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Employee ownership – the future for business?

K&H became members of the Employee Ownership Association (EOA) last year, having launched our company-wide share ownership scheme the previous year – everyone at K&H is now a shareholder in the company. (See my previous blog posts on this here and here.)

The EOA is an organisation that exists to promote co-ownership of companies by their employees. Members include the John Lewis Partnership, Arup, Unipart, etc.

Last Thursday I attended the annual dinner at the House of Commons. Visiting there was a great experience in itself (despite queuing for over half an hour to get through the airport-style security). The main highlight was listening to a speech by Will Hutton, economics writer and former Observer editor and now David Cameron’s appointed Chair of the Commission on Ownership.

I have read his articles for years and always been impressed with his insights into economics. Needless to say, he had many thoughts on recent events in the global economy.

His main theme was that unfettered capitalism – the pursuit of maximising shareholder value as an overriding aim – in itself was no longer a viable model for our free-market economy.  Also, given that communist models have long been discredited as a viable alternative, we need to look to new ways of running businesses to avoid the need for excessive regulation.

The solution that Will espoused involves more varied ownership models including employees, with a much more engaged and committed work force.

He also put forward his own definition of ‘fairness’ to serve as a guide to the distribution of income within these organisations:  ‘Discretionary effort with proportionate reward’, as opposed to the extremes of ‘reap what we sow’  and ‘from each according to his ability, to each according to his need’.

Following Will, Norman Lamb, Lib Dem MP and Chief advisor to Nick Clegg, spoke about his ambition to promote employee ownership models in the public sector – including the Royal Mail and NHS, as the only possible way to shake those huge organisations out of their endemic inefficiencies.

Would you be willing to give shares to your employees? Please let me know your views.

One Response to “Employee ownership – the future for business?”

  1. Tony Armstrong says:

    The John Lewis Partnership is an excellent example of a very successful employee ownership organisation. They are also a very successful and consumer oriented company. Whether the employee share ownership scheme is causal in driving their success or is just another way of rewarding staff, I’m not sure and I’m not sure anyone knows.
    Taken in isolation, employee share ownership may not achieve anything over other models of employee motivation and remuneration. As part of a more employee-involved style of management it can be extremely effective. It is also far easier to start such a scheme from the beginning as part of an overarching culture rather than attempt to introduce such a concept into a long established company with a clashing culture.
    Taken overall, consider this model seriously at start up, early stage or turning point of your business. Make sure that it is integrated and complimentary with company culture and systems (especially employee involvement and communication) and make sure you go and chat with Andrew!

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