Employee-ownership: Good for the economy and good for the employees

18 January 2016

The chairman of the UK’s largest employee owned company has said employee owned businesses are good for economies and for the employees who work for such businesses. Sir Charlie Mayfield, chairman of retail giant John Lewis, stated there is no option to sell their shares and invest elsewhere, each of our 90,000 partners at John Lewis and Waitrose have an incentive to throw all their energy and passion into making each year better than the last.

Partners have owned the business for 150 years and look set to own the business for another 150 years according to Sir Mayfield. In an opinion piece, Sir Mayfield pointed to some reasons why more businesses are not owned by their employees which included a lack of awareness and understanding about how the model works and the fact that the model does not necessarily suit everyone.

However, he claimed the greatest reason is because of the way that most owners perceive the value of their ownership.

“For most, the traditional means of value realisation is through the sale of the company either to another business or to the public market. This brings immediate, certain and often substantial financial reward. And as a result, owners are often tempted to sell their businesses long before they have reached their full potential.

In Britain, we embrace the public limited company model more than in almost any other developed country. Yet there is evidence that employee ownership can deliver increased profitability and greater levels of innovation than other forms of business ownership. Employee-owned businesses are more resilient during economic downturns. They have more engaged employees who benefit from higher levels of wellbeing and experience less stress.”

Sir Mayfield stated that employee ownership in the UK is growing at 10% annually and in Scotland there are 71 employee-owned businesses and worker cooperatives which represent approximately 6,500 employees and a £900 million turnover a trend which he believes should be encouraged.

“At a time when businesses and policymakers seek new ways to address the UK’s productivity challenge, now is the perfect time for alternative ownership models to flourish. The economy needs more employee-owned businesses because they have demonstrated an ability to deliver increased productivity while also thinking and acting for the long term.”

John Lewis was founded in 1864 and operates 42 stores across the UK with a turnover of £10.2 billion for FY2013-2014.