Celebrating Employee Ownership with Arup

 

 

 

An independent global firm of designers, engineers, planners, consultants and technical specialists aiming to make a positive difference in shaping our world, with sustainability at its core. Founded in 1946.

 

Arup is 100% Owned in trust on behalf of and for the benefit of its staff since 1964, meaning there are no external shareholders or investors, resulting in an independent firm dedicated to the pursuit of excellence.

 

Arup have some 14,000 employees globally, all of whom benefit from the ownership status afforded to them by the company structure. Arup is listed amongst the top 50 employee owned companies in the UK.

 

Queensferry Crossing, Forth River opened 20 August 2017 – the longest three-tower cable-stayed bridge in the world.

https://www.arup.com/

If you would like to explore how employee ownership might be introduced in your company, please contact us for an initial discussion.

We are happy to meet at our offices without charge or commitment and will be very pleased to hear from you.

GET IN TOUCH

Employee Ownership is here

As we predicted 2019 is the year in which employee ownership becomes mainstream.

Last weekend saw an unprecedented level of media coverage on employee ownership.  We look at what the BBC, Times and Financial Times have been saying and give our view on why employee ownership is capturing such wide attention.

The decision of Julian Richer to transfer the ownership of his successful hi-fi and television stores to an employee ownership trust has clearly caught the media’s attention.

 

Each of the following was published on Saturday 18 May:

 

The BBC, in an online feature entitled The firms turning their workers into owners, describes how 60% Richer Sounds has been transferred to an employee ownership trust.  This will enable Julian Richer to save CGT on his £9.2m sale proceeds, although he is more than giving back the tax saving by paying a £3.5 million bonus to employees.  From now on, they will also be able to receive an annual bonus free of income tax (maximum £3,600 per employee).

 

The Financial Times devoted an editorial to employee ownership.  Injecting the right note of realism (employee ownership does not suit all circumstances), it recognises that it can raise productivity and growth, create a healthy longer-term business perspective and build a more inclusive capitalism.  The FT’s view is that employee ownership should be voluntary and it has little time for the coercive version which has been advanced by Labour, under which all companies with more than 250 employees would build up to a 10% holding from which dividends would be shared between employees and government – a hybrid of employee ownership and nationalisation.

 

Then we had The Times, who have also given over premium editorial column inches to employee ownership.  Their view is that the “greed is good” approach to business (as voiced by the fictional corporate raider Gordon Gecko in the film Wall Street), is plain wrong. The Times cites with approval Mr Richer’s view that the more rapacious brands of capitalism are toxic, that a good company does a lot more than simply provide profit to investors and that employee ownership will often both be good business and a great way for businesses to make a wider contribution to society.

 

The CGT and income reliefs that come with transferring your company to an employee ownership trust are attractive and are sometimes the initial reason why business owners look at this route to succession.  But other reasons tend to emerge and take precedence:

  • Employee ownership will create a strong platform for further growth
  • The business owes much of its success to date to its employees, and will continue to do so
  • Employee ownership is a fair way to reward commitment and talent
  • A well-led employee owned company is able to think longer term, enjoy greater productivity and show resilience when times are harder

For more evidence The Ownership Dividend report explores this in more detail.

We welcome the attention employee ownership is receiving.

For more information about employee ownership click here

Employee Share Schemes 2018 The Good, The Bad & The Future

 

 

 

 

 

 

 

 

 

Despite Government taking its eye off the ball on EMI options, in other ways 2018 has seen major steps towards increased employee ownership.

The EMI story

This was a desultory one but with a satisfactory ending – for the time being.  Our concern is that a similar problem may come around again in 2019 but this time with no solution in sight.

EMI tax reliefs are regarded as State Aid under EU rules, requiring EU Commission approval which needs to be renewed on a regular basis.  The previous approval was set to expire in April 2018 but the UK Government only became aware of this days before the expiry, resulting in the tax reliefs ceasing to apply and worries that amidst Brexit negotiations renewal would not be a priority for the EU Commission.

In the event, the Commission did come through with renewed approval and no damage was done.

But there could be a new, final chapter in this short story.  Under an agreed Brexit withdrawal it will be necessary, if EMI is to continue, that State Aid approval also continues, and currently it is not clear that this has been provided for under any withdrawal terms.  A no-deal withdrawal does not present this problem but of course would throw up wider issues on a wholly different scale.

But aside from the EMI lash-up, 2018 has been otherwise been a positive year, particular for all-employee ownership and ownership succession through employee ownership trusts (EOT).

 

Employee ownership

In June, the Ownership Dividend inquiry into employee ownership was published http://theownershipeffect.co.uk/, finding amongst things that increased employee ownership in UK business has the potential to:

  • Increase productivity and performance
  • Support the development of regional economies, and
  • Foster more engaged employees

A growing number of companies have seen the benefits of becoming employee owned and transferred ownership to an employee ownership trust.  In 2018 these included household names such as Riverford Organics www.riverford.co.uk and Aardman Animations www.aardman.com  and others including orms (architects) www.orms.co.uk and Blue Chip Technology (computer design and manufacture) www.bluechiptechnology.com

The Scottish government announced financial support for extending employee ownership, and the Labour Party announced its own radical plans to increase the number of employee owners in the UK.

The record 750 delegates at the November annual conference of the Employee Ownership Association www.employeeownership.co.uk showed an unprecedented level of interest in employee ownership. With EOTs becoming an increasingly attractive exit route for business owners, and with professional advisers increasingly aware of this, we predict that 2019 will be the year in which employee ownership comes into the mainstream.

If you would like to explore how employee ownership or an employee share scheme might be introduced in your company, please contact us for an initial discussion.

We are happy to meet at our offices without charge or commitment and will be very pleased to hear from you.

GET IN TOUCH

Today Is Employee Ownership Day

Employee Ownership Day (EO Day) is the national celebration of employee ownership and a major opportunity raise awareness of the economic benefits and positive impact the sector has on the UK economy.

EO Day takes place in the same week as the launch of the findings and recommendations of a major new independent inquiry into the potential for increased employee ownership in the UK: the Ownership Effect Inquiry 

The employee ownership sector accounts for more than £30 billion of the UK economy.  Whilst employee owned companies include a number of substantial businesses including John Lewis, Arup and Riverford Organics, a growing number of SME companies are moving to employee ownership, spanning a range of sectors including construction, architects, manufacturing and information technology,

The Ownership Effect Inquiry reveals new evidence that there is a significant and valuable Ownership Dividend to be gained from having more employee ownership in the UK economy, which the Inquiry believes would deliver a more productive and inclusive economy in a number of ways, including:

  • Improving UK productivity
  • Resilient regional economies
  • More engaged employees

The Inquiry is both authoritative and rigorous.   Chaired by Baroness Bowles, it has been sponsored by the John Lewis Partnership, the eaga Trust and the Employee Ownership Association, and has supporters including the Cass and Manchester Business Schools.   Members of its panel have included representatives of the Institute of Directors, the Institute of Chartered Accountants in England and Wales, the Federation of Small Business and the Chartered Institute of Personnel and Development

It has made a range of recommendations, including:

  • Investing in government agencies to build awareness of how to businesses can introduce employee ownership and practical help to make it happen
  • Development of a new national strategy for business ownership
  •  Consider further incentives to encourage growth of employee ownership, including tax incentives
  • Wider education about employee ownership

The Inquiry’s report and findings can be read in full here

The Ownership Dividend – The Economic Case for Employee Ownership

If you would like to explore how employee ownership might be introduced in your company, please contact us for an initial discussion.

We are happy to meet at our offices without charge or commitment and will be very pleased to hear from you.

GET IN TOUCH

Reasons To Consider Employee Ownership – No.4

EO Day Friday 29th June

 

 

 

Recruitment & Staff Retention

 

Celebrate the growing power of employee ownership in the UK economy.

But why consider it as an option?

 

Read here how employee ownership helps recruit and retain staff

 

 

 

 

 

 

 

 

 

If you would like to explore how employee ownership might be introduced in your company, please contact us for an initial discussion.

We are happy to meet at our offices without charge or commitment and will be very pleased to hear from you.

GET IN TOUCH