‘UK Social Enterprises Ahead On Executive Pay And Governance’

Peter Holbrook, Chief Executive of Social Enterprise UK,the national body for social enterprises, has responed to the publication of the government’s Corporate Governance Reform Green Paper on executive pay and governance.

He said today:

We welcome this consultation on the back of the Prime Minister’s declaration that the economy should work for everyone.

“Unfair business practices are contributing to inequality in Britain and by introducing sensible measures, the government has an opportunity to bring mainstream businesses into the 21st Century.

“Businesses have considerable power and there has never been a more pertinent time to address these issues. Government shouldn’t be scared about being bold. We will be submitting evidence to this consultation to show what’s already happening – and has actually been happening for decades in the social enterprise sector. British social enterprises are ahead of the game on executive pay and governance because fairness and tackling inequality is in their DNA.

Paying fair

“Research shows that the average pay ratio between social enterprise CEO pay and the lowest paid is just 3.6:1 – while for FTSE 100 CEOs, this ratio stands at 150:1.”

Representation on boards

“The government does not have to look far for good practice on pay ratios and employee representation on boards. British social enterprises, businesses that reinvest their profits for good, are often employee owned and give their customers and service users a serious and genuine say in how they’re run. Their stakeholders are not an afterthought – they’re integral to the running of these businesses which put people and communities first.

Consultation

The government is consulting on the following:

• Shareholder influence on executive pay, which has grown much faster over the last two decades than pay generally and than typical corporate performance;
• Whether there are measures that could increase the connection between boards of directors and other groups with an interest in corporate performance such as employees and small suppliers; and
• Whether some of the features of corporate governance that have served us well in our listed companies should be extended to the largest privately-held companies at a time in which different types of ownership are more common.

Case studies

CSH Surrey: The first of its type to spin out from the public sector in 2006. It is an employee-owned social enterprise that provides community nursing and therapy services in Surrey. Employee ownership has enabled CSH Surrey to transform the local community NHS services, meaning their patients benefit from more innovative and higher quality services.

CSH Surrey’s annual employee survey results consistently outstrip the NHS staff survey in all key areas. Higher staff engagement is proven to be linked to delivery of higher quality and more compassionate patient care.

CSH’s employee owners are represented at the Board by a co-ownership council called ‘The Voice’. The Voice’s elected co-owner representatives challenge the Board on strategy and performance on behalf of all the employee owners. The questions and answers are shared throughout CSH as part of CSH’s commitment to openness and transparency.

www.cshsurrey.co.uk

Leading Lives: This award-winning social enterprise based in Suffolk is 100% employee owned, with the Board made up of employees from across the business. The organisation employees more than 500 people. Leading Lives provides social care support for 1,500 customers in the community, in the home and through short break respite stays. With a primary focus on adults who have learning disabilities, support is also provided for people with physical, complex needs, autism, acquired brain injuries, need support to remain independent through age, ill health or dementia and young people making the transition to adult services.

www.leadinglives.org.uk