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How inclusive business models can help us create a stronger and fairer economy

Inclusive business models can help us create a stronger, fairer economy

Challenging times for businesses offer a chance for change. In this article, Clare Alexander, Head of Co-operative Development Scotland, describes how inclusive business models and a people-centred approach can increase prosperity and help us create a fairer, more progressive Scottish economy.

Co-operative business models play a key role in creating globally competitive businesses. They enable employees, communities and businesses to work together on shared interests. This unlocks creativity and increases productivity, innovation and growth.

Clare Alexander, Head of Co-operative Development Scotland

Clare Alexander, Head of Workplace Innovation, Scottish Enterprise

A people-centred approach to economic development

We want to help create a more progressive Scottish economy that contributes to increased prosperity and equity, creating better opportunities for everyone and spreading the benefits of economic success more evenly.

Inclusive business models play a key role in supporting the Scottish Government’s aim to create a fairer, stronger and more democratic economy. 

I believe our business community is key to supporting this. The inclusive business models we promote are great examples of plural ownership. This is one of the five pillars of Community Wealth Building. These are central to creating the changes we'll need to make so that we can benefit local communities and create national wellbeing. 

As we enter this period of rebuilding our economy, we recognise the importance of supporting this people-centred approach to economic development. This redirects wealth back into the local economy and puts control and benefits into the hands of local people.

We're committed to supporting businesses who want to develop their business model to drive success and resilience. We also want to ensure greater equity for our communities and fairer working practices for our workforce. 

Discussions on the social aspects of the economy have become louder in recent years — with Covid-19 and other large-scale challenges making this more relevant and urgent than ever. Various crises have had a massive impact on the global economy and Scotland, like all countries, has been deeply affected.

Many of our norms have been questioned and there's a desire to change the way we do business. Business leaders have prioritised wellbeing and communities have responded by supporting each other through the crisis. 

New and innovative ways of doing business have come to the fore. There's also been a focus on a collective, rather than an individual, call to action. We’ve been driven not just to respond in the immediate term, but also to make choices about the sort of economy we want to have and to focus our efforts on ‘building back better’.

Inclusive business models can create a stronger, fairer future

With thoughts turning to economic recovery, inclusive business models can play a critical role in helping to create a fairer and more democratic economic alternative. 

We recently commissioned research that shows there's a genuine desire not to return to business life as before. Almost half of Scots (48%) agreed the pandemic provided a springboard to make Scotland’s economy stronger and fairer. With almost two thirds (59%) of the younger generation (under 35s) specifically believing this.

Interestingly, 64% of those who responded said that the pandemic had already made their business more socially responsible. To strengthen this movement towards creating greater economic wealth that also helps protect jobs, communities and improves staff wellbeing, it's important that we build on that and keep these initiatives going.

I genuinely believe that plural ownership – in the form of employee ownership, community ownership and consortium co-operatives - will play a key role in achieving a stronger and fairer future economy.

These co-operative business models are collaborative vehicles that play an important role in creating globally competitive businesses, industries and infrastructure. They enable employees, businesses and communities to work together to fulfil shared interests. This unlocks creativity and capacity. There's also growing evidence that they increase productivity, innovation and growth - while achieving wider social benefits.

Employee-owned businesses often outperform

An employee-owned business is one in which the employees hold the majority of the shares, either directly or through an employee ownership trust. Selling to employees allows owners to manage their exit and achieve fair value while safeguarding the long-term future of the company.

Employee ownership gives employees a meaningful stake in their organisation and a genuine say in how it's run.

Take Highland Home Carers, for example, the leading home care provider in the Highlands and Scotland’s largest employee-owned business. The business used its employee-owned status to support its staff financially through the Covid-19 crisis. It did this through pay increases, a profit share pay-out, an enhanced sick pay programme and a share buy-back scheme. It also introduced an Employee Assistance Programme, where staff could access a range of support services, including the use of physical and mental health professionals.

Evidence shows employee-owned businesses consistently outperform in terms of improved business resilience during times of economic crisis. They tend to be more productive with higher levels of staff engagement and wellbeing, particularly relevant during a time in which people are spending more time working from home.

The potential of community businesses

Our research highlighted significant worries from Scots. Over one in three respondents said that job security was a concern, and one in four worry about closures of local amenities such as shops and pubs. Co-operative models can help to address those concerns through their ethos and structure.

Setting up a community co-operative can be an effective way for people to safeguard public services. For instance, coming together to take over a local shop or pub and prevent it from closing, which has a real relevance in our current climate.

Community businesses can have a significant positive impact on areas whether they provide a local service, deliver economic growth, or contribute towards the health and wellbeing of the local community – often all three. They're important to the economy because they can retain jobs, bring economic opportunity and retain vital services and amenities.

The economic and social potential of community business is significant, and could be more widely adopted in Scotland. Combined with the greater community spirit that was cultivated during Covid-19, now's the right time to champion community business models and the wider economic, social and environmental benefits they can deliver.

Community co-operative, The Crunchy Carrot, a community-run shop in Dunbar, East Lothian, responded to the community in its time of need with its move from supplying 60 vegetable boxes per week before the pandemic, to 350 during the early stages of lockdown. Its strong and well-established local supply chains with mills and farms (something local chain shops didn’t have) meant that all its orders were fulfilled and deliveries to vulnerable customers were guaranteed. 

While demand has eased, as some people return to previous shopping patterns, the Crunchy Carrot has still significantly grown its customer base on the back of the reliable and reassuring service it was able to provide during difficult times.

The advantages of consortium co-operatives

With 33% of Scots stating that working collaboratively with other businesses should be a priority, we’re advising business owners to consider the advantages of formally joining together via the consortium co-operative model. These are established when businesses come together for a shared purpose: to buy or sell in scale, market more effectively, share facilities or jointly bid for contracts. 

We know collaboration was a vital part of the response to the pandemic, so formalising a consortium co-operative could be an effective, low-risk way for businesses to improve market presence and achieve new goals whilst retaining their independence.

The Glasgow Canal Co-operative, which aims to 'unlock the potential of the canal to create a vibrant neighbourhood for people to live, work and visit’, is a consortium co-operative made up of 25 member organisations. This has been a difficult time for many of its members, but they pooled resources, shared risks and worked together to develop projects for the wider consortium which also support the members’ own activities.

Having a platform for members to share experiences and to help each other was very important and enabled them to respond to the effects of the pandemic more strategically.

While these types of inclusive businesses have experienced many of the same challenges around job retention, cash flow and uncertainty as others, they're often more resilient. This puts them in a strong position to weather the economic storm, or to recover well afterwards. During the initial response to the pandemic, many of these businesses were able to unite behind a common goal, helping their ability to adapt and innovate during the crisis.

I’ve seen first hand how these business models contribute to both the communities and sectors in which they operate, as well as the wider Scottish economy. The economy needs to have the best possible chance of recovery, with businesses that can be resilient, adapt and offer a fairer more inclusive economy. We know there's a significant role for inclusive business models to play in helping to build back better and would urge any business owners reviewing their options to consider adoption of these models.

How we can help

Co-operative Development Scotland (CDS) can offer one-to-one sessions with a specialist adviser. We'll help you choose the best business model for your needs and help you set it up. We also provide a range of information, advice and services to help you along the way.

For example, if you’re considering employee ownership, we can provide a feasibility study to help you decide if this model is right for your business.

For businesses or communities looking to collaborate or set up a co-operative, we can provide advice on how to get started, including legal requirements and how to structure your co-operative.

Learn how we can help your company achieve more and get further information on employee ownership, community co-operatives or consortium co-operatives and the support available. 

Read more on how CDS can help your business

Contact our specialists

Get in touch with Co-operative Development Scotland to find out how we can help your business achieve more.