Employee ownership growth outpaces UK economy

The top 50 employee-owned business across the UK are worth £21.5bn. Figures released for Employee Ownership Day show the sector has grown by 4.6% year-on-year, while last year...

The top 50 employee-owned business across the UK are worth £21.5bn.

Figures released for Employee Ownership Day show the sector has grown by 4.6% year-on-year, while last year the UK economy grew by 2.8%.

The annual review of the sector, produced by RM2 Partnership with the Employee Ownership Association, sees John Lewis as the country’s largest employee-owned business. Others include engineering consultancy Mott MacDonald; design consultants Arup Group; engineers CH2M Hill Europe; and management consultancy A.T. Kearney Holdings.

The list, which looked at the sector in May, covers UK-registered companies that are more than 25% owned by employees. It also identified that five of the 100 largest private companies in the country are employee-owned. One in seven people in those top 100 companies is an employee owner.

Across the sector, the combined workforce of the top 50 businesses tops 164,000 – an increase of 4.3%.

The combined operating profit of the top 50 is £1.2 billion, an increase of 3.4% on the previous year. Of those business, only 13 have net borrowing, with most having cash reserves.

The two sectors most strongly represented are care services (14 companies) and services related to the built environment (nine companies). A number of the care service companies are spin-outs from local government or the health service.

To mark the Employee Ownership Day in Scotland, a group of influential business leaders said giving employees power will help unlock innovation in the country.

A study from the University of Stirling and St Andrews showed employee-owned businesses are 5-10% more productive than traditional companies. The survey looked at manufacturing, agriculture, oil and gas and textiles.

With innovation named as one of the four main themes in the Scottish government’s latest economic strategy, Deputy First Minister John Swinney voiced his support for employee ownership.

He said: “Employee ownership is a great option for businesses. It enables companies to focus on creating long-term value for their employees, their customers and their partners.

“This approach inspires employees to be more engaged and motivated, which benefits everyone.

Researchers also estimated that more than 16,000 small and medium enterprises in Scotland will consider an exit strategy in the next five years.

The research shows that family-owned businesses are most likely to consider employee ownership, with around 3,000 in Scotland having older entrepreneurs who will look to exit in the next five years.

Sarah Deas, chief executive of Co-operative Development Scotland, said: “With businesses across Scotland celebrating EO Day, now is the perfect time to consider the benefits of employee ownership.

“Not only does it act as a driver of innovation, it also helps root businesses in their local area and rewards employees for their commercial success – while owners can achieve a competitive price for their company and manage their exit over time.

“Finding the correct succession solution for your business is vitally important to protect its future, so owners should start considering their options at the earliest possible opportunity – even if it feels like retirement may be some years away.”

Business owners interested in the model will be able to hear more at the Inspire EO conference, run in collaboration between John Lewis Partnership, RBS and Scottish Enterprise.

Speakers at the event – which will be held on October 26 at RBS’ Edinburgh headquarters – are set to include Sir Charlie Mayfield, chairman of the John Lewis Partnership, and Alison Rose, CEO of Commercial and Private Banking at RBS.

• To find out more, visit: inspireeo.co.uk

 

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