Three reasons why employee ownership is great for the economy
Employee ownership isn’t just good for the companies that adopt it. It also benefits the country’s economy
By Ernest Richardson
As we count down to Employee Ownership Day on Friday, 28 June 2019, we’ve been recounting some of the benefits of co-ownership for businesses.
| ...employee ownership also yields considerable gains for the wider economy. |
But that’s only half of the story, because employee ownership also yields considerable gains for the wider economy. Here are three reasons why it’s great for UK PLC that a growing number of companies are making the switch to employee ownership models.
1. Co-owned companies make a significant contribution to GDP
According to the Employee Ownership Association, businesses that are owned or partially owned by their employees contribute 4pc to UK GDP, which equates to around £30 billion per year.
Peter Foy, a director at Just Recruitment Group Ltd who project-managed its move to employee ownership in 2017, says that the figure is expected to grow in the years ahead.
“Thanks to fiscal incentives and practical support from the government, it’s very appealing to make the switch,” he reports. “As a model for businesses, employee ownership has a huge amount to recommend it.
“It’s a way of business founders and owners selling their holdings without simply disposing of the business to a competitor or third-party investor. And it consistently delivers increased efficiency, higher productivity and a more engaged workforce – all factors that contribute to the economic output of the country as a whole.”
2. Co-owned companies tend to prize ethical business practices
As high-profile examples like the John Lewis Partnership and Arup demonstrate, there is often a connection between a company’s decision to adopt co-ownership models and their commitment to Corporate Social Responsibility. The result is a more moral economy, which benefits everyone.
“It is striking that co-ownership is often part of a really strong corporate ethos that prioritises doing the right thing,” reflects Mr Foy. “To give an example, employees at Arup are encouraged to behave well in every aspect of their business activities, and to immerse themselves in the culture of Ove Arup, who founded the company. And John Lewis puts employee wellbeing, ethical supply chain management and customer respect at the heart of its activities.
“It’s the same for Just Recruitment. We chose to pursue employee ownership because it felt like a natural outworking of our ethos. We’ve always been committed to ‘Placing People First’. By entrusting our own staff with ownership of the company, we’re enshrining that commitment in the most visible way imaginable. Our staff are encouraged and empowered to act well, because their identity is inextricably linked with that of the company they co-own.”
3. Co-owned businesses tend to offer a fantastic customer experience
It’s probably no accident that John Lewis and Richer Sounds, which recently moved to employee ownership, are consistently named as the UK’s best retailers.
By showing their employees how much they’re valued and giving them a direct influence on the destiny of their company, these businesses secure a deep emotional investment from the workforce. The results are a strong desire to deliver the very best customer experience, as the American Management Association has reported.
As a result, consumers benefit from a more pleasing purchasing experience, whatever the business they’re trading with. That makes them more likely to spend, generating a positive multiplier effect that benefits the economy as a whole.
“Just Recruitment has always prided itself on serving candidates and clients with efficiency, courtesy and care,” says Mr Foy. “But we have definitely noticed that employees feel even more engaged in the customer experience since moving to a co-ownership model, and that’s undoubtedly yielded an increase in sales.
“I don’t think this is just about staff feeling good about working for a co-owned company,” he continues. “It’s also a shrewd business decision. If you have a stake in a business, you’re more likely to see the benefits of going the extra mile for your customers. After all, any increase in profits stands to benefit you personally, as well as the business and the wider economy. It’s a win for all parties.”
Published: 27 July 2019
© 2019 Just Recruitment Group Ltd
If you enjoyed this article, you may like: Five top tips for branding success
You may also enjoy: Just five benefits of employee ownership (to businesses)