Last week John Prescott wrote in his column in the The Mirror newspaper an article in which he described a tale of two bosses. Both bosses also happen to be former majority shareholders of the businesses they ran. But the similarities stop there.
The first is a household name; Sir Philip Green, former owner of the now defunct BHS, who has left the former employees with an empty pension pot to the tune of £571m. The second is the relatively unknown (at least until his appearance in the Prescott piece) Peter Neumark, boss of Classic Motor Cars, a specialist restoration company. Neumark has been in the news recently following his decision to transfer ownership of his company to his employees. Mr Neumark (who remains the chairman of the company he founded) felt he needed to reward his 60 employees with more than a raise, so after much research into the employee owned sector, he chose to pass his Company onto them using an Employee Ownership Trust (EOT). Every similarly structured company he researched in making the decision to move to an EOT structure had experienced high levels of employee retention, increased productivity, increased profitability and equally importantly to him, high levels of customer satisfaction.
Classic Motor Cars are far from alone, in fact there are over 300 companies in the UK held by EOTs, who between them employ in excess of 5,000 people. According to the Employee Ownership Association (EOA) who have recently released new figures for the sector, the combined sales of the Top 50 Employee Owned companies in the UK was £22.5bn, with a year on year increase of 4.6%!
Research shows that Employee Owned companies have grown both their sales (11.1%) and productivity (4.5%) significantly in spite of the recession compared to non-employee owned businesses (0.6% sales growth). The employee owned model is one that Mr Prescott is keen to promote as he views the sector as productive, effective and future forward. He goes so far as to suggest in his article that we would do well to transfer ownership of our railways to an employee owned structure or a co-operative with passengers as he strongly believes that this would improve passenger and worker satisfaction, boost performance and be a successful way to run the railways. An interesting idea…
As the almost daily news tells us that certain big businesses are using all available means to avoid paying large tax bills, firms who wish to be both successful and responsible are increasing asking “What about the workers?” and looking to employee ownership models to answer that question.
If employee ownership is an option that appeals to you or you would like to know more about, please do get in touch for an initial conversation with us.