It’s easy to see why Employee Owned Businesses (EOBs) are becoming an increasingly popular choice of business model in the UK. They have the ability to generate enhanced productivity, have greater engagement and increase innovation.
Employee Owned Businesses
EOBs are exclusively owned by their employees, either directly or indirectly. It means employees aren’t just there to work but also take interest as a genuine owner or stakeholder.
EOBs can take one of three forms:
Indirect employee ownership – employees don’t own shares in the company directly, these are usually held collectively in an employee trust.
Direct employee ownership – using one of many tax-advantaged share plans, employees can become individual shareholders and acquire direct ownership of shares in their employer company or group parent company.
Hybrid model – a combination of both the above with direct ownership by key management and an employee trust for all other employees.
What are the benefits?
Employees having a share of the business creates a positive and engaged workforce and produces a sense of ownership.
More benefits of employee ownership include:
- Increased productivity
- Cultivation of long-term thinking
- Sustainable business legacy and culture with employees having a voice in corporate governance
- Better financial performance
- Lower absenteeism
- Higher resistance to market fluctuations
- Recruitment and retention
- Tax savings
- Succession planning
What you need to consider when thinking about employee ownership
It’s important to be prepared with a plan, should an employee wish to sell their shares in the future. Also, if you are planning to retire, you need to make sure that you have a commercially capable and motivated management team to guarantee successful succession.
How we can help
Employee Ownership should not be a place of last resort for succession planning but a model for sustainable, scalable, successful business where employees are the drivers and beneficiaries of a financially sound and strong company.
We have a wide range of experience advising on employee ownership and employee share schemes in general. We can assist with ownership succession planning, the effective and efficient sharing of profits, equity participation by employees and equity salary sacrifice schemes.
If you would like to know more about Employee Ownership or other types of sale available to you, please get in touch today.