EO Explained

OVERVIEW

Employee owned companies account for over £25 billion in total annual turnover in the UK. The sector is growing at a significant rate because employee ownership is proving to be a durable, successful business model that's extremely well suited to the challenges of 21st century management.

Successive Governments have promoted employee ownership because they recognise its potential contribution to the economy.

Employee ownership can work for any size of business and in any industry including retail, manufacturing, architecture, care, engineering and advertising. Successful examples include John Lewis, ARUP and Loch Fyne Oysters. You can see more case studies here.

A range of factors combine to make employee owned businesses an asset to the UK economy:

• Independent research suggests that a combination of shared ownership and employee participation delivers superior business performance. 
• People working in employee owned businesses tend to be more entrepreneurial and committed to the company and its success because they’re co-owners
• Employee owned businesses are well placed for recruiting and retaining talented, committed employees because they have high employment standards, involve all the workforce and give everyone a stake.
• Employee owned companies excel at innovation because managers go out of their way to consult, share information about the company and involve employees in    decision making.
• Employee owned businesses tend to have a strong commitment to corporate social responsibility and involvement with the communities they operate in.
• The employee owned business sector adds to the diversity of Britain's economy - by offering an alternative and fairer business model which delivers success.

MODELS
There are several models of co-ownership. Many companies have adopted the “John Lewis model”, where the company is held in Trust with employees as beneficiaries.  As the company is trust-owned, it would be very difficult to sell the company to a third party. This creates a very stable structure and ensures the long-term sustainability of the business. 
Other businesses use a hybrid ownership structure with some shares held in Trust and some shares distributed to direct ownership of employees. This enables employees to build up a valuable shareholding in the company and can provide a direct link between company performance and individual gain.  There can be tax advantages for employees participating in Employer Share Schemes.
Companies thrive with these diverse structures.  There is no single model - the best structure of employee ownership is the one that fits with the company, its people, culture and environment.
Employee owned structures provide stability and sustainability to businesses.  Employee ownership is an attractive route for business succession. As well as putting the company into the hands of the people who know it best it also provides a means for the company to retain its independence and individuality. 
 
PERFORMANCE
Baxendale works closely with the Employee Ownership Association in the UK and the National Center for Employee Ownership in the USA to monitor and evaluate international benchmark data.

Baxendale holds and monitors national data on the performance and culture of employee owned companies within the UK.

Latest research shows that employee owned businesses tend to:

• Be more sustainable as decision making is focused on their longer term success
• Have higher employee engagement, satisfaction and retention
• Report increased productivity (between 9 + 19% higher) than traditionally structured similar businesses
• Be employers of choice attracting the best talent in their sectors
• Create a culture of innovation and continual improvement
• Enjoy stronger customer and supplier relationships due to autonomous decision making
• Perform better than non EOBs in times of recession.