect on their status.

So with that in mind, we ask the bodies considering a different form of future ownership:

  • Why? The Environment Agency
  • Why not? East Coast main line and other franchises, toll roads, job centres, libraries, children’s centres, Transport for London, fire services, the BBC, other land or asset-owning bodies, e.g. the Forestry Commission
  • A possible future? Royal Mail/Post Office, Met Office, Homes and Communities Agency, English Heritage, Student Loans Company
  • A necessary consideration? Northern Rock, the audit function of the Audit Commission, Queen Elizabeth II Conference Centre, Sustainable Development Commission
  • Ready to progress? British Waterways

By Hywel Lloyd, OPM senior fellow (hlloyd@opm.co.uk), Dan Gregory of Local Partnerships (dan.gregory@localpartnerships.org.uk) and Matthew Thomson of London Community Resource Network (Matthew@lcrn.org.uk). The authors are part of the The Public Interest Public Services (PIPS) Forum – an open collective of policymakers and practitioners developing alternative models of public service delivery.

New ownership models in public services – speech to Lambeth: The Co-operative Council

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The following is a transcript of a speech on new models of ownership in public services given in Lambeth, London on 15 September 2010 by Phil Copestake, OPM’s Head of Analytical Studies. Phil spoke to Lambeth’s Citizens’ Commission, councillors and policy team.

I’d like to thank the team at Lambeth Council for giving OPM the opportunity to contribute to the Commission – I know we’re not alone in being seriously impressed with the depth and scale of your ambition in developing the Co-operative Council.

OPM works with public services at all levels and in all sectors to help improve social outcomes. We do that through research, engagement, evaluation, and organisational and leadership development.

I’m going to outline some of the key findings from research we’ve recently completed into the potential of employee and community ownership models for public services. I’ll also propose questions that arise from these findings.

OPM is itself 100 per cent employee owned, and based on that and our wider research and experience, we think alternative models of ownership can have amazing advantages for public services including higher levels of productivity, greater resilience during difficult times, better levels of engagement and reciprocity between staff and service users, and so on.

But crucially – and this is perhaps the most important finding from our research – you risk significantly diluting those benefits if you aren’t ruthlessly clear about your purpose and motivations for adopting employee, user or community ownership for one or more of your services and then being objective in choosing the model that’s fit for purpose. While they have wide potential, alternative models of ownership are much better suited to some services than to others.

I’m aware that in your White Paper you are keen to develop principles of co-operation as much as actual ‘co-operative’ models of ownership, but I do think that in Lambeth as elsewhere, it’s worth seriously considering moving some of the services that are currently provided by statutory services to employee, user or community ownership; I’m going to talk about some of the factors that we found to be helpful in guiding that process.

The terminology surrounding different models of ownership is horrendously confusing. You hear people talk about mutuals, co-operatives, social enterprises, co-owned and employee-owned organisations – frequently interchangeably.

In our report – New models of public service ownership – A guide to commissioning, policy and practice – we do have a detailed taxonomy, but when it comes down to it we think that public organisations looking to transition services to a different ownership structure have four options; the right option will depend on your motivation for change:

  • If your primary motivation for transferring ownership is to reap the benefits of increased productivity and cost effectiveness, then evidence suggests this is most effectively delivered through an employee-owned organisation – one in which at least 50 per cent of the value of the service is controlled by employees
  • Where the main motivation is to create or preserve a sense of ownership and responsibility within a distinct and recognisable community it is often best to set up a community trust where the social purpose is strongly locked in and where the governance model means that trustees are accountable to local people
  • Where a sense of ownership is needed for the specific reason of raising financial contributions from service users because without those the service cannot continue to operate, a subscription-based traditional mutual may be best
  • Finally, if the desire is to have greater engagement and reciprocity between staff and users or citizens – because you think that will lead to innovation, higher satisfaction and better outcomes – then go for a multi-stakeholder ownership model

But how to decide which of the many public services are best suited to this change? It seems that alternative models of ownership work best when you:

  • Have a clear community or constituency of users with a strong shared interest or common identity
  • Have the ability to build long-term relationships with owners (so it’s more difficult where there’s much higher turnover of the people who would be the likely owners)
  • Don’t have a pressure to grow the size of the new organisation very quickly – any growth needs to be steady, to allow ownership and owners to adapt

Once you’ve decided which service areas are best suited, evidence suggests that for a smooth transition and longer-term success, you need to:

  • Go on making the case to staff, users, the wider community and other key stakeholders
  • Ensure that local commissioners have good levels of awareness and give the new organisation space and time to get on its feet
  • Support the new organisation in securing access to finance
  • Build the business and entrepreneurial skills of the new owners
  • Put in place a governance model that accurately reflects the balance of interests in the organisation

I’ll close by saying that OPM is going to be conducting further research with a number of organisations to try and divine the secrets of success, and we’ve also been appointed by the Cabinet Office as one of the mentors for the government’s ‘mutual pathfinders’ so we’ll be learning from that process too. It goes without saying that we’re really keen to share what we learn with Lambeth and with the Commission. Thank you.

Phil Copestake



What does the Big Society mean for mutual forms of ownership?

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Mutual forms of ownership are directly relevant to many of the ideals of the Big Society agenda.

At their best co-operatives and mutuals can represent some of the most successful practical examples of local participation, joint local responsibility and community working.

Shifting public services to mutual forms of ownership is seen as a way to foster the innovation that’s needed to enable public services to deliver targeted, personalised services in a context of budget cuts.

Supporting new models

OPM is currently in the midst of exciting research and capacity building to help public services make the most of employee owned models.

Although traditionally associated with Labour ideals, cooperative and other employee owned models of public services featured in the manifestos of all the major political parties. As a result, the Coalition’s programme for government includes the commitment to:

‘Support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and enable these groups to have much greater involvement in the running of public services.’

Lambeth taking the lead

There is a sense that now is the time to explore new structures of ownership and governance. An example of a public organisation willing to take the plunge on a potentially grand scale is Lambeth Council, which is developing the UK’s first co-operative council. Lambeth has created a Citizens’ Commission to gather views from other councils, community organisations, academics and think tanks to establish how far the principles of co-operation and co-production can be translated into co-ownership of local authority services.

Report on new ownership models

OPM – a fully employee owned organisation itself – has recently published the latest in its series of Public Interest Research reports: New models of public service ownership – A guide to commissioning, policy and practice.

The report focuses on the practical steps that public services will need to consider to realise the potential of shared ownership models. The report details which of the many different models of ownership might be best suited to various settings and services. It outlines some of the issues for policy makers, commissioners and providers to consider in transitioning to employee ownership. It also makes an attempt to cut through some of the confusing terminology and concepts used to refer to shared ownership models to make the choices much clearer.

Choosing the right model

Employee or user owned models are not the answer to every challenge facing public services. Our research suggests that from a Big Society point of view, shared ownership models work best where there’s a clear community of interest (i.e. a group of service users with similar needs), and struggle when there’s high staff and/or user turnover, which precludes building the longer-term relationships that are needed for co-ownership to work most effectively.

One of the biggest challenges in moving to a shared ownership model is in implementing the new governance structures that will reflect the purpose of the organisation. If your principal purpose is to increase productivity, then you’ll be looking at a different arrangement than if you want to build a stronger reciprocal relationship between service users and staff.

Further learning

At OPM we have a fantastic opportunity to learn from the experiences of some of the employee owned pioneers, both from the second stage of our own research, which will involve in-depth case studies of organisations that have transitioned to a new ownership model, and from being one of the Cabinet Office’s approved mentors for its public service mutual pathfinders. All of the findings will be shared on this blog and through a series of publications, so watch this space.

Read the report: New models of public service ownership – A guide to commissioning, policy and practice

If you would like to discuss mutual forms of ownership contact Phil Copestake on pcopestake@opm.co.uk or 020 7239 0879.

By Phil Copestake, OPM principal, and Jo Sloman, OPM senior researcher

Phil CopestakeJo Sloman