Adverse economic environment is prompting a reappraisal of alternative
ownership models to the dominant public and private shareholder models - one
that is not only resilient in times of adversity but also promotes sustainable
wealth creation and equitable distribution. In the UK, in particular, the case
of employee-ownership has recently gained attention - in part because of the
recognition of the need for fairer society, but also because adverse economic
conditions point to business resilience as an important part of sustaining
employment and long-term growth. The UK has a healthy but small employee-owned
sector. The sector is estimated to be worth £25 billion annually - equivalent
to 2 per cent of UK GDP. It comprises firms that operate in a wide range of
sectors, from retail, to manufacturing and engineering, to financial services.
Employee-owned organisations can also be found in the public sector, where they
deliver services such as health and community care.
Research by Professor Joseph Lampel, Professor Ajay Bhalla and Dr Pushkar
Jha established that Employee-Owned Businesses (EOBs) - firms where employees
own stake both individually and collectively through a trust- are more
resilient, display less sales variability, and deliver more stable performance
over business cycles. The report also showed that the profitability of EOBs
correlates with giving employees greater autonomy in decision-making. EOBs that
adapt their organisational structure and empower their front-end employees are
more likely to sustain their performance as their size increases. It also
provides evidence that EOBs create jobs faster than their Non-EOB counterparts
and particularly so in times of economic downturn.
This study adds to this evidence base by examining the following:
- Evidence that benefits of employee ownership vary across different business
- Evidence on whether employee ownership can create a longer-term focus in
- Evidence of the impact of the distribution and concentration of employee
ownership on performance
- Evidence on whether higher employee ownership increases human capital
- Evidence on institutional disadvantages faced by employee owned
The full report is now available below, including a foreword by Norman Lamb MP,
Minister for Employment Relations, Consumer and Postal Affairs.