By Marcus Leach
Deputy Prime Minister Nick Clegg today (Monday) called for staff to have more of a say in how their employers are run, and to create a 'John Lewis economy' in the UK.
His comments have been met with mixed feelings, with Professor Colin Mason of the University of Strathclyde's Hunter Centre for Entrepreneurship, said it wasn't as unusual a concept as many people believe.
“It is already a characteristic of many entrepreneurial companies that the wealth is spread around, with employees either being given shares or having the opportunity to buy shares," Professor Mason said.
"There are many benefits for SMEs taking this approach and should these companies eventually get taken over — a lot of people benefit from a financial windfall. Indeed, this sharing in the financial success of a business is a key characteristic of what I would call ‘entrepreneurial capitalism’.
“Moreover, this does not constrain business growth. One of the companies in my recent study of high growth firms in Scotland was majority employee-owned and another was a co-operative.
“One of the unfortunate economic trends in recent decades has been the decline in alternative ownership models, such as mutuals and co-operatives. Certainly such ownership structures can benefit local and regional economies as the example of Mondragon in the Basque Region of Spain shows.”
Justin Rix, Employer Solutions Partner, Grant Thornton said that such a move would lead to greater employee engagement.
"In our experience, companies that operate employee share plans report greater employee engagement and an improvement in the interest in the performance of the business. This in turn can lead to better business performance and increased company value," he said.
"We look forward to hearing more details of these proposals and would encourage the Government to consult widely to ensure that new arrangements will meet the commercial requirements of business of all sizes."
Ed Molyneux, CEO and founder of FreeAgent, said that it was critical for all businesses to consider this approach.
“It’s critical for every business to consider implementing some form of employee co-ownership scheme if they want to be successful. By allowing staff to co-own part of the company, you provide them with a real opportunity to see how their own performance links with the wider success of the business, rather than thinking that their employment is ‘just another job’," he said.
“Allowing staff to purchase shares in the company also helps to raise morale and increase motivation among your employees - as they get the chance to share in the company’s profits. It breeds a positive workplace culture where everyone is focused on the same goal of seeing their company grow and perform better."
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