Home entertainment brand Richer Sounds has entrusted its staff with 60% of its shares, in a conversion to an employee ownership (EO) model. Renowned for its socially conscious ethos The Richer Way, [1] the hi-fi retailer announced the move in a 14 May joint press release with the Employee Ownership Association (EOA). [2]
Under the firm’s new structure, a Richer Sounds Trust will be responsible for administrating the EO scheme. As such, the Trust will operate in accordance with a set of guiding principles designed to ensure that the company continues to work in a responsible manner, in line with its long-established values of honesty, commitment, trust and respect.
Brand founder Julian Richer is stepping back from his day-to-day running of the firm, with a Management Board coming in to absorb the lion’s share of his work. According to the announcement, the Board is comprised of longstanding directors – with the newest a veteran of 25 years’ standing – all whom are steeped in the company’s culture. Meanwhile, a Colleagues’ Advisory Council will represent staff interests and concerns.
Richer said, “I have always planned to leave my company in trust on my death for the benefit of the colleagues in the business. Having hit the ripe old age of 60 in March, I felt the time was right, rather than leaving it until I’m not around, to ensure that the transition goes smoothly and I can be part of it. The company’s banks, suppliers and customers should feel that the move is – hopefully – seamless and Richer Sounds carries on as normal.”
Richer Sounds chairman David Robinson, who is overseeing the transition, noted: “It’s incredibly exciting times and allows our colleagues to feel even more connected to the company. They have a real stake in the success of the business and can take pride in knowing that they are shareholders, building for the future.”
EOA chief executive Deb Oxley OBE added: “We congratulate Richer Sounds on its transition … another great brand bringing employee ownership to the high street. We’re delighted to see it secure its future independence with a focus on its people and an eye on the future world – a world with a more inclusive economy and where more businesses are doing well while doing good.”
In defiance of high street trends, Richer Sounds made £9.6 million in profits last year. While the firm will pay Richer £9.2m for his stake in the business, he plans to return £3.5m of that sum to staff, who will each receive £1,000 per year of service.
What should other leaders take away from the rationale that Richer has advanced for his company’s structural revamp?
The Institute of Leadership & Management head of research, policy and standards Kate Cooper says: “What’s really interesting about this strategy is that it solves the problem of a transition of legacy within a financially successful family business. If, for example, members of a family in charge of a firm aren’t interested in continuing to manage the business, and their interest is primarily financial, then there’s no real legacy. But giving the business to the employees who’ve helped to build it guarantees a real, tangible legacy.
“We often talk of appropriate reward for effort – and what better reward for loyalty and engagement than what Richer is doing? It is a great way to recognise the role that staff have played in lifting the company up to where it is. And wouldn’t it be marvellous if other organisations followed Richer’s lead?”
Cooper adds: “We at the Institute are currently working with the University of Birmingham on a research project to explore growth and sustainability within family businesses. As we continue that research, it will be interesting to see whether other instances of EO have contributed to the overall picture and, if so, how.”
For further insights on the themes raised in this blog, check out the Institute’s resources on aligning values
Image of Julian Richer courtesy of Mick Atkins, via Shutterstock