Download WHY EMPLOYEE OWNERSHIP? WHY NOT! Employee owned

WHY EMPLOYEE OWNERSHIP?
WHY NOT!
Employee owned businesses (EOBs) come in all shapes and sizes in any sector of the economy but
every EOB puts the people who work there first. This means involving them in management
decisions and sharing the responsibility and rewards of business ownership.
The Employee Ownership Association
In the UK the Employee Ownership Association (EOA) represents the employee owned sector to
Government and other organisations and gives information to businesses when a change of status is
being contemplated. It reported recently that the current level of interest in employee ownership is
unprecedented and the number of employee owned businesses is currently growing at an annual
rate of 10%, while contributing more than £30 billion each year to the UK GDP. The John Lewis
Partnership is the largest employee owned company in the UK.
In its pursuit of economic growth for the UK, the Government has looked at the economic business
case for more employee ownership which has a reputation for delivering more productivity and
innovation. There is now a Government sponsored Implementation Group, a Minister with
responsibility for Employee Ownership and an imminent campaign of awareness among professional
people like accountants, solicitors, financial advisors, who are well versed in the more conventional
forms of business ownership, but lacking in experience in the various funding and governance
arrangements used in a business owned by its employees.
Owning shares versus sharing ownership
Share ownership is seen as a way of aligning the interests of company employees more closely with
those of the other shareholders, but responsibility for the failure of the business does not come with
share ownership alone. Those who support employee share ownership believe that it boosts
employee morale and encourages them to work hard and make decisions that are in the company's
best interests. In other words, employee share ownership is adopted for the good of the company,
as much as for the people who work for it.
John Lewis Partners (staff) do not own shares but they share in the power, knowledge and profit
that co-ownership of the organisation gives to them.
This was the clear difference between the Government’s proposals for employee share ownership
and employee ownership John Lewis style, which was made clear from the presentation to
Hampshire Chamber’s Tax Finance and Legal Committee members last month. Adrian Young,
Operations Manager, Commercial Support, John Lewis Southampton, joined the meeting to give a
presentation on “Competitive Advantage through Ownership” as experienced by John Lewis for
nearly a century.
Adrian started by giving an idea of what it is like to be a Partner with the John Lewis Partnership
group, of the vision held by the founder John Spedan Lewis which was, and remains, based on the
founding principles of happiness of the Partners in their work and the responsibilities and rights of
ownership, being the right to share power, the right to share knowledge and the right to share
profit.
Adrian went on to explain that the enduring culture, governance and practices, which have stood the
test of time despite some modifications, are proving to be very successful during a prolonged
economic recession and in particular in the retail sector, where a general recovery remains elusive.
The most recent John Lewis annual bonus was worth 17% of annual salary – a higher than expected
level and the equivalent of nine weeks’ pay for 84,700 staff. There is a lot more information on this
aspect of John Lewis on their web site at
http://www.johnlewispartnership.co.uk/about/the-partnership.html
Howard Robson, Employment Partner at Warner Goodman and Vice Chairman of Hampshire
Chamber’s Tax Finance and Legal Committee, reported that the Government has recently passed
into law the concept of “employee-shareholder” status. In return for giving up certain employment
rights an employee will receive at least £2,000 worth of paid-up shares tax free and benefit from up
to £50,000 of capital value growth without Capital Gains Tax being deducted. The new status is
likely to be introduced in the Autumn of this year and is another element of the Government’s plans
for growth.
Napoleon I of France once accused England of being a nation of shopkeepers and the recent UK
Government campaign “Is there a business in you?” might well be said to support that view. But
starting your own business is one of the riskiest things you can do, so why not rely on there being
safety in numbers and make it an employee owned venture?
Kristine Salomon-Olsen, Head of Representation, Hampshire Chamber of Commerce.