Recruitment agency Cordant morphs into social enterprise
The Guardian, by Rob Davies
One of the UK’s largest recruitment firms is to tear up its 60-year-old structure and become a “social enterprise” with a pay cap and profit-sharing plan, in a move the family who own the company hope will inspire others businesses to follow suit.
Cordant, which sends 125,000 temporary staff every year to work for 5,000 clients such as Amazon and Tesco, will announce the radical overhaul this week.
Its largest shareholder, Phillip Ullmann, whose father founded the Cordant Group in 1957, said he hoped to convince clients to follow suit by improving workers’ conditions, predicting a Brexit-related shortage of workers that would give low-paid staff more bargaining power.
The new ethos, cemented by a change to the company’s articles of association, will include a fixed limit on its pay ratio, the gap between its highest- and lowest-paid employees.
Top earners will not be able to take home more than 20 times the salary of its lowest-paid staff, some of whom earn the minimum wage, effectively meaning a salary cap of £400,000.
There will also be a ceiling on dividends paid to its owners, several branches of the Ullmann family, who will not be able take more than £3m out of the business between them in any single year.
Profit, above what is paid to shareholders, will be shared with the company’s 1,500 permanent staff, while company money will be channelled into projects that “address the needs of society”, Cordant said.
It has yet to finalise its plans but this will include offering staff and IT systems to the NHS at cost rather than for profit, which it says will save the health service “millions of pounds”.
Cordant also plans to plough cash into education initiatives to help teachers and improve workplace skills.
As well as overhauling its own model, the company hopes in time to convince some of its clients to adopt similar measures, such as profit shares for the low-paid temporary staff they employ via Cordant.
Ullmann, who lists his favourite film as Mission Impossible, said: “With Brexit there will be a shortage of minimum wage workers so there should be more power to the workers.”
“Brexit will focus the mind,” he added.
He came up with the plan after a discussion with the accountancy firm Deloitte and sought approval from fellow family members, who between them control the company.
Ullmann, whose profile on the Cordant website describes him as “chief energiser”, said: “I was a traditional capitalist. I wanted to make more money and increase the size of the wealth.
“Now I’ve found gold dust, that’s how it feels to me. It will give more satisfaction than just doing more of the same.”
Ullmann said the company would share some its profits with its 1,500 permanent staff, a scheme reminiscent of John Lewis’s annual staff bonus scheme, and would encourage businesses that use its temporary staff to do the same.
But he admitted he could not force clients such as Tesco and Amazon, which use Cordant workers in their warehouses, to come up with similar plans.
“We’re not going to tell clients to put up wages or we won’t work for them,” he said. “If I decided what they pay, wages would be high. It’s a more subtle journey than that.”
He said workers would also benefit from plans to give them more choice in where they work, rate temporary employers and sign up for extra shifts when they want them.
But Cordant’s ambitions to cap its dividend and profits could be limited by its ability to produce them, according to accounts filed at Companies House.
The Uxbridge-based company made a pre-tax loss of £9m last year, although it posted a profit of £3.9m in 2015, and it has not paid a dividend in either of the past two years.
“I recognise the ladder we’re trying to climb but I’m not daunted by the challenges in the way,” said Ullmann.
“We are all in. We’re not going to reverse.”
Cordant also has some way to go to win the hearts and minds of its workers, according to posts on the jobs website Glassdoor, which carries reviews of hundreds of employers.
Some 55 reviewers gave it an average of 2.4 out of 5, a relatively low score compared to other companies.