Yahoo Finance Why employee-owned businesses are so attractive
As the staff of Richer Sounds celebrate being handed a 60% stake in the home entertainment firm, we look at why employee-owned businesses are so appealing for all involved.
Over 200,000 people in the UK own a stake in one of the country’s 300 employee-owned businesses. Both these figures are growing and when you look at the results produced by employee-owned businesses – which aren’t only measured in figures – it’s easy to see why.
Employee-owned companies are more successful
The Employee Ownership Association says that co-owned companies tend to be more successful, competitive, profitable and sustainable than other business ownership forms.
When staff own a part of the business they work for, however small this may be, they know that they will benefit financially from its success. Employee-owners naturally have more incentive to work hard to help their business thrive.
Employee ownership also encourages a more entrepreneurial and cooperative spirit with staff eager to share ideas that could better the business.
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Staff are loyal
When the business is doing well, the employee-owners want to stick around to taste the fruits of their labour, so staff turnover in employee-owned companies tends to be lower than average. This, in turn, helps to grow lifetime work pal friendships and a real community spirit.
Recruitment eases
Employee-owned businesses are more attractive to potential employees, with research by the Employee Ownership Association finding that 44% of adults are more likely to apply for a job at an employee-owned company than other forms of business. Getting a cheque once or twice a year from your share of the profits, on top of your salary, is a fantastic carrot.
A greater level of trust
When the ownership of a company is held by a small group of board members or even a larger group of faceless dispersed shareholders, employees can be forgiven for feeling that they are just a cog in a wealth-growing machine; a wealth that they never get to see a part of. When you own even just a tiny stake in your company and you know that all your colleagues do too, you tend to trust its intentions more.
Those that do business with an employee-owned company tend to trust it more too, with research from the Employee Ownership Association showing that 41% of people say that they are more likely to buy products or services from a business that is employee owned and 58% claiming that employee-owned businesses are more trustworthy than other types of business.
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