Employee owned businesses deliver an 8-12% productivity boost

Posted 19 Oct 2023 09:23 by RM2

A new research report has produced clear evidence that employee-owned companies really do outperform in terms of productivity, and beyond.

“People-powered growth: The rapid rise of employee and worker ownership in the UK” looked at over 9% of the UK’s 1,650+ EOBs and compared results to a control group of non-EOBs. The findings demonstrated a whole host of positive impacts:

EOBs are between 8% and 12% more productive than non-EOBs
EOBs punch above their weight in the wider economy. These businesses make up only 0.1% of the UK economy, but they currently drive between 1.7 and 2.1% of overall economic activity
EOBs create more jobs. They’re twice as likely in the last five years to have been expanding their workforce than other businesses
EOBs create engaged and motivated employees. This is helped in part by paying a fairer basic, wage and sharing dividends and bonuses amongst employees. These businesses also tend to provide better access to healthcare support and greater flexibility in respect of working hours and career breaks than non EOBs
EOBs invest in their businesses and employees, whether in R&D or skills and training
EOBs are helping create a more resilient economy, including better job security for employees. Employee owners are five times less likely to be made redundant than their counterparts in non-EOBs. In smaller companies, this increases to eight times.

The report looked at a variety of types of business in the sector, ranging from worker co-operatives to companies where employees are individual shareholders. Of course, the biggest driver for employee ownership in the last few years has been the phenomenal rise of the Employee Ownership Trust. Overall, though, it seems that the positive impacts of employee ownership are broadly consistent, irrespective of the type of model used.

RM2 is proud to have sponsored and supported Ownership at Work and the Employee Ownership Association in the production of the report. We hope that the findings of this research will encourage policy makers and government to support the sector, and will result in wider take-up of a business model that can create so much positivity for employees and the wider economy.

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