[Podcast] Every Last Share: Rob Knott on the Power of Employee Ownership

May 19, 2021 Shareworks Marketing

Headshot of Rob Knott Chairman of GHD as Guest on Shareworks Podcast on Every Last Share: Rob Knott on the Power of Employee Ownership, beside with the words 'Thriving Globally with Equity' in teal.

 

 

 

In the late 1940s, Australia was reeling from the Second World War. The country’s workforce decimated, Geoffrey Davey was struggling to retain his best employees at his engineering firm GHD.

“What was needed was a way to involve them in the engine room of the company’s very being - to give them a chance to be investors in their own future,” wrote Michael Sweet in Breaking New Ground, a history of the company.

To increase loyalty, Davey made a select group of his best employees part-owners. He encouraged them to think of themselves as custodians of the business. They owned it now, but eventually, they would pass on their shares to the next generation. The most important thing was always leaving it in better shape than they found it.

His plan worked. GHD’s new employee-owners became more engaged, productive and loyal. The company enjoyed sustained success through the 20th century — growing its headcount, adding new service lines and spreading across Australia.

Davey’s ownership model remains strong to this day — as does his message of stewardship. GHD’s current chairman Rob Knott is just as passionate about his role as custodian as his predecessors were in the 1940s.

“Our sense is about holding a company in trust,” he explains. “We hand it on from one generation to the next, always leaving it in better shape than we received it.”

Knott says that a distinctive culture can be created in companies like GHD which are entirely owned by their employees. Most large businesses have investors and those investors want returns. They push companies to grow quickly and maximize profits wherever possible. While that may produce short-term gains, it’s is often the case that decisions driven by short term performance pressure are not necessarily in the best long-term interests of the business.

But there are no outside investors at GHD. Every last share is owned by someone who works within the group. When your investors are your employees, the growth calculus changes. Instead of chasing short-term wins, you can pursue what’s in the company’s long-term best interests. At GHD, Rob isn’t just thinking about the next quarter — he’s planning for the next decade.

GHD’s ownership model and strong culture also allowed it to grow rapidly without compromising its foundational beliefs, motivations and philosophies.

“As an employee-owned firm, you can set your own pace,” he says. “You can walk away from the deals that might be risky. You can slow or increase your tempo depending on what's happening. It gives you the ability just to make good decisions.”

When Knott joinedGHD, it was an Australian company. Apart from a couple of overseas projects, all its business was in its home country.

During Knott’s 23-year career with GHD, the company has grown immensely. GHD’s headcount has increased from 900 when Knott joined to more than 10,000 today. And revenues have followed suit, ballooning from AUD100 million to AUD2.2 billion in 2019. Today, it’s a global company with operations in North America, Southeast Asia, Europe and the Middle East.

Looking back on GHD’s journey, Knott struggles to imagine the company without its employee ownership program. It’s so integral to the business that he says one simply couldn’t exist without the other.

“Employee ownership shapes who we are,” he says. “Across the industry, we all do similar things. Ownership doesn't change that. Ownership changes the way you work and the culture you create.”

What you’ll learn from GHD:

  • Why GHD made a conscious shift to become a global company: “Globalization was a strong force in the Australian market. We were starting to see new competitors come into the market. You could see early signs of consolidation. As a company, we either had to grow and become a global operator or we would disappear and become irrelevant.”
  • How employee ownership changes mindset: “They’re an employee… but they're also an owner. As an owner, they're interested in more than their career. They engage in the strategy of the company. They engage in risk. They begin to challenge things. Owners care about their company in a way that an employee can't or doesn't. Their money's in it so they nurture it.”
  • How employee ownership integrates GHD into local communities: “I always tell our clients that if they’re employing GHD, the funds that you're paying are actually cycled back into your community. Our people are part of their community. Everything that comes into GHD from clients goes back out in our expenses and our returns. That's a powerful mindset when you think of the interests people have in supporting their local communities and economies.”
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