A year inside the machinery of governance at dxw
I’ve seen too many sparky organisations sell out to big capital and lose their essence, despite good intentions and trying very hard
One blink-and-you-miss-it year ago I was appointed as dxw’s first non-executive director on the company board. I’m reflecting on that year for dxw, and for the wider industry.
I joined dxw because of a choice made some months before. dxw’s founder and management team chose to manage the founder’s exit by setting up an employee-owned trust rather than selling out to external shareholders. Over the years, I’ve seen too many sparky organisations sell out to big capital and lose their essence, despite good intentions and trying very hard. It’s all about whether the mission goes with, or against, the grain and the context. You can go against the grain, but it’s harder, there’s more friction.
How it works
dxw is set up with a staff majority shareholding held in trust by a trustee board which holds the organisation to account for (I paraphrase):
- prioritising the experience of users of the services we build, especially where they are the most vulnerable in our society
- radically improving the quality of peoples’ interactions with government, because we believe that government is a force for good
- reducing the costs of transactional government so that money can go to other more needed places
- being a sustainable growing organisation that cares about its employees
These are great things to be held to account for! But it’s been quite a journey going from a founder-owner plus management team – a light structure for a team of under 100 – to a structure with the trustee board (which includes 2 elected staff trustees) and a company board. Both supported by a staff council which gives employees a voice. And also growing by over 50% in the last year, to well over 120 employees today.
Getting the governance right
Our starting point, on the company board, which runs the organisation, has been to tease apart the tactical day to day, week to week, from the more strategic. We now have quarterly board meetings to which we devote a day, to bring the right mindset to longer term perspectives. These meetings give us the collective breathing space to answer questions about the kind of organisation we want to be in our future.
After 6 months, I was asked to chair the company board, and we’re clear that the chair leads the board, and the CEO leads the organisation. It’s a close team of 2 with different contributions, and freedom to focus on the different aspects of the organisation we both care about.
It’s taken a while for governance to bed in – changes like this complicate before they simplify, as people figure out new ways of working alongside busy day jobs. But it now sets a basis for better engagement with the staff council – we can discuss the contents of board meetings before they happen – and the trustee board, as we can focus more and more on the mission outcomes. And also on how our employee-owned but mission-driven status can add value for our employees, through them our clients and, most importantly, for the people our clients serve.
A key insight common to many employee-owned organisations is to realise that being employee-owned does not mean being employee managed. And the mechanisms by which owners hold a board to account are often different to the mechanisms that employees need to raise ideas, questions and concerns. Clarifying the roles of Trustee board and staff council have been key to that and are a work in progress as we understand that interplay.
As we’ve been looking at our machinery of governance it’s been very helpful that, separately to my dxw work, I’ve been doing qualifications via the Institute of Directors. In the last 12 months, I’ve completed the certificate in company direction as the first of 3 steps to becoming a chartered director. As when I did a part-time MBA some time ago, the simultaneous combination of learning and doing improves both.
A challenge of being trust-owned, rather than in the shareholder capital world, is growth. We can’t access big funds for rapid growth, even though the demand for our work outstrips our ability to resource it. We have to grow in a much steadier way, reinvesting in the business as we go. Though we can clearly make that particular bug a desirable feature for our staff and for the clients who we can resource our work with.
We can also grow by being an attractive place for other founders who share our values to bring their companies and teams, not for maximum cash-out potential, but to benefit from our scale and support. This is evidenced by our recent welcoming of Neontribe into the dxw family. We’re addressing the big questions of how our leadership and our central team add value to our different business units, and how the business units add value to each other. What does it mean to be a part of dxw?
The benefits of a mixed economy
Back in the last century, I worked for a bank through the excitement of the deregulatory big bang, and the first applications of remote technologies to formerly highly-touch activities. At that time, it was clear to me that having a plural market – shareholder-owned companies alongside mutual building societies alongside community-owned credit unions – was incredibly beneficial.
Ethically-guided organisations help keep everyone honest and focused on the wider needs of the customer. Whilst shareholders seeking returns drive efficiency and certain types of innovation. As I look at the landscape of digital agencies working in public service technology I see a similar plural dynamic, and I’m glad that dxw’s machinery of governance is a part of it.