Employee Ownership Explained

What is Employee Ownership?

Employee ownership is a form of company ownership in which the majority or a significant part of the company is owned by or on behalf of its employees.
Reportedly the fastest growing form of business ownership in the UK, employee ownership has seen an increasing number of business owners who are looking towards retirement and succession planning changing their structures to enable their employees to take over the ownership of their business. It’s not just those looking to retire who are attracted to this form of ownership; entrepreneurs creating new businesses are seeing the advantages that employee ownership can bring to business growth. Whilst large businesses such as John Lewis and Arup are high profile examples of successful employee-owned companies, there are a large and growing legion of smaller companies – in diverse sectors from manufacturing to professional services – that are also employee-owned.

 

Between 2014 and 2016, the combined sales of the Top 50 employee owned companies have increased by 10.2%, compared to UK GDP which grew at just 7.7% over the same period. Added to this, they are shown to benefit from greater resilience when times are hard with productivity growing year on year. Employee-owned businesses invest heavily in employee engagement, engendering a culture of collective responsibility by involving staff in decision making, giving them a powerful voice and sharing success more widely.

 

Why employee ownership?

You might be considering employee ownership for one or more of the following reasons:

• Reward and retain talent, motivate employees
• Improve productivity, encourage innovation and entrepreneurial thinking
• Build a stronger company in the future, maintain legacy
• Maintain independence that may not be possible under an MBO
• Tax relief on selling to an employee ownership trust
• Income tax-free bonuses for employees

What kind of employee ownership would work best in your company?

There are three main forms of employee ownership:

• Long term trust ownership
• Individual share ownership
• A combination of the trust and individual ownership (hybrid)

Which of these will be the best solution will depend on your company and its employees. The following guide to the options for employee ownership may help you start thinking about this:

 

 

 

 

 

 

 

 

 

 

 

In conclusion, employee ownership recognises that rock bed of success is rooted in talented people, through investing in and creating an engaged workforce with a sense of collective responsibility businesses in this sector continually demonstrate their commitment to rewarding the contribution staff make to a company’s success, giving them a voice and a tangible piece of that success.

This post was kindly reproduced with the permission of Postlethwaite a London based English law firm specialising in employee ownership and all forms of employee share ownership.

 

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Engage & Prosper is a UK based privately owned Employee Engagement Consultancy and Social Enterprise, on a mission to help organisations develop a highly productive and fulfilling workplace culture, with their people, through enhanced employee engagement strategies, fabulous and effective internal communications platforms and tailored reward and recognition programmes.

For more information on Engage & Prosper or to discover how we can help you achieve your organisational and people goals please call +44 (0) 330 223 0464 or find out more at www.engageandprosper.com