Employee Ownership in the Spotlight: Should Companies Buy into it?

Making employees feel as though they have an active role within the business is more important than ever before. Researchers are consistently finding that the new generation of workers are looking for a sense of meaning and purpose in their employment, as well as a paycheque – and ensuring they find that meaning should be a top priority for any business owner. 

There are plenty of ways to engage employees more and offer them something beyond what is considered the ‘standard’ approach to employment, and no two businesses will approach things in exactly the same way. 

Something that has gained significant traction over recent years, thanks to a number of high-profile frontrunners. For instance, John Lewis is the UK’s largest employee-owned business – and a great example of how successful a scheme like this can be. Read more about it below. 

What is an employee-owned business?

As the name suggests, it is a business that is fully or partially owned by its employees. These employees have a financial stake in the business, and, to some extent, a direct line of input into how it is run. 

There are three different kinds of employee ownership:

  • Direct – employees receive tax-advantages share plans, making them shareholders. 
  • Indirect – these shares are held through an employee trust, rather than by the individual employees.
  • A hybrid of the two

There are a number of different schemes that make employee ownership possible, including Share Incentive Plans (SIP) or, for smaller companies still growing, Enterprise Management Incentive (EMI) schemes. 

What are the benefits of Employee Ownership? 

For employees, the main benefit is a much more active role in the business’s successes, and in its ongoing development. This structure tends to foster a much more open and communicative environment, which, in and of itself, is enough to bring about a significant boost in morale and productivity. Combine that with a clearer line of recognition, and the environment enjoys a significant boost. 

For the business itself, this heightened productivity, engagement, and motivation obviously bring significant benefits. Beyond that, however, companies that commit to employee ownership tend to see lower staff turnaround, which makes it easier to retain key talent – a key concern for any forward-looking business.

The productivity and motivation driving the business forward has the added benefit of making it more resilient to external factors and pressures, like economic recession. 

Could Employee Ownership Work for You? 

Every business is different, and whether or not employee ownership will truly benefit your company depends on a long list of factors. It’s impossible to glean how beneficial it could be without talking through the specifics with someone who holds a wealth of experience in the area already. 

For this reason, anyone considering the benefits of employee ownership should turn to corporate solicitors who understand the nuances of this type of structure. They can guide you through your options and help you to identify the right course for your business, and its employees. 

Despite the growing popularity of employee ownership, these specifics of these schemes remain relatively unfamiliar to the majority of business owners. Exploring your options is a significant move forward in and of itself – and one that, as the statistics show, is well worth making. 

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