What the evidence tells us
The employee owned sector is growing. More than 50% of its growth has happened since 2017.
Plus, the shape and size of the employee owned sector is changing. Once reliant on a handful of large businesses, the growth in employee ownership as a succession option for SMEs and family businesses is continuing at pace.
Evidence from the 2018 Ownership Dividend report tells us that increasing the number of businesses that give employees a stake and a say will have benefits for the individual, businesses and deliver impacts of more resilient regional economies.
The most recent snapshots of the sector in May/June 2020 were taken before the effects of the Covid-19 could be fully felt, so it remains to be seen if these types of businesses will be more resilient through this crisis. However, with 66% of the Top 50 having no debt, plus early case studies showing that many EO businesses where quick to unite their employees behind a hibernation, survival, pivot or key worker strategy, there are some early signs that, in markets where there is still demand, that there is positivity towards survival.
White Rose Centre for Employee Ownership survey
Data from the White Rose Centre for Employee Ownership survey published in June 2020 shows there are 470 employee owned businesses in the UK.
Figures for the White Rose Centre for Employee Ownership survey are provided by Prof Andrew Robinson (University of Leeds) & Prof Andrew Pendleton (UNSW). The definition of employee ownership British firms where 25 per cent or more of the ownership of the company is broadly held by all or most employees (or on their behalf by a trust).
Growth of Employee Ownership
The sector experienced its highest growth to date:
- 28% growth in 2019
- 100 new employee owned businesses since June last year
- 50% of businesses have transition to employee ownership since 2017
Regions and sectors
EO is a national phenomenon with all regions showing good coverage with the London and Scotland showing a growing critical mass of EO firms.
Over 30% of respondents are in the Professional, scientific and technical sector. When other similar activities are included such as information and communications, real estate, and finance and insurance, over 50% per cent of employee-owned companies are in activities where the mode of production is primarily human-capital based.
Other substantial areas of activity include manufacturing (15%) with ‘wholesale and retail’ and ‘construction’, and ‘health and social work’ marking other significant clusters of activity.
Growth in the regions since 2017 – top 5 (74% of all transitions)
- London 20.7%
- Scotland 17.3%
- South East (England) 14.3%
- East of England 11.0%
- North West (England) 10.5%
Growth in sectors since 2017 – top 5 (76% of all transitions)
- Professional, Scientific and Technical Activities 29.1%
- Manufacturing 14.3%
- Information and Communication 12.2%
- Construction 11.4%
- Wholesale and Retail 9.3%
Download the infographics below:
The Employee Ownership Top 50
The Employee Ownership Top 50 is an analysis of the UK’s fifty largest employee-owned companies, compiled by RM2 and published by the Employee Ownership Association.
During May 2020, UK employee owned companies were identified from multiple sources: EOA members, internet searches, professional advisers active in the sector and searches of Companies House June 2020.
The list is ranked by employee numbers. Figures are from companies’ latest annual accounts filed at Companies House June 2020.
Published in June 2020, the Employee Ownership Top 50 has recorded continued growth on a like for like basis (Like-for-like means each of the top 50 EOA companies has been compared against its own prior year results).
For a 7th year running the Employee Ownership Top 50 shows a strong performance from the Top end of the employee owned sector.
The headlines include:
- Combined sales: £20.1bn (Up 4.3% on a like-for-like basis)
- 178,000 combined employees (of these 100,000 are in companies with new or deemed EOTs) – up 1% on a like-for-like basis
- Median change in operating profit: Up 5%
- Mean change in productivity (value added per employee): Up 6.9%
- Percentage of companies with no net debt: 66%
- There are five new entrants – Greenwich Leisure Ltd, Seetec Business Technology Centre Ltd, Gemporia Partnership Ltd, Allford Hall Monaghan Morris Ltd and First Community Health & Care CIC.
The mean increase productivity of the Top 50 over the past 5 years is 6.2% in 2016, 7.6% in 2017, 9.7% in 2018, 7.7% in 2019 and 6.9% 2020, each year comparing extremely favourably when compared to UK business as a whole.
The combined number of employees over the past 7 years has varied between 151,000 and 178,000.
The combined sales has varied between £19.2m and £22.7m.
Download the infographics below:
The Ownership Dividend
In 2018 we published the Ownership Dividend: The case for Employee Ownership after a year-long inquiry into the employee ownership as an economic and social enabler.
The Ownership Dividend is the evidence report from a year-long, independent, business-led Inquiry. Read more about the inquiry
The report found that the Ownership Dividend can deliver a more productive and inclusive economy in three ways:
- Improving UK productivity – via more businesses unlocking the enhanced performance and productivity powered by the increased personal endeavour and discretional efforts of employees acting with greater common purpose once they become employee owners.
- Resilient regional economies – via a more sustainable and resilient business model that root jobs locally by providing an effective business succession solution, business independence and the ability to plan growth and investment over the longer term.
- More engaged employees – via more inclusive, transparent and effective models of corporate governance and employee engagement which better involve, motivate and financially reward individuals through their ownership stake