Delivering social value through ownership and employment: the Pennine Healthcare story
Introduction
Large anchor organisations are key players in the work of building healthier, fairer places. But they are not the whole team, and they cannot build community health and wealth on their own. Lasting change depends on the whole ecosystem around them: the SMEs, social enterprises, and community organisations that put social value at the heart of how they operate.
Pennine Healthcare is a good example of one such organisation. Based in Derby, it is a proud SME, and one of the UK's leading medical device manufacturers. In this case study we look at how it has put a commitment to social value into practice through two of the biggest decisions a business can make: who owns it, and who it chooses to employ.
These two choices sit at the heart of the story. First, in 2021 Pennine became an Employee Ownership Trust, keeping the business rooted in Derby, and putting decision-making and profit in the hands of the people who work there rather than remote shareholders. Second, through its wider The Heart of Life is Health work, it has put social value at the heart of how it operates as a business, including by creating skilled roles for people nearing the end of their prison sentence.
Background
Pennine Healthcare specialises in manufacturing single use, sterile medical devices and customised procedure packs for the NHS and the wider healthcare sector both in the UK and worldwide. The business has deep local roots; it employs around 180 people at its purpose-built site and has operated in Derby for more than 60 years.
Owned by its workforce
One way a business creates social value is through who benefits from the wealth it generates. Rather than profits flowing out to remote shareholders, an employee ownership model channels them back to the people who create them. Pennine's move to employee ownership is a clear example of that Community Wealth Building principle in practice.
In 2021, after considering offers from international buyers, the company chose instead to transition to an Employee Ownership Trust. The driving force behind the decision was to ensure that Pennine Healthcare remained in Derby, recognised employees for their hard work and effort and retained capital in the business. The Trust now holds 100% of the shares on behalf of the workforce. The sale was made below market value to maximise the benefit to employees.
For employees, the change is tangible. After 12 months' service, each person is allocated a share, making them eligible for up to £3,600 a year in tax-free dividends from net profits. The shift is cultural as well as financial. An employee committee called We Matter gives staff a formal voice in how the business runs, and the company marks an annual Employee Ownership Day. Employee ownership has reframed Pennine's identity, and that sense of shared purpose is the foundation for the community work that follows.
The Heart of Life is Health, and the ROTL scheme
To mark the third anniversary of becoming employee-owned, Pennine launched The Heart of Life is Health, a single banner for all of its community and wellbeing activity. Some of the activities covered by this will be familiar to other employers: monthly on-site yoga, menopause and mental health champions, and a 24/7 counselling and employee assistance programme.
However the standout initiative is more ambitious. Through its Release on Temporary Licence (ROTL) scheme, Pennine has opened up roles in its cleanroom operations to people nearing the end of a custodial sentence.
These structured placements provide valuable employment opportunities to individuals, helping to rebuild confidence, develop skills, and support long-term reintegration into society.
A social purpose and a business need
What makes the scheme sustainable is that it answers a real business question as well as a social one. With a significant portion of its cleanroom team approaching retirement - and wider skills shortages affecting the manufacturing sector generally - ROTL placements are helping Pennine develop the next generation of skilled workers while also supporting rehabilitation for the local prison population.
As Dan Wilson - Head of Strategy, Marketing & Communications at Pennine Healthcare - explains: “the statistics show that a large percentage of prisoners are likely to re-offend if they don’t have a job, somewhere to live and a support network upon release. Having a job upon release is vital for the individual but also the prison service to reduce re-offending. Our ROTL workers have been nothing short of brilliant, and it is a testament to the programme and individuals themselves.”
What's the impact been
The first two ROTL workers have gone on to leave prison, and one continues to work at Pennine, whilst the other moved back home to London and has set up a successful plumbing company, actually employing people himself from his local area. The business is now up to 12 ROTL workers and counting, showing the ongoing success of the programme.
What’s next
The business is now looking at different ways to support prisoners, whether that be putting cleanrooms into actual prisons themselves, or by encouraging other companies within their sector to take on ROTL workers themselves. They are inviting interested businesses who wish to learn more about their experiences to reach out.
To find out more get in touch with Dan at d.wilson@penninehealthcare.co.uk