There are many compelling reasons why employee ownership is one of the fastest growing succession options for small- and medium-sized enterprises (SMEs), and family businesses that have no natural successor.
For employees it gives them a stake and a say that allows them to share in both the responsibility and reward of the business’ success.
By aligning the interests of owners, managers and workers, employee-owned businesses unite people behind a shared goal and ensure that employees can enjoy higher engagement, motivation and wellbeing; top up their salaries by sharing in the capital value they create; and work within transparent governance regimes that lock in benefits for the long term.
All these gains cement employees’ sense of fairness and happiness at work.
This stake is delivered via direct shares, a trust, or a hybrid, along with the accompanying influence exercised through a structure of representation, which can include voice groups, employee councils, elected employee trustee directors and elected employee directors.
So how does employee ownership deliver benefit for the business? The analogy I often use is ‘who washes a hire car’?
There is a mental change that happens when you own something. It drives behaviours that relate to what needs to be done rather than what you want to do. It is this shift that helps to drive success in an employee-owned business: better performance, productivity and innovation.
Employee ownership done well – supported by good engagement, good governance, and good leadership – sees many businesses experience a ‘whoosh effect’ in the first few years of being employee owned.
It also has great benefits to communities and the economy too: it roots jobs in the region for the longer term.
So, it is not just a nice thing to do, it unlocks the potential of people and businesses, and as more businesses choose this option, it will help to deliver more inclusive and resilient regional economies.
Deb Oxley OBE is chief executive of the Employee Ownership Association (EOA)