Employee Ownership case study: Richer Sounds hands over firm to staff

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Despite many stories of doom on the high street, here is a great success story of a retailer of technology. Julian Richer built a very successful business with the help of colleagues and employees. For this reason, he intends to reward his employees for their efforts by joining companies such as John Lewis in ’employee ownership’, and giving staff £1,000 for each year they have worked. Here you can read why Julian believes that this idea increases staff loyalty and commitment to the business and sales…

Julian Richer will receive an initial £9.2m for his Richer Sounds stake but he is giving £3.5m of that back to staff. Here is an excerptfrom the original article featured in The Guardian: 

The founder of Richer Sounds is handing control of the hi-fi and TV retail chain to staff, in a move that will also give employees large cash bonuses.

Julian Richer will announce to staff on Tuesday that he has transferred 60% of his shares into a John Lewis-style trust. Richer, who recently turned 60, said the “time was right” to pass the baton to the chain’s 531 employees.

“My father dropped down dead at 60 so I am very keen for this to happen in my lifetime,” explained Richer. “I felt the time was right, rather than leaving it until I’m not around, to ensure the transition goes smoothly and I can be part of it. I still really, really care but it is time for the next generation.”

The company will pay Richer an initial £9.2m for the stake but the businessman is giving £3.5m of that back to staff, who will receive £1,000 for every year they have worked for the retailer.

The average payout will be £8,000 but there are 39 employees with more than 20 years’ service who stand to receive substantial windfalls. The company’s nine directors, who Richer said earn six-figure salaries, are not included in the bonus pool: “This is to thank loyal, hardworking colleagues.”

With annual sales of nearly £200m, Richer Sounds is one of the biggest UK companies to embrace employee ownership in recent years.

The Employee Ownership Association (EOA) says more than 350 businesses have now adopted the model, with at least 50 more preparing to follow suit. Recent converts include Riverford, the organic vegetable box company and Aardman, the Bristol-based animation studio behind Wallace & Gromit.

An unorthodox business figure, with his long hair and sideline as the drummer in funk band Ten Millennia, Richer is lauded for the success of Richer Sounds which he founded in 1978 at the age of 19. His business philosophy, set out in his 2001 management book The Richer Way, champions providing secure, well-paid jobs with a happy workforce as being key to business success over the long term.

Richer Sounds, which has 53 stores, refuses to use zero-hours contracts and is one of the 14% of companies with a pay gap that favours women. Employee perks include access to company holiday homes around the world, including in European cities such as Paris, Venice and Barcelona. It donates 15% of profits, which last year stood at £9.6m, to charity.

Read the rest of this interesting article here: www.theguardian.com/business/richer-sounds-staff-julian-richer