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Royal Mail's share scheme - employee engagement or privatisation politics?

Posted by on in Employee Engagement

The announcement that Royal Mail will be privatised in the Autumn won’t come as a shock to many. Chief Executive Moya Greene has been openly talking about the need for external investment since January this year, and her tenure has repositioned the group as a viable opportunity for potential investors. So where does this leave the employees of this historic institution?

As part of the flotation plans, each of the 150,000 staff will be given their share of 10% of the share capital on offer – equivalent to around £1500 to £2000 worth each.

Employee ownership like this is a great way to reward and incentivise and it’s something which the government have been actively promoting over the past year. It’s not just about making businesses a more rewarding place to work. Jo Swinson, Minister for Employee Relations, recently wrote on the Cooperative News site about the strong links between employee ownership and key business performance areas likes productivity, absenteeism, resilience and ultimately profitability. So it would seem to be the natural strategic move for Royal Mail, which is focussed on securing its future by competing with the big private communication companies. But Royal Mail isn’t just any other business. It’s been open for public use for nearly 380 years and its history as a national institution isn’t matched by any other organisation in the country, possibly the world.

The lessons of Consignia

That normal rules don’t apply was demonstrated over 10 years ago, with the short-lived name-change of the Post Office Group (including Royal Mail) to Consignia plc. A rebranding exercise to set the group up for diversification and competitiveness, the name was boycotted by unions and disliked by the much of the public who have such a deeply ingrained emotional tie with the service.

This doesn’t mean that Royal Mail can’t modernise in a way that’s accepted by employees and its customers. Since Moya Greene took over in 2011, Royal Mail has turned from a loss-making business into one that announced nearly £400 million in pre-tax profits as recently as this year.

There have been disputes and strikes, notably in 2007, but staff eventually signed up to modernisation plans and the group continues its turnaround.

Staff surveys show anxiety

The most recent staff satisfaction survey revealed some precarious results though that mean the group can’t afford to be complacent. Only 36% support their employer’s strategy and objectives and 74% don’t agree with the pace of change. Privatisation is bound to raise anxiety around these issues further, about a further loss of control for employees, fears that they will be asked to cope with increased workloads, and worry about cuts. In that context, it’s difficult for employees to feel the benefit of the share capital that they’ll receive. Many will feel it’s an award to soften the blow of the sell-off, which changes the dynamic where employee ownership can be empowering and motivational.

Authentic share schemes 

The economic situation may have pushed the government into selling Royal Mail before there has been sufficient time to prepare employees for the change. What difference if they had announced a commitment to employee ownership in the event of privatisation, a long period in advance of any sale? Or if more successful profit-share initiatives were operated before this announcement was made?

We await more details of the share sale to come but it has already highlighted the problems of announcing engagement initiatives at the same time as a major change in an organisation. Royal Mail must make sure that such worthwhile initiatives don’t get lost in the processes of privatisation, and the new owners can’t afford that to happen – getting employees motivated and on side will be key to making Royal Mail thrive.

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Comments

  • Guest
    Bay Jordan Thursday, 18 July 2013

    A nice, balanced perspective of a possibly emotive and controversial topic. It strikes me that the success of this initiative, and the extent to which it does engage employees depends on two things.

    Firstly the extent to which proper change management techniques are used to elicit the whole-hearted support of employees.

    Secondly, the extent to which the allotted employee shareholding:
    a) is equitable (i.e. does it benefit all employees proportionately and fairly, or does it favour the upper echelons of management?) and
    b) empowers employees and give them a voice in the running of the reshaped organisation.

    I guess, as Cary says, we will have to wait and see. One thing, however, is sure: the long-term success of the transformation will depend on the manner in which these issues are addressed.

  • Matt Smeed
    Matt Smeed Friday, 19 July 2013

    Completely agreed @Bay Jordan - and underlying your two points above is a theme of authenticity - i.e. Royal Mail's true motivation for putting this package together.

    Assuming that the shares on offer are a genuine attempt to involve staff in the running of the business, to motivate them to make the change process a success and to reward them for their existing commitment - then I can only see this as a positive aspect of an already difficult situation.

    The worry for me will come if the scheme is not seen through, or is delivered poorly (linked to your points above) - suddenly the best laid plans may come across to staff as a de-motivating factor, or even dare I say it a 'bribe' to ensure that the change process follows the route of least resistance.

    Unfortunately as you say, I think only time will tell as to whether this is a success - but you would like to think the points you have raised above are being discussed and considered somewhere within the walls of Royal Mail!

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Guest Thursday, 27 November 2014

Cary CooperGood Day at Work

The new well-being resources hub founded by @profcarycooper and Roberston Cooper. Join for FREE and access blogs, videos, downloads, podcasts and more.

Ben MossBen on Twitter

MD of Cary Cooper's business psychology firm, Robertson Cooper - for all things well-being, engagement and resilience at work.

Cary CooperCary on Twitter

Professor Cary Cooper, Director and Founder of Robertson Cooper Ltd, Distinguished Professor of Organizational Psychology and Health at Lancaster University.

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