Riverford is becoming employee owned on 8th June 2018. Here are the key facts…
- 74% of Riverford will move into an Employee Trust, benefiting all employees equally
- Founder-owner Guy Singh-Watson will retain 26% and a very active role
- After research and reflection over more than a decade, Guy has chosen employee ownership to protect Riverford’s values, ensure its independence, and because he believes the employees are the best people for the job
- The rejection of outside investors and choice of EO to secure its succession continues Riverford’s challenging stance on business norms. EO is a gathering movement, seeing growth of around 60% since 2010. Done well, it has demonstrable benefits for staff and business, including higher productivity, higher morale, and less debt
Read on for the whole story.
Making business a force for good
On June 8th 2018, Riverford will move into employee ownership. Founder-owner Guy Singh-Watson has long seen Riverford’s purpose as more than just growing and delivering the best organic veg; since converting his first field to organic in 1987, he has challenged business norms and pushed to use Riverford as a force for good. Employee ownership is the next chapter.
74% of the company will move into an Employee Trust, benefiting all Riverford employees equally. Guy will retain 26% and a very active involvement in the next phase of Riverford’s journey.
Succession planning – a thorny issue
Since its foundation in 1987, Riverford has been family-owned. Over the years, Guy has been vociferous in challenging all sorts of business norms – from embracing organic farming when it was still seen as something for ‘freaks on the fringe’, to rejecting the numerous advances of external investors. Having always vowed that he would not let the business get into the hands of external shareholders, and with none of his four children interested in following in his footsteps, he has for 12 years been exploring options for ‘what next’.
“To sell Riverford as a tradable chattel, whose purpose would be to maximise short-term returns for external investors, feels to me a bit like selling one of my children into prostitution.”
- Guy Singh-Watson
For a family-owned, values-driven business determined not to hand over to external investors, the options are not obvious. A recent article in the Evening Standard on the thorny issues of succession planning for family-owned businesses brought together some startling statistics. Apparently just 20% of family-owned businesses make it to the third generation, and only half of all small businesses in the UK have a succession plan at all.
As family-owned businesses make up more than 80% of SMEs (small and medium-sized enterprises), employ over 12 million people and generate more than one-quarter of the UK’s GDP, this is an alarming state of affairs.
Why employee ownership?
For Guy, employee ownership is not a last resort, but a very positive move. He has thought long and hard about it for almost 12 years. The benefits he sees in this course are three-fold:
a. Protect our values – forever.
The trust model Riverford is adopting locks in the values that Riverford was founded on and has pursued for over 30 years, notably -
- Giving a fair deal to staff, suppliers, customers and the planet
- A commitment to organic and to our farming roots
- Long-term relationships of trust with our growers
These will be embodied in a binding ethos statement (available shortly) that Guy has developed with staff. The ultimate guardians of these values will be the Trustees, consisting initially of Guy, two staff members, and two very experienced external trustees (Ken Temple and Nick Buckland).
b. Ensure independence and a long-term view.
The model of employee ownership Riverford is opting for protects it from predators, and makes it virtually impossible for the business to be sold.
With his farming roots, commitment to long-term custodianship of the soil and responsibility to the staff, Guy has little sympathy with the way many companies, particularly in the US and UK, are bought and sold in 5-year cycles. This frequently involves a loss of independence and a compromise of principles – and with it the brand’s value – to achieve short-term and unsustainable growth. Riverford has never aspired to exponential growth. Instead it has grown steadily, organically, with minimum debt and an assiduous attention to its underlying values and the brand consistency. Maintaining our independence will help us continue to do this for the long term.
c. The best people for the job.
Riverford’s employees are the people most passionately interested in its values, the best custodians of them, and the most competent to achieve the commercial success necessary to promote those values. They are the people who should also reap the rewards.
It’s not all touchy-feely. Guy’s belief – supported by extensive research - is that employee ownership can deliver commercial as well as emotional benefits: higher productivity, lower attrition, higher morale, greater resilience, and less debt.
Guy’s view is that there is plenty to play for. Although an inspiring leader who rallies staff and customers around a vision of a better way – of eating, of farming, of doing business – he is, by his own admission, not the best manager. To ensure Riverford reaps the benefits of employee ownership, he and the Board have launched a transformative programme of cultural and management changes.
“Most people are better, kinder, less greedy and have more to give than our institutions allow them to demonstrate. We will help Riverford staff build the confidence to be the best possible versions of ourselves.”
- Guy Singh-Watson
How it will work
Riverford is unusual in handing over such a high percentage (74%) to staff initially. Many companies who talk about employee ownership are in fact only ceding a low percentage of shares.
Like around half of businesses going into employee ownership, Guy, working with the Board and a group of staff, has opted for a trust model – where shares are held in trust for all staff equally – rather than a direct ownership model.
“To me it just felt fairer. Everyone contributes to success, everyone benefits.”
- Guy Singh-Watson
A minority of staff would have preferred to own shares directly, but the majority feel that the trust model is a better fit for Riverford’s values.
The change will be funded with the help of a loan from Triodos, the Bristol-based, ethical bank. Guy will be taking his money – reckoned to be about half or less of Riverford’s market value – over a number of years.
Guy and the Board have been very clear that Riverford is not becoming some sort of hippie cooperative. John Lewis is a good model of how employee ownership can be combined with conventional management structure to achieve both commercial success and accountability to founding values. Riverford will continue to have a conventional board, recently strengthened by the appointment of its first two non-executive directors. In a few months an employee council will be elected. Two members will also become Trustees.
Employee ownership – a gathering movement?
Employee ownership is not new. The most cited example is the John Lewis Partnership, founded in 1929. In the twelve years that Riverford has been considering employee ownership, we have met or scrutinised a whole range of businesses:
- John Lewis Partnership, employee owned since 1929
- Wilkin & Sons, employee owned since 1989
- Gripple, employee owned since 2011
- Union Industries, employee owned since 2014
- Childbase Partnership, employee owned since 2000
- Cambridge Weight Plan, employee owned since 2014
Their models of employee ownership are as diverse as the industries they operate in, and Riverford recognises that this is a developing sector with no cookie-cutter solution to apply. But we remain convinced that employee ownership will deliver for Riverford – and could for many others.
Since 2010, employee ownership has seen growth of around 60%; there are now more than 320 employee-owned businesses in the UK, with more than 210,000 employees. Half that growth has been since 2014, when the government introduced Employee Ownership Trust tax incentives. According to Deb Oxley, head of the Employee Ownership Association, around half the business are choosing the trust route as opposed to direct ownership of shares.
“If each of us at Riverford achieves three-quarters of our potential, we will fly – and we hope others will follow. I find myself as excited about this next leg of Riverford’s journey as when I sowed my first organic leeks all those years ago.”
- Guy Singh-Watson
10 years of rumination
Read Guy’s evolving thoughts on employee ownership in his weekly newsletters.
Guy Singh-Watson founded the veg box business Riverford Organic Farmers on his family farm in Devon in 1987. In the last 30 years, it has grown from one man and his wheelbarrow (by his own description a ‘freak on the fringe’) to the country’s largest organic veg box business. His veg boxes arrive in 50,000 homes a week, straight from the farm. A restless innovator, Guy still gets more ideas and inspiration from time he spends in the fields than time at a desk or in a boardroom. As well as his passion for good farming practice and good food, he has been outspoken in his views on ethical business practice; he has twice been awarded BBC Radio 4’s Farmer of the Year, and in 2015 Riverford veg boxes were named The Observer’s Ethical Product of the Decade. This month he is putting 74% of his business into the ownership of its staff.
News & updates
What’s new in Riverford’s journey towards employee ownership?
- Listen again to Radio 4’s On Your Farm special: All Change at Riverford
- Read The Observer’s article: ‘Staff ownership ensures organic veg firm Riverford doesn’t forget its roots’
To find out more about employee ownership, visit the Employee Ownership Association.