Deputy Prime Minister Nick Clegg has urged more companies to offer shares to their employees, saying it will improve productivity and unlock growth.  Does he have any evidence to back up his claim?
 
Employee share ownership has fascinated academics in business management and organisational behaviour for many years, and there have been many pieces of research.  Taken together, these do in fact 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.
 
Here is a digest of some of the most recent research focused on UK companies:

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
• Employee-owned businesses perform at least as well as those that are not employee owned and in some cases provide productivity gains
• Employee-owned businesses may be better placed to survive difficult economic conditions
• Employee-owned businesses may be better innovators as a result of having more committed employees

See: http://www.employeeownership.co.uk/publications/the-employee-ownership-effect-a-review-of-the-evidence/
 
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 business and concluded, among 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=ro3e9eWG6eI
 
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 see: http://www.york.ac.uk/management/staff/apendleton/
 
Richard Freeman and Alex Bryson, 2010 
Bryson and Freeman, 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