The unstoppable rise of employee ownership

13^th January 2015

At this time of year we think of the two faces of Janus, the Roman God after whom January is named, pointing in opposite directions, one that looks back to the year just gone and the other forward to the brand new year ahead.

So let us for a moment adopt the Janus approach when considering employee ownership.

Looking back, businesses owned by their employees played a leading role in 2014 in delivering the UK’s economic recovery. They continued to outperform their competitors as a direct result of being employee owned. In fact, progress last year was so significant that by the end of 2014 employee ownership had become the fastest growing form of business ownership in the UK. 2014 saw the total number of employee owned businesses rise by 9%.

This popularity of employee ownership is based on its benefits, particularly the higher productivity, and better profitability it delivers. In 2014 productivity in employee owned businesses grew by 4.5%, when it was flat in the rest of the economy, and profitability in businesses owned by their employees rose by 25%. In addition, 70% of firms who have moved into employee ownership reported in 2014 that they had improved their competitiveness as a direct result of becoming employee owned.

2014 also saw a range of new tax incentives for employee owners and creators of employee owned businesses come into force, measures that will sustain the expansion of the sector. Employee ownership is now a part of the economy with a similar scale to the aerospace industry and is several times bigger than agriculture. In 2014 employee ownership achieved, for the first time, parity of esteem with other high value added sectors of the economy such as pharmaceuticals and the automotive industry. By the end of 2014 the sector was firmly on track to achieve the widely endorsed target I first set in 2012 of 10% of GDP being delivered by employee owned businesses by 2020.

So 2014 was a brilliant, unprecedented, twelve months for employee ownership in the UK and I am tremendously proud that the Employee Ownership Association (EOA) led the way throughout 2014 on every important piece of this progress. Looking ahead, 2015 has the potential to be a similarly successful year.

The year ahead offers so many opportunities to raise awareness of the brilliant economic performance of employee owned businesses and the way employee owners think and act for the very long term.  Increasing levels of awareness is the optimum route to encourage more and more businesses to be employee owned from inception or to transition into employee ownership.

2015 also provides a platform to emphasise that more employee ownership is not just about individual businesses and their workforces. It is also about the structural reform of the wider economy. More employee ownership is a solution to some of the deep seated issues in the economy including our endemically low productivity. It also supplies a powerful antidote to the short termism that dominates business behaviours in our economy.

As in 2014, the EOA will be promoting all of these arguments through our programme of events, speeches and publications throughout this year. The next major event in this programme takes place on 5 February. It is targeted at those who have not yet adopted employee ownership and is specifically designed to inspire the next generation of employee owners. Almost all businesses in the UK that become employee owned are guided and advised by the EOA so we are very much looking forward to working with those whose imagination is captured by this event.

Beyond February other highlights to look out for in the sector include the one hundred or so events across the country that the EOA will be co-ordinating on UK Employee Ownership Day on 3 July and our publication at various points throughout the year of further hard commercial evidence of the performance of employee owned businesses, including those delivering public services.

I have no doubt at all that 2015 will be another year of tremendous success for employee ownership. As I have been saying for a long time now, this really is the decade of employee ownership.

Our campaign for a new economy in which employee ownership plays a big part is now unstoppable.