IT infrastructure distributor Axiz is in the process of selling 100% of the company's equity to its employees - and is already reaping the rewards.
The Axiz Ledibogo Trust was founded in 2003 when the company's 20 shareholders sold shares to an employee-owned trust so as to benefit every employee. Through a process of small, monthly salary deductions, Axiz's 450 employees will ultimately own 100% of the stock through the trust.
At present, the trust owns just over 10% of the company, which turns over R1,8bn/year and is growing at 30%/year.
Participation in the ownership scheme is obligatory, but share ownership has been limited to a maximum of 5% per individual. "I don't want to develop different communities within the company," says CE Anthony Fitzhenry.
He started thinking about employee ownership five years ago, initially believing that a listing was the best way to share the company's wealth. He changed course at the last minute. "I wanted to create a situation where the capital, management and employees are aligned through a common interest - ownership.
"Everyone told me that it was impossible."
Ignoring that advice, he scoured the world for examples, took the best and modified it to create a local solution.
"The first priority is for employees to have a solid understanding of what ownership means and, more importantly, to believe in it.
"Then, to make informed decisions, people need to read and understand balance sheets, income statements, investments and returns."
The company, which has always had open book management, then established a trust for the employee-owned shares and employees appointed managing trustees.
"Axiz is run by a board, selected by the owners, with at least one trustee director appointed by the members of the trust."
Agreeing on principles for an employee-owned organisation is vital.
"The CEO must be willing to be held accountable by the board and the employee owners . Not everybody is willing to go that route."
Changes in the company culture are difficult to pinpoint, but Fitzhenry mentions new levels of trust and respect. Changes in the numbers, however, are clear. "Our expenses have gone from double-digit to single-digit figures."
As employee owners, individuals are assuming more responsibility. As a result the company is able to manage its rapid growth better than in the past.
Ultimate success is not yet assured, though.
Fitzhenry is a founder member of the Employee Ownership Association Africa (www.eoaa.co.za). "We wanted to pass on our knowledge to others," he says.
