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Collective 'hands up' for employee ownership

A global foundry supplier experienced a 60 per cent increase in turnover in the three years following its move to employee ownership. A reduction in waste, an increase in productivity and company-wide engagement are some of the additional benefits noted by this leading supplier of capital equipment for the foundry sector. Clansman Dynamics is renowned for the supply of robust workhorses. The company’s manipulators, grinders, knock off hammers and hydraulic wedges are designed and built to withstand the harshest of conditions, offering long lasting solutions to a customer’s finishing processes.

However, having developed into an internationally successful business with a global reputation for reliability and performance, the company became the subject of increasing acquisition interest from overseas. Alarm bells were ringing for the company’s founder, engineer Dick Philbrick. Philbrick was keen to ensure that the business, with its skills and expertise, would remain in Scotland, a country with a proud tradition of engineering. Whilst the solution seems obvious now – a decade later and with years of continued growth and accomplishment under the belt – in 2009 the company emerged as a trailblazer in the sector when it transitioned into full employee-ownership, thus securing the business for employees, customers, and the country.

Fast-forward to 2021 and current managing director Sandy MacDonald remains true to the original ethos and Philbrick’s passion for a global business strengthening a regional economy. MacDonald explains how normal business culture is still relevant, but with added impact: “We have to add value, do so efficiently and we must innovatively build better products than anyone else – all the normal business challenges. However, we are not constrained, looking over our shoulders at distant external shareholders. We are the shareholders. We face those challenges, unshackled, in the context that the rewards are for ourselves.”

There is evident conviction that a company owned by its employees benefits from pride in work, attention to quality, a company-wide appetite for success, and loyalty and engagement throughout the business – from the shopfloor, to the management, to the local community and, most importantly, to the customer. “We all share the mission and responsibility to uphold the founding values of the company; for the benefit of current and future employees,” MacDonald affirms.

Having secured continued employment and economic benefit for their native Scotland, the management team is keen to continue to deliver value to the employee owners. Share ownership is a benefit not lost on sales manager and elected director, Andrew Allan. His introduction to the company came from an article in a local newspaper highlighting the merits of employee ownership at Clansman. “It was one of the things that attracted me to the company,” he explains. Following a four-month work experience placement between his final years at university Allan saw the chance to have ownership in the company he worked for as an advantage when choosing his career path after graduation. This is just one example of how championing employee-ownership helps attract the appropriate calibre of workers. Director, Derek Muir says: “It ensures we have the right blend of experience…it attracts excellence. The nature of the business, its customer base and its ambitions, means that it absolutely needs the best people.”

Servicing the needs of household names like Ferrari, Daimler, Volvo, and Scania provides added pride for the workforce and further strengthens the assertion for this type of business model. The ability to meet international standards and expectations means that 90 per cent of production is exported and MacDonald is proud of this achievement. “We are a global exporter of high value, critical capital equipment to some of the biggest blue-chip names around the world.” Allan champions the fact that the pride is evident outside of work: “You want to talk about what we do at Clansman. I’m proud to be a part of it and own part of it.”

The share option is open to all employees who want to pursue the offer, with no obligation to those who choose not to. Although individuals have different roles and responsibilities in the company in terms of a conventional management hierarchy and system, there is an integrity that permeates the business because as MacDonald explains: “Nobody should feel less valued than anyone else, as long as they are committing to the company. We try to live this out in a culture of dignity and respect.”

Clansman has been working closely with employee ownership expert Carole Leslie of Ownership Associates over the years to ensure the company gets the best from its employee ownership structure. She told Foundry Trade Journal. “Clansman has always been a successful business. It’s testament to the team’s commitment that it’s continued to grow and flourish under employee ownership.” The Trust is the majority shareholder in the business which means that the company has a stable ownership model that secures the business for the long term. The company’s leadership is accountable to the Trustees to ensure that Clansman continues to be commercially successful, producing high quality products whilst being a great place to work.

Leslie is complimentary about the manner in which Clansman has navigated the process and highlights how the business model has a proven track record in many parts of the world. “This is not an unusual model in the US or Europe. Scotland’s growth in employee ownership is attracting attention across the globe. Much of this can be attributed to success stories like Clansman. Clansman proves it works. Customers are happy that the people they deal with are owners and have a personal interest in ensuring superb quality products and service.” She is particularly keen to note the benefits: “There are higher engagement levels and more interest in the big picture. A recent employee survey showed that having a say in the company and influence over direction is important. Employees do gain from significant financial benefits, but this is always ranked by Clansman Dynamics as the least important benefit of employee ownership.”

Customer is still king

When asked how the customers react to this unconventional business model in the cast metals sector, the answer is loud and clear. “The customer knows that the guys who build the machines are the ones who will install them and maintain them. There’s a real sense of ownership,” MacDonald enthuses. More recently, this has been supplemented by photographs of the build team being delivered with the equipment, along with the machines sporting nameplates listing the individuals involved with the design and build. It all comes back to one word, which keeps cropping up – pride.  Everyone feels proud, because everyone feels a part of the company’s structure and success. “It connects the customer to us in a very direct way,” MacDonald reflects.

Commitment to the brand in-depth permeates Clansman throughout, with a strong sense of urgency about helping the customer, providing well thought out solutions and tough machines that will do the job for years. Muir concurs: “It’s amazing how many of our customers are interested in our business model, they see a benefit because of the commitment across the company.”

Allan is quick to point to the calibre of employees and highlights that the business model is just one aspect of the company’s growth and success rate: “I think it’s not just because of the employee ownership, I think the we all genuinely care about the company and, most importantly, the customer. We all want to make the customer happy and make the products the best that we can. The structure we have means that as an individual you also feel a part of it.”

Muir agrees, and presses the fact that whilst all companies have committed individuals, there are a higher number in employee-owned enterprises. “The difference here is that we have a larger percentage of those than is the norm. Other companies have workers; we are owners.” It can’t all be plain sailing can it? When pressed about the complexities of juggling a large opinion group MacDonald admits: “There is an added dimension to leadership in an employee-owned business. You are managing the people who own the business. There is no hiding place. Leaders are accountable to shareholders in a very immediate way. You want to be on top of your game every single day.”

Leslie notes that in essence a collective interest is more of a benefit than a hindrance. “There is probably more consultation than would happen in other businesses, but this is a positive rather than a disadvantage. It takes time, but it means that people are on board with the actions, consequently execution of decisions is more effective.” Leslie pulls no punches: “However, there is no tolerance of egos or arrogance – high levels of accountability means that communication is important and customer satisfaction is paramount.”

Injection of external thought

An “enabling style” promotes skills development and job diversity. Indeed, there is a low turnover of employees at this multi-skilled workforce, where everyone is keen to “muck in” and task share. Clansman’s low turnover of staff could result in an internal tunnel-vision approach, which MacDonald is keen to avoid. “We actively encourage bringing fresh ideas into the business; things like lean tools, additive manufacturing and advances in control systems. An outward facing view is important. We connect to other people and companies, with intent, as potential supply partners, mentors and maybe eventually friends! This keeps our thinking sharp and our minds open.”

The upbeat and inclusive culture at this world-leading company is evident most recently with the collective recognition of the need to keep production going during what has been a testing time for all manufacturing in 2020. Everyone at the company has a real motivation to find solutions, even in the darkest of times. The equipment produced at Clansman Dynamics is customer-driven, taking into account the specific needs of the harsh environments where the kit will be deployed. Reliability, flexibility, ease of use, health and safety of operators and speed of delivery are all key factors, but so too is the engagement of a workforce that has a tangible stake in the company and its success. The message is clear, if the employees know the customer and are genuinely invested, then there is a greater chance of satisfying customer needs.

The management team acknowledges that Clansman is far from perfect with more work to undertake on infrastructure, ongoing training programmes, health and safety culture, and employee owner obligations. But at least the company’s destiny is in its own hands – its own many, individual hands, which is something to be thankful for, now and into the future.

Contact: Andrew Allan, Clansman Dynamics, Tel: +44 (0) 1355 579 900, email: a.allan@clansmandynamics.com web: www.clansmandynamics.com