Esop star profile: Paul Jackson

Paul Jackson, columnist, Investors’ Chronicle

In what ways does employee share ownership serve a useful purpose?

Inclusion. People who have a tangible stake in their employer feel not only that they are more valued, but also that they belong more in the organisation.  It helps employee engagement and encourages greater conscientiousness, which also helps to increase productivity. I’d also say that sooner or later, share owners start asking what causes the share price to move, and that in turn leads to a greater interest in the company strategy and a greater awareness of the part they play in achieving it.

How can we widen and deepen the adoption and use of employee share ownership?

Through all-employee share plans, which really are the Cinderella of employee benefits. In my view, they are second only to the company pension scheme in terms of the value to employees. 

Within an organisation, it’s really important for senior executives both to support the plans and to participate.  That gets management on board.  Next, a marketing budget – the plans need to be promoted like any other product.  I used to lean on the administrators for help with this – we simplified our plan documentation to make it as accessible as possible.  What you want is to spread the message by word-of-mouth, or social media, so something that grabs the attention really helps. 

One problem is that at first sight, a share plan invitation seems complicated, so there’s a hurdle to overcome. Make sure that employee share plans feature in company induction courses. And finally, ask yourself what’s holding some employees back from participating.  And seek to address those issues. 

What would you tell someone on the fence about introducing employee share ownership to their company?

Making a tangible business case is difficult. Share plans come at a cost and take up management time. Their intangible benefits outweigh these costs but they are hard to measure, so I’d aim to show how it’s in executives’ interests to introduce employee ownership and to encourage employees to participate in the company employee share plans. 

Employee share plans effectively say “we value you, that’s why we’re offering you this share plan” and the sense of being valued and involved improves attitudes and commitment. The fact that they offer something extra for everyone, wherever they are in the organisation, and on the same basis, intensifies the sense of inclusion. All-employee share plans – and employee share ownership – are a powerful form of corporate glue.

I’d go further and ask how the organisation measures other intangibles. Most companies aim to improve employee engagement, for example, and in trying to measure it, companies spend small fortunes on what are little more than sophisticated opinion surveys. You could argue that participation levels in voluntary share plans are a much more tangible measure of employee commitment (and arguably a more reliable measure too.)  But above all, involved employees will champion their company to friends and others, and so act like unpaid ambassadors. So you get informal public relations thrown in as well.

It also improves internal communications. Executives are often unaware of issues further down the organisation.  Employees with more of a stake in the business are more likely to be forthcoming.  And when success does come, never forget the optics: executive pay is leveraged on rising share prices. With the rise in populism, it’s in executives’ interests to enable employees to have the opportunity of sharing in that as well.  By including employees, share plans (participation as well as ownership) defuse resentment.

What do you think will change about employee share ownership over the next five years?

I expect increased publicity about the gap between executive reward and employee pay to encourage companies to promote their all-employee share plans more.

What has been the most important development in employee share ownership during your career?

Initiatives intended to recognise that managing employee share plans is a profession in its own right. But at the same time, this still has a long way to go. The profession is a hybrid of other professions – HR, pay, corporate tax, personal tax, company law, finance. Within organisations, these disciplines exist in silos within which, too often, share plans are seen as peripheral.

Which change to employee share plans legislation, in the UK or elsewhere, would you most like to see?

The standard measure of executive pay is the Single Figure of Total Remuneration, which summarises what the executive actually receives. I’m not convinced that the equivalent figure for average employee pay (that’s used in the ratio that compares the two) is compiled in the same way. If not, legislation to ensure a level playing field would need to include the gains from employee share ownership would be needed. Since this ratio now has to be published, this change would encourage companies to focus more on employee share plans.

Apart from that, it’s also important to defend what we have. As personnel changes within HMRC, new people see the tax structure of plans as “subsidies”.  Having to explain why they’re not seems to be a recurring issue.

Why do you think employee share ownership has enjoyed cross-party support in the UK?

There are few other issues that do enjoy such cross-party support – I believe that all parties see employee ownership as helping towards more efficient organisations. More efficient organisations lead to greater GDP growth. And if ownership and share plans enable people to increase their wealth, the bill for future social welfare benefits will reduce.

Liberal Democrats: belief in employee share ownership along the lines of the John Lewis model as a way of increasing employee involvement through ownership, encouraging responsible management and higher morale in general. Plus enabling individuals to manage their financial affairs more effectively. 

Labour: belief in greater participation by workers in the company that employs them, adding weight to unions in discussions with management and fostering greater responsiveness, plus a way of redistributing company profits (via dividends) more widely.

Conservatives: initially part of their share-owning democracy philosophy. More recently, a way of encouraging employee participation as an alternative to unions. Plus a means of giving people a stake in their employer and in so doing, broadening the appeal of shares in general.

Which aspect of the Esop Centre do you most value?

Very informative monthly newsletter (Newspad) and useful meetings and symposiums.

Which aspect of the Esop Centre would you most like to change?

It would be great to have more company involvement.

What is your idea of perfect happiness?

Good company and a lingering lunch.  A hot summer’s day and a gutsy red wine, slightly warmer than room temperature. 

What is your most marked characteristic?

Persistence and, when it matters, an attention to detail. Both can be a positive, but I’m conscious that if overdone, they can be a negative too.

What do you consider your greatest achievement?

Family, friends and a stable home life – it’s too easy to take them all for granted. 

What historical figure do you most identify with?

Personally, it would be my grandfather. That generation had years of worry and uncertainty leading up to, and then during, two devastating wars, each of which went on for years. When people complain about Brexit, I think of him – and how our current problems are minor compared to what previous generations had to endure.

Which living person do you most admire?

Barack Obama. How he became President of the USA was inspiring, as was his demeanour and judgement during his tenure. We could all do with him back on the world stage.

Who are your heroes in real life?

“Hero” is perhaps putting it too strongly, but I have the greatest respect for anyone who fights against the odds and triumphs against adversity. History is real to me so I’d plump for someone from the past – someone like Thomas Clarkson who risked his life to campaign to publicise the horrors of the middle passage in the days of slavery, and campaigned to end slavery altogether, despite it being part of the fabric of the British economy during the eighteenth century. Or Millicent Garrett Fawcett who, by working within the establishment, gained influence and eventually (through her efforts and those of others, plus the social impact of a world war) saw her goal achieved of extending votes to women.  Both campaigns took about fifty years. 

Which word or phrases do you most overuse?

Why? I went to a school that encouraged me to question everything. I still do. But I recognise that sometimes it’s best not to articulate “why?” and work things out inside my head.

What is your most treasured possession?

It would have to be something sentimental. Whenever I visited my parents, they’d give me coffee in a mug with my name on it, which I think they originally bought as a bit of a joke.  They died a few years ago, but I still have the mug and it reminds me of them every time I use it.

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