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Employee ownership: a possible model for independent community pharmacy?

In this article Martin Bennett explains the process of introducing an employee ownership scheme for the staff of his independent community pharmacy business

By Martin Bennett

In this article Martin Bennett explains the process of introducing an employee ownership scheme for the staff of his independent community pharmacy business

As managing director of Associated Chemists (Wicker) Ltd since 1973 I have had the benefit of working for a pharmacist consortium-owned company with a strong emphasis on developing the professional aspects of pharmacy practice. The company was formed in 1951 when 45 independent  pharmacists came together to set up a city centre pharmacy that would provide an extended hours service for the Sheffield area every day of the year. Wicker Pharmacy opened on 27 January 1952 and has been open every day since. During that time it has been at the forefront of community pharmacy developments from typewriters to robots and pharmacist prescribing.

Sixty years on and the structure of community pharmacy has changed dramatically. In the 1950s around 80 per cent of community pharmacies were owned by independent pharmacists. Now the pendulum has swung the other way with over 80 per cent in Sheffield being owned by multiples. In addition, the Government’s relatively brief flirtation with 100-hour pharmacies has further distorted the picture.

In the main, the community pharmacy model that we have seen develop is one where an independent pharmacist builds up a pharmacy practice and then puts that business up for sale to the highest bidder. This has resulted in the bulk of the busier pharmacies being purchased by one of the multiples, which have the advantage of additional buying power and access to funds. The result is that most community pharmacists are now employees or locums and there is a fair amount of dissatisfaction due to a real or perceived sense of lack of autonomy and target-driven micromanagement.

Whether this structure is good for community pharmacy or patients is debatable. It has been claimed by Chijioke Agomo (PJ 2012;288:8) that it could be detrimental to a profession that wants to play a pivotal role in healthcare. He went on to put forward the case for “pharmacist partnerships” as a future model for pharmacy ownership. However, given the movement towards a team approach in delivering services, I am not sure this goes far enough.

Against this background Associated Chemists (Wicker) Ltd has been looking at how the company might continue into the future, maintaining its professional ethos, but still allowing the existing 28 pharmacist-shareholders the means of relinquishing their shareholding at a fair value when they so wish.

That was our problem for 2012 — how do we square the circle?

Enter the concept of “employee ownership”. Ever since the mid-1960s I have taken a great interest in the John Lewis Partnership following a holiday at its Odney Club in Cookham near Maidenhead, Berkshire, courtesy of a friend’s mother who was a partner. (She was employed by its Cole Brothers store in Sheffield — highlighted in recent years by Richard Hawley as the title track on his “Cole’s Corner” album.)

I was fascinated by a company that provided so much for its employees — so different from my family’s experience of employers in the steel industry. The years moved on, but some of the concepts stayed with me and I have always attempted to involve staff in decision making and introduce profit-sharing schemes.

So, in an attempt to find another option to our dilemma, I turned to the Employee Ownership Association’s website (www.employeeownership.co.uk) and discovered a mine of information. I quickly realised that the number of models of employee ownership almost matched the number of companies involved. Everyone had a different system. Some involve a trust owning shares on behalf of employees; at the other end of the spectrum, others insist on every employee buying a minimum amount of shares individually. Between the two extremes were variations — the mixed economy models.

I was lucky to be able to visit two highly successful international companies based in Sheffield that are employee-owned: Swann Morton (the scalpel blade manufacturer), which has the “trust” approach, and Gripple (the wire fence link manufacturee, among other things), which uses an “every employee must invest a minimum of £2,000” approach. I also attended a number of meetings where it was possible to speak to representatives from other employee-owned companies and to others contemplating a move to employee ownership. The John Lewis model, with a trust holding the shares, looked the most suitable for pharmacy.

The upshot of all this activity was that, as chairman of Associated Chemists (Wicker) Ltd, I wrote to shareholders and staff outlining the options for the future.

The most popular option for both groups proved to be the move towards gradual employee ownership. To enable this to happen we had to undertake changes to our articles of association and this was achieved at an extraordinary general meeting in August 2012, along with an agreement to provide the employee trust with 10 per cent of the issued shares of the company. This was a generous gesture on behalf of the shareholders and an essential one to get the venture off the ground.

On 19 December 2012 the Wicker Employee Trust (WET — quite appropriate for 2012!) was set up and the Wicker Employee Trustee Ltd was incorporated as a company limited by guarantee.

The situation now is that the employees, in the form of WET, own 10 per cent of the company. The idea is that each year they will purchase shares from existing shareholders at a fair price (as valued by our auditors). The funds for these purchases will come from money previously paid as staff bonuses. The staff will, however, receive money from the dividend due on their shareholding (in proportion to their earnings). Initially this is likely to mean a reduction in money received (the bonus being greater than the dividend) but as the trust builds up its stake in the company that should reverse. Although the trust only owns 10 per cent of the company, if we look at our other shareholders we can see that almost 70 per cent of the shares are now held by the employees and former employees.

Alongside this we have introduced democratic structures that ensure the board of Associated Chemists (Wicker) Ltd has employee representation, as will the trust.


So there we have it — a new structure for the future. Looking at the need of a team approach it feels as if this could work. We are an unusual company — 75 employees on one site providing all sorts of pharmacy and mobility services.

Team approach

To be successful we need a team approach. We have pharmacists, prescribing pharmacists, accredited checking technicians, technicians, dispensers, healthy living champions, medicines counter assistants, mobility showroom staff, mobility consultants, service engineers, cleaners, accounts staff, administrative staff, an IT manager and an operations manager.

Academically our staff range from those who left school at the age of 15 to one with a PhD in astrophysics, but they all have important parts to play if we are to continue to be successful. They all need to be involved in ensuring that “their” company provides the best possible service to its customers and has a flexible approach enabling it to provide innovative solutions to future problems. I am hopeful that this model will also give professionals the autonomy they need to provide clinical services to the highest standard.

Equally important is that work should be satisfying and fun — that is how it has been for me for the past 40 years. I hope that this new structure will enable our unique company to continue providing this opportunity to staff well into the future.

In the 1960s, The Pharmaceutical Journal ran a leader “Associated Chemists — a model for the future?”, in which it charted the development of various “associated chemists” around Britain. Perhaps now is the time to look at employee ownership as a model for pharmacy practice in the future.
It will be interesting to see how the future pans out. Will we exist in 15 years’ time as a 100 per cent employee-owned organisation? Or might we have been swallowed up by a multinational or succumbed to a fate not yet perceived? Whatever happens, at the very least the staff now have an involvement — a voice and a vote as to their future. What is more, I have every faith in our staff steering the good ship “Wicker Pharmacy” safely through the choppy seas ahead.

In these times of austerity and negativity, here is a route to a brighter, more rewarding future for your team as an employee-owned company.


Martin Bennett, FRPharmS, is managing director and chairman of Associated Chemists (Wicker) Ltd (email martin@wicker.co.uk)

 

Citation: The Pharmaceutical Journal DOI: 10.1211/PJ.2013.11115983

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