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Last week’s revelation that staff at Blackwood-based magazine printer Pensord Press are set to pocket thousands of pounds thanks to a free share-option scheme demonstrated the motivational power that equity participation can have on a workforce.

When Tony Jones completed an MBO at the company in 2003, the printer was down on its luck and morale was at rock bottom, but the chief executive had a clear plan of how he, with the help of his staff, could turn the company around.
Giving employees a vested interest in the future of the business, so that they were rewarded for their hard work and loyalty when its fortunes changed, was central to his philosophy.

"A business should be about its people. At the time, what we gave them was nearly worthless, but I had a belief that they would get something from it in the future," he says.

Jones took advantage of the Enterprise Management Incentives (EMI) scheme, which gave employees the option to acquire share options effectively free of charge. In his own eyes, it was an unusual move but one that, following his sale
of the business to an MBO team led by commercial director Dar­­ren Coxon, is now paying divi­­dends to those around him.
"I must admit we were quite sceptical when the share options were introduced, it was a nice gesture but I put it to the back of my mind. I’m now extremely grateful to have had this cash effectively gifted to us," says Pearl Dunn, pre-press operator at Pensord for the past 29 years.

According to Nicholas Mockett, partner at Moorgate Capital, it is unusual for equity participation within a print business to extend to machinery operators.

"Anecdotal evidence suggests that giving equity to people who are below the management team doesn’t necessarily yield much of a benefit because they themselves don’t put much value on it," he says.
"However, in terms of pushing equity down into the entire employee base, options are probably the best way of doing that because they are a one-way bet."

Maintaining dialogue
Andrew Brown, director of corporate affairs at the BPIF, adds that the key to offering extra financial motivation to a company’s staff is maintaining a dialogue with each and every employee.

"Providing a performance-based scheme to staff can promote motivation and improve efficiency among staff, but if you have to pay out when your company is potentially still losing money, that can prove problematic," he says.

Mockett argues that one benefit of options is that they will only be exercised if the value of the equity has gone up. "Whereas, if staff have bought shares, they’re more tied in as they’ve parted with cash and they need to see a return on it."
In light of the cash windfall at Pensord, Brown says that a profit-based operation or a share-ownership model can benefit staff, but adds that it is important for business owners to inform their employees on the performance of the company during the good times and the bad. "On a financial basis, an employee could feel removed from what is going on, therefore a dialogue must be entered into. To me, it is essential."

Steven Brown, director at Your Print Solution, agrees: "Keeping your staff informed works, there is no doubt about it. We have fortnightly meetings to update them on how we’re doing and there is a real team spirit."

The High Wycombe-based company runs events for its employees three times a year, all of which are paid for by the directors. These include away-days for staff and their partners as well as Christmas events and ‘ladies’ nights’ for staff to enjoy a night out. "Yes they can prove expensive but they are worth it. As a result, we have staff that enjoy coming to work and there is a tight bond among us," he says.

According to Kevin Sarney, managing director at Butler, Tanner & Dennis, a key fundamental he communicates to the 120 staff at the Frome-based company is that "we are all in this for a common goal".

Team spirit
Although the company doesn’t offer financial incentives to staff at present, Sarney does believe that such schemes can have their place. "Communication is critical. We discuss all manner of issues with staff. Times are still tough and there are long-term objectives we want to meet here."

But in Pensord’s case, it is difficult to argue with the pairing of an incentivised workforce coupled with strong leadership when it can turn a loss-making £4m turnover business into a profitable £12m powerhouse in a six-year period.

Jones concludes: "I am only at the front of the bus and I’m dependent on everyone else. I had total belief that the good times would come and they have. It is all about the people, if you look after your people then, surprise, surprise, you can often make some money too."