Employee Ownership Day: Why more companies are taking up EO

Today marks the seventh annual Employee Ownership Day in the UK. Employee Ownership Day aims to raise awareness of employee ownership (EO) as an economically strong and balanced business model.

Research undertaken by the White Rose Employee Ownership Centre in 2017 showed that there were 300 businesses in the UK which were 25% or more employee-owned, with those companies employing more than 200,000 people. The sector is estimated to contribute £30bn GDP to the economy annually.

A very significant proportion of employee-owned businesses (110) are in Scotland, with a greater degree of Scottish Government-backed support being available to businesses who are considering the transition to EO. Last year, an industry leadership group, ‘Scotland for EO’, was set up to help drive the total number of employee-owned businesses up to 500 by 2030. Scotland is therefore well-placed to capitalise on the opportunities afforded by EO.

Why adopt an EO model?

There are number of far-reaching benefits in employee share ownership:

  • Employees feel more incentivised, engaged and invested in the company: recent research showed a material increase year-on-year increase in productivity among employee-owned companies, at a time when productivity otherwise remained flat across the UK.
  • Surveys show that consumers consider EO businesses to be more trustworthy, and that customers are significantly more likely to buy products or services from an EO business.
  • EO creates a potential marketplace for the sale of a company.
  • A range of very advantageous tax incentives are also available, depending on the structure put in place.
Who is using EO?

EO is highly flexible and can work for any size of business, from the largest (John Lewis) to small, family-owned businesses. Examples of well-known companies which have adopted a form of EO in the last few months are Richer Sounds, Aardman Animations, BESTrustees and Lush Cosmetics.

We have advised many firms across the UK in this area, allowing them to make employee participation in ownership a reality.

Latest updates from @MacRoberts