During the Telegraph’s Festival of Business, John Lewis boss Sir Charlie Mayfield took to the stage determined to educate SME business leaders about the benefits of employee ownership. John Lewis Partnership is a perfect example of an employee ownership success story. Not only did it emerge from the recession less scarred than other retail empires, it also embodies values – equality, voice, inclusivity – that resonate with the public, particularly those who believe a new form of capitalism is needed following the 2008 financial crisis. It’s no surprise, then, that Sir Mayfield wants to share this path to success with other businesses. His aim is to increase the percentage of UK businesses that are employee-owned from 2% to an ambitious 10%,
Benefits derived from employee-ownership include improved employee engagement and a shared vision. Businesses operating an employee-ownership scheme report that staff appear much more interested in the company’s values and its public image. They want to know the business has a purpose beyond simply making money. Growth and sustainability become inseparable and the businesses trajectory is widened to include social as well as financial objectives.
Employee ownership could be considered the opposite to venture capitalism, which targets rapid growth and the acceleration of a company’s value following investment. Employee ownership often takes a more long-term approach, treating employees as assets as opposed to agents for profit maximization. Venture capitalism, which was in its zenith prior to the financial crash, remains a force in today’s economy. Yet the rise of employee ownership signals an interest to expanding the mechanics of capitalism and nature of business.
Interestingly a research recently published by Hays, ‘UK salary and Recruiting Trends’, reports that 38% of employees plan to move jobs within the next six months because of a lack of voice and involvement in the workplace, leading to pent up frustration. It raises the question whether this frustration would be felt if the employer operated an employee-ownership scheme, in which the worker played a crucial role in the development of the business.
For a legal understanding of employee shareholder status, including the impact of employee rights, please click on the link: employee shareholder status