Employee ownership is where all of the business’s employees have a ’significant and meaningful stake in the business. This means employees must have both: a financial stake in the business, which could be owning shares, and a say in how it’s run, this could be helping make decisions on events or changes to the business structure. 

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So, is this a good business idea? Many say that having employee ownership within your business is a great idea because it typically means that the employees are more entrepreneurial and enthusiastic about the business and its success. However, when you give up shares in your company, and everyone effectively becomes an owner, you lose a certain level of control over the business.

The latest webinar hosted by the Great British Entrepreneur Awards and Anthony Collins Solicitors sees a group of experts discussing the topic of employee ownership, making sense of all the whats, hows and whys you may have. 

David Alcock of Anthony Collins, started by advising of some of the huge benefits of employee ownership, “In 2018, research done on employees found that employee-owned businesses are on average more productive than their counterparts,” he said. 

“They also reported that employee-owned businesses show lower staff turnover, particularly when staff were expecting financial benefits from the company’s performance. Staff motivation was also at a high. So there are many practical, good reasons why you might want to consider going down this road.”

Nick Coley, Managing Director of Fitzgerald Contractors, explained his journey with employee ownership, and how after thinking about his options when it comes to exiting the business, employee ownership was the right option for them. “Employee ownership was really brought to our attention because, in the construction sector, businesses are notoriously difficult to sell on to trade and private equity. I think that is changing a bit, but certainly in construction employee ownership is becoming a big thing,” he said. 

“In construction, for example, you’re very reliant on your employees and on their productivity, so a solution that suits both the shareholders and the employees, and makes the business more productive, is very attractive.

“From an owner’s position, it can enable me to perhaps drop down to a three-day week in the future, or I could go into a chairman position. Employee ownership allows me to manage my level of involvement, and in terms of employees, it gives them continuity and more involvement in the business.

“Another advantage is that there are great tax benefits for the shareholders with employee ownership, as it is free from capital gains tax. However, this should be seen as a bonus and not the driving force for doing it. Doing it just for the tax advantages is probably not the best way to make that decision - it really needs to be about the business.”

Going on to discuss the other benefits it has on employees, Nick explained how it is highly beneficial for employee culture. Allowing employees to have a voice in the business that is heard and respected creates a much more positive environment. 

“We’ve gone to our employees and asked who would like to put their names forward to be on the employee council, and 25% of the employees have come back and said, yes, we’d like to, and what we’re really encouraged about is that it’s from right across the business. So it’s some senior managers,  and some of the guys, you see digging the holes and doing all the hard work. That was key for us - we really want the council to be a good cross-section of employees. In summary, it’s a really exciting time for the business.

“What I will say is, it’s all been positive,” he said. 

David Alcock added “it’s been great to see the journey that Fitzgerald has taken.  Nick and colleagues are now making employee ownership real in their business, and it’s exciting to see people at all levels taking that on board.

“Employee ownership is a real option for businesses that rely on getting the most out of their people, as well as being a very positive choice for owners who are thinking about stepping back. 

It’s an option that reflects a positive investment in your people as the future and makes a strong statement to the wider market about what kind of business you want to be. Maybe it’s right for your business too!”

For more information on how you can integrate employee ownership into your benefits, and find out if it’s the right path for you to go down. Contact Anthony Collins Solicitors today!