A considerable amount of research has been done which seeks to answer the related questions: Does employee ownership create better companies? and Does it have benefits for employees?
We summarise below the findings of some of the most recent research. Taken together, these show very clearly that employee-owned companies have attributes that any ambitious company would value highly, and which translate into benefits both for the companies themselves and their employees.
HM Revenue and Customs, 2008
Research carried out for HMRC into EMI option schemes found, amongst other things:
- 79% of companies with EMI option schemes believed they had improved staff motivation and helped them retain key or skilled employees, with 71% believing their EMI options had improved company performance
See http://www.hmrc.gov.uk/research/report41-summary.pdf
Further research into Save As You Earn options and Share Incentive Plans (SIPs) discovered that:
- A majority of companies with an SAYE option scheme believed it had improved productivity and half of companies with a share incentive plan (SIP) saw a productivity improvement.
See http://www.hmrc.gov.uk/research/report59-summary.pdf
Matrix Evidence (UK), for the Employee Ownership Association, 2010
Research by Matrix Evidence into UK companies with significant employee ownership found:
- Stronger employee commitment and job satisfaction
- Improved financial and other rewards for employees
and that employee-owned businesses:
- perform at least as well as those that are not employee-owned and in some cases provide productivity gains
- may be better placed to survive difficult economic conditions
- may be better innovators as a result of having more committed employees
Cass Business School, for the Employee Ownership Association, 2010
Professor Joseph Lampel, Dr Ajay Bhalla and Dr Pushkar Jha looked at the performance of employee-owned businesses and concluded, amongst other things that:
- Employee ownership offers particular advantages to SMEs. Employee owned companies with fewer than 75 employees have significantly better profitability compared with non-employee owned companies of the same size.
- Employee-owned companies create jobs more quickly
- Employee-owned companies are more resilient - between 2008 and 2009 enjoying sales growth of 11.08% compared with 0.61% for non-employee owned companies
See http://www.employeeownership.co.uk/publications/model-growth-do-employee-owned-businesses-deliver-sustainable-performance/
Professor Lampel and Dr Bhalla can be seen discussing their research at http://www.youtube.com/watch?v=ro3e9eWG6el
Professor Andrew Pendleton, University of York, 2011
Professor Pendleton has published extensively on employee share ownership. He has identified positive outcomes for companies where employees are able to participate in ownership compared to companies without such performance incentives.
For a full list of Professor Pendleton's research publications see http://www.york.ac.uk/management/staff/apendleton/
Richard Freeman and Alex Bryson, 2010
Freeman and Bryson, in their article 'How Does Shared Capitalism Affect Economic Performance in the United Kingdom?' found a clear improvement in productivity in companies with employee ownership.
See http://www.nber.org/chapters/c8091.pdf
This is just a sample of the research which has been done on the effects of full or partial employee ownership on companies, showing its positive impact on company and employee performance.
For more information about how you might introduce employee share ownership in your business, including guides to different kinds of share schemes, an explanatory video on how employee share ownership works, decision-making tools, calculators and case studies, please look at our Resources. For a discussion about the particular circumstances and objectives of your organisation please contact us.
