Interest in employee ownership is thriving. With the ability to achieve higher productivity, greater engagement and increased innovation, it is easy to see why employee owned businesses are becoming the fastest growing form of business in the UK.
What is Employee Ownership?
Broadly, employee owned businesses can take one of three forms:
- Indirect employee ownership – employees don’t own shares in the company directly, these are usually held collectively in an employee trust.
- Direct employee ownership – using one of many tax-advantage shares plans, employees will become (or via options have the right to become) individual shareholders and acquire direct ownership of shares in their employer company or group parent company.
- Hybrid model – a combination of both the above, shares are typically held within an employee trust and over time some of these are transferred directly to the individual employee.
What are the benefits?
When employees have a share in the business for which they work, it can provoke a sense of ownership which creates a positive and engaged workforce. This is one of many benefits of employee ownership, which include:
- Enhanced productivity;
- Cultivation of long-term thinking;
- Sustainable business legacy and culture with employees having a voice in corporate governance;
- Better financial performance;
- Lower absenteeism;
- Higher resistance to market fluctuations; and
- Lower staff turnover.
What you need to consider when thinking about employee ownership
- If you allow employees to buy shares in your company, you need to have a plan for how and when they will be able to sell them in the future.
- If you are planning to retire, you need to make sure that you have a commercially capable and motivated management team to guarantee successful succession.
- Most importantly, you must design your employee ownership arrangements around your businesses longer-term goals.
Get in touch
If you would like to know more about employee ownership schemes and which will work best for you, please contact us today using the form below.