RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance Ownership, performance and reward at RCU - what works for us Gordon Aitken, Director RCU

RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance About us – briefly! Customer surveys; staff surveys; market analysis; data mining; labour market info; stakeholder perceptions; income generation; customer relations management. Colleges and training companies Private sector clients

RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance Previous Model (2002-April 2009) Managing Director Deputy Director EBT nominee 2 Non-Execs Right to attend for all other staff Salary bonus (equal for all staff) EBT group benefits (caravan, events) Reinvestment

RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance Current Model (April 2009 onwards) Managing Director 3 Exec Directors (Elected A shareholders) 3 NEDs Right to attend for all other staff Dividend (equal for all staff) Staff Benefits Budget (group benefits) Reinvestment Share Ownership 17 voting shares awarded after 1 year’s service capital owning shares (and 900 options) – 60 per year of service.

RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance So what’s changed? This is what colleagues say Click hereClick here (you need to be running slide show)

RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance Remuneration Structure

RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance Benefits and (Potential) Problems Collective enterprise Motivation/innovation Cost control Self-adjusting remun. Peer group impact Reduced mgt cost Recruitment Transparency Development spur Longer perspective Initial legal/tax cost Slower decision-making Risk of “free riders” Disenchanted “top performers” Small company model – James Meade (1975) “employee-shareholder enterprises” c30? BenefitsPotential Problems

RCU, Buckingham House, Glovers Court, Preston, PR1 3LS Tel | Fax | Seminar 5: Linking employee ownership to reward and performance Final thought No structure works without genuine employee involvement... but most structures will work with it.