Led by John Lewis, co-owned businesses are on the rise – they tend to be not only successful but good for workers too
Here's a thought: your company is the most productive in its industry. The people in the business care deeply about it; they understand how it works; they contribute energetically and are constantly coming up with ideas to transform it. They have the lowest rates of absence and turnover in the sector, and they share a desire to keep the company independent. As for customers, this is a business not just appreciated but loved by them.
Just a pipe dream? Not at all – this description is true of many companies owned by all their employees. There is one proviso: employee-owners must be treated not as mere employees, but as partners. They must share comprehensively in the rights that ownership confers: information, influence and the wealth created.
In any business, employees are partners. They are not under anyone's control, like robots or hire cars. Employees are people: they choose to co-operate – or not, as the case may be. When they own the company, the stage is set to arouse the instincts for committed effort and innovation. When people own a business, it follows that they work harder, think actively about the organisation and stick with it through thick and thin. It's common sense. Ownership as the driver of performance? That's capitalism.
This is different from the effects of parasitic City ownership by institutions and dealmakers, who tend to extract cash rather than make committed investments to support innovation. The 30-year proliferation of the UK financial sector has skewed the economy out of all proportion. In the UK, member-companies of the Employee Ownership Association have a combined turnover of £25bn
– much larger than the agricultural sector. Some are famous: the John Lewis Partnership, Arup, and Mott MacDonald. And smaller companies, spanning every imaginable industry, are involved as well. Abroad, optics company Carl Zeiss has been employee-owned for 120 years. Europe's second-largest coach manufacturer, Irizar, and its fifth-largest manufacturer of electrical appliances, Fagor, are long-standing worker co-operatives in Spain.
But we don't hear much about these businesses. One reason is because no one can gamble on their shares – the employees own them. When the time comes to retire and sell your company, do your advisers offer the employee-buyout option? Rarely. They will argue it is too complicated and doesn't work. But it does work – and brilliantly – for the economy, for the companies involved, for the people in them and for customers and communities.
It is vital to engage with people who have switched to employee ownership: companies have paid dearly for wrong advice. The spectrum ranges from 100 per cent trust ownership, like John Lewis, through to wholly individual ownership, a structure that tends to be short-lived. A growing band are making a success of the Baxi Partnership model for employee ownership, with a trust providing a stable base and each employee holding shares directly as well.
David Erdal is the author of Beyond the Corporation: Humanity Working
