The employee-owned sector – comprising companies that are wholly or substantially owned by their staff – is worth around £25 billion annually, accounting for 2% of UK GDP. Employee-owned companies operate in a wide range of sectors in the UK – from retail, manufacturing and engineering to financial services.
The financial crisis and the subsequent global recession have stimulated a far-reaching debate about the future of capitalism and the way that companies are owned and run. This has led to renewed interest in employee ownership – and in the role that employee-owned companies could play in future economic growth.
This report assesses the financial performance of employee-owned businesses compared with conventionally structured companies where employees do not have a significant stake in ownership or the right to participate in decision-making. It also examines how employee-owned companies maintain the advantages of their ownership structure as they grow in size and complexity. The research by Cass Business School is based on an in-depth survey of senior executives and analysis of the financial data of over 250 companies.
It finds that employee-owned firms create new jobs more quickly than conventionally structured businesses and demonstrate the same levels of profitability. Employee-owned businesses are more resilient: their performance is more stable over business cycles, and they have outperformed the market during the downturn. They are also more robust: employee-owned businesses have a lower risk of business failure. The employee ownership model offers particular advantages to small and medium-sized businesses and in knowledge and skill-intensive sectors, where employee-owned companies significantly outperform competitors. Employee-owned businesses also add more value to output and human capital. They recruit more employees at a faster rate and reward employees with higher wages.Read Article