Services and recruitment supplier the Cordant Group has just become the UK’s largest organisation to transition from a corporate to a social enterprise concept. Chief Energiser Phillip Ullmann and CEO Chris Kenneally explain why this is a game changer
The services and facilities management sector accounts for about seven per cent of UK GDP, yet still has little or no influence on governmental policy – an omission which has inspired both RICS and BIFM to focus on the benefits that the sector can bring not only to clients, but society as a whole.
RICS’ upcoming set of professionalising FM case studies will focus on the societal impact facilities management services can deliver, while BIFM’s Impact on Society Award “recognises the way that excellent facilities management contributes to the fabric of society.”
Examples of societal impact, which range from supporting start-ups and promoting environmental practices to improving education and training, typically form part of a broader corporate social responsibility (CSR) strategy, and are, of course, commendable. But what if an organisation can go much further in its societal contribution?
This is the proposition of recruitment and services business the Cordant Group, which announced in September it was to become a social enterprise by reinvesting all of its profits into initiatives and programmes designed to help improve lives and society.
For the uninitiated, a social enterprise is “an organisation that addresses a basic unmet need or solves a social problem through a market-driven approach” (Social Enterprise Organisation UK). In other words, it’s an organisation which may still aim to make a profit – but what it does with that profit sets it apart, by reinvesting or donating it to create positive social change.
Cordant’s range of services includes recruitment, facilities, cleaning and technical services. It turns over £840 million and employs 125,000 workers annually, making it by far the UK’s largest organisation to adopt a social enterprise concept. But what inspired this family-owned business to take on this massive change?
Phillip Ullmann, whose title has now changed from Executive Chairman to Chief Energiser, explains: “Initially we didn’t know what a social enterprise was at all until Deloitte mentioned it to us a couple of years ago when we were looking at a public sector opportunity and they said, ‘why not do it as a social enterprise?’ I knew nothing about it, but the more I looked into it, I thought this is big, a hidden treasure. It’s a paradigm shift, and it’s not CSR, which is what many perceive it to be. Up until now, we were about profit maximisation, and now it’s social impact. Put another way, it’s from the I to the We.”
The changes have brought some fundamental shifts in the way the business is run, beginning with a shareholder cap; dividends are capped at £250,000 per shareholder family, and anything made thereafter is used for society. Alongside this, all executive salaries are capped at £400,000 (twenty times that of the lowest-paid employee).
Says Ullmann: “There is a legacy commitment to senior managers which we will honour, but thereafter we’ll apply a cap on remuneration as well of 20 to one. This is because we want people to buy into this philosophy. £400,000 is enough for a comfortable life, and once I’ve got to that point I want to give something back. We’re recognising that not everyone will want to join us, but those are the people that we want.”
Another change is the creation of a profit share scheme for both permanent and temporary staff. Ullmann describes this change as “very important, as profit share is fundamental to responsibility and what we need to do as a society is ensure that the workers are engaged in looking for productivity. Once they get a share in that wealth, everyone begins to think about how we can improve our processes.”
But what of senior management? How do they get involved? According to Chris Kenneally, Group Chief Executive officer, the leadership team – which comprises around 10 managing directors – is aligned with this change, but will continue to run their business units and day-to-day operations to generate profit, “because without that we can’t give back to society”.
Rather than employ a social enterprise manager, the organisation has appointed legal experts BWB (Bates Wells Braithwaite) to assess the social impact of the group on an annual basis. Explains Kenneally: “BWB have worked in the social enterprise market for a long time and we’re using those guys to extract their knowledge to enable us to put the benchmark into our organisation so we can measure what success looks like, and how we deliver that.
“This is more than a compliance tick in the box process like achieving BS 5750, where once a year, when they come to audit, you take it out of the drawer. This is about flipping the organisation on its head so that the leadership are coaching the workforce to take responsibility.”