DISCUSSION Tomorrow’s Business Forms

Business and government challenged to rethink choice of ownership structure and governance

Choice of an appropriate business form can enhance business success, and may well help a business achieve more trust. Yet this combination of legal status, ownership, governance and accountability rarely receives the attention it deserves from boards or owners of companies.

“We challenge owners and board members to reconsider the use that they are making not only of their legal status but of all the options within it” say a group of business leaders in a new report from Tomorrow’s Company.

The report ‘Tomorrow’s Business Forms – making the right choices of ownership, structure and governance to deliver success for business and society’ shows how some listed and private companies have changed business form, and describes a growing array of choice of business forms. This presents an opportunity for the owners and boards of businesses. Examples of this welcome growth in diversity of business form include social enterprise, employee ownership, public sector mutuals, LLPs, listed company hybrids, innovation in private equity and Community Interest Companies. In its agenda for change the report challenges business owners and boards to ask:

• Does our current business form enable or constrain the purpose and values of our business?
• Does it inspire the workforce to achieve business purpose?
• Does it connect the business to its wider stakeholders?
• Does it incentivise longer-term behaviour?

Speaking at the launch, Mark Preston, Group CEO, Grosvenor, will say:

“The best recent example of a failure to match form to purpose must be the Southern Cross care homes collapse. The vulnerability of its residents and the rather obvious purpose of caring for them ought to demand … a business form and ownership suitable to conservative financing”.

He will contrast this with the success of Circle, a health care partnership now running Hinchingbrooke Hospital within the NHS. “This was the first attempt to privately manage a hospital and their success in both patient care and cost reductions is likely to be connected to the fact that Circle is half owned by clinicians and employees”.

The same awareness of business form is needed by government as policymaker, owner and purchaser. Government has encouraged increased diversity through, for example, its response to the Nuttall Review on employee ownership. It is encouraged to move from such piecemeal encouragement to systematic promotion of diversity. The report suggests government carry out a review of innovation of business form across the world, and its implications for business in the UK.

Norman Lamb MP, Minister of State for Care and Support, has accepted an invitation to speak at the launch and respond to the report’s recommendations.

Graeme Nuttall, partner Field Fisher Waterhouse LLP and author of the Nuttall Review will say:

“The Government is removing obstacles preventing the wider adoption of employee ownership. This commitment can be extended to all business forms to encourage greater diversity.”

Sir Charlie Mayfield, Chairman, John Lewis Partnership, said:

“Tomorrow’s Business Forms points to the importance of exploring how business can deliver both commercial success and public benefit. Whilst no single form of ownership is right for every business, encouraging a greater plurality of ownership is a positive step in promoting staff engagement and longer-term decision making.”

Dame Fiona Reynolds, Master, Emmanuel College, Cambridge said:

“The form and structure of a business is increasingly influential in the way the business connects with and understands consumers, markets and longer term trends. No longer need we be confined to the conventional plc structures that have dominated for so long. This report explains the new business forms that are emerging, and why; and how they can help tomorrow’s company face the challenges of a fast-changing world. It makes fascinating reading; and compels action.”

Norman Lamb MP, Member of Parliament for North Norfolk said:

“In today’s increasingly competitive business climate, there is more pressure than ever for companies to be able to adapt and evolve.  Businesses need to take advantage of the commercial opportunities open to them – and that means making best use of the resources at their disposal, whether they are intellectual or other capital assets, a skilled workforce, or acquired business experience and knowledge.

This is a fantastic initiative in encouraging companies to take an objective look at the way they are set up, and the way they work, and to consider whether there is a better way of doing things.  There is a great deal of evidence that alternative business models, such as mutuals, and the wellbeing of staff, can have a transformative effect on the competitiveness of organisations.”

Notes for editors

Tomorrow’s Business Forms – making the right choices of ownership, structure and governance to deliver success for business and society is to be published by Tomorrow’s Company, price £50 for organisations and £10 for individuals. It will be launched at noon on 25 November 2013 at Deloitte, 2 New Street Square, London EC4A 3BZ. Mark Preston, CEO of Grosvenor will present the findings of the report, and Norman LambMP, Minister of State for Care and Support, will speak in response.

The report has been prepared by a group of influential business leaders representing a wide cross-section of business forms. It aims to:

• inform debate on the wide range of business forms now available
• encourage owners and boards to review whether their business form is giving the business an edge in achieving their purpose
• provoke a debate about how government and the public sector can better harness the efficiency and innovation of the private sector.

This project was initiated by business think-tank Tomorrow’s Company, working with a diverse group of business leaders, under the chairmanship of Mark Preston, Group CEO, Grosvenor.

John Davies, Head of technical, ACCA

Andy Wood, CEO, Adnams

Richard Boucher, Business change and strategy director, Anglian Water

Alden Whittaker-Brown, Head of the group executive office, Arup

Richard Hickson, Head of policy and public affairs, Camelot

David Hawley, Public policy director, Deloitte

Mark Preston, Group CEO, Grosvenor

Charlotte Cool, Head of public affairs, John Lewis Partnership

Cal Bailey, Sustainability director, NG Bailey

Stephen Howlett, Chief executive, Peabody

Gerald Avison, Chairman, TTP Group

John Lelliott, Finance director, The Crown Estate