Workers Can Do It for Themselves but They Need the Right Support; the Publication of a Report on Employee Ownership in the UK Raises Issues of Awareness, Taxation and the Opportunity for Substantial Benefits to the British Economy. Here Glenn Bowen, Director of Enterprise at the Wales Co-Operative Centre Looks at the Reports Findings and Its Potential Implications for Welsh Business
Byline: Glenn Bowen
THE Wales Co-operative Centre supports the sentiment of a "culture shift" towards employee ownership in the private sector.
Employee ownership empowers workers and provides owners a means of exiting their company without having to sell to a rival or close the business.
Employee ownership has also been proven to enhance businesses performance in comparison to their competitors.
The Nuttall Report on employee ownership which was released last week raised some key points: the report calls for raised awareness of the concept of employee ownership and the potential benefits among business owners and the professional advisory sector.
It suggests employee ownership should be considered as a possible solution in business rescue situations.
It argues there is a need to consider the funding levels available from government to support employee ownership schemes and that there is also a need to develop simple employee ownership toolkits so that business owners can begin the process of moving towards employee ownership.
In March of this year, the Wales Co-operative Centre published a report titled Employee Ownership: Defusing the business succession time bomb in Wales.
Our report was focused on the need to consider employee ownership as a viable alternative to business failure because of poor succession planning, but it called for many of the same things.
The Nuttall Report also called for a "Right to Request" and the UK Government is looking to launch a call for evidence on whether this should be a blanket approach or limited to certain milestones in a company's lifecycle such as during succession planning.
We would certainly support such a right to request at the succession planning stage but would urge caution with regards to a less focused approach.
The John Lewis Partnership is often used as an example of good practice in employee ownership. The company has a very specific model based on a trust that is set up to hold the employee shares on behalf of the employees. This is supported by well-established and effective democratic and communication processes within the company.
This approach works extremely well for the business and for its employees or "partners" - they have consistently earned an annual bonus worth between 9% and 20% of annual salary per employee since 2000.
But, the John Lewis model is only one form of employee ownership and it may not be suitable for every company.
One size does not necessarily fit all.
Employee ownership can take many forms from worker co-operative through to part ownership through a share incentive scheme. The motivations for the owners, and for the employees, for embarking on a transition to a form of employee ownership can vary immensely. …