OPINION

Sir Charlie
Mayfield
A greater plurality of business
ownership is profoundly good
for the balance of the economy

towards such a short-term ownership structure

long before their companies reach their potential.
Employee-owned businesses such as the John
Lewis Partnership can never be sold, so we focus
on future earnings. That focus on continuous
improvement is a powerful competitive advantage.

hy are more companies not owned by

their employees? Its a question that
challenges the conventional wisdom of
how businesses should be run. I think there are
three big reasons.
The first is lack of awareness. Not many
successful employee-owned businesses are in the
public eye. Second, it is a form of ownership that
wouldnt suit every company. And third, while
setting up an employee-owned business is
comparatively easy, creating one from a fullygrown company has been much harder. The single
easy way of creating one from a mature company
through a singular act of altruism is now a
rarity as society seems to have settled on a
different form of philanthropy.
Spedan Lewis, the founder of our Partnership,
decided to give his wealth away to employees to
create a better society through better businesses.
But in the same way we need many and different
forms of ownership, we need an equally varied
palette of philanthropy because a greater plurality
of business ownership is profoundly good for the
balance of the economy.
EMPLOYEE OWNERSHIP DELIVERS
There is increasing evidence that companies owned
by their employees deliver higher productivity and
greater levels of innovation. They are more
resilient to economic downturns and have more
engaged and happy workers, who are less stressed.
With 4.5% year-on-year productivity increases and
25% annual increases in profits, employee-owned
businesses really are at the forefront of driving
economic growth in the UK.
For most owners, the primary means of value
realisation is to sell the company. This explains
why it is perfectly rational to manage a company
for short-term results. The average tenure of
owning a share in a company listed on the London
Stock Exchange is now only nine months, which
explains why shareholders often look for a CEO
who will be able to move market sentiment at
least for long enough to drive a rally in the share
price. Owners of promising companies are drawn

economia

NOVEMBER 2014

Sir Charlie Mayfield is

chairman of the John
Lewis Partnership

LONG-TERM THINKING
The economy needs more employee-owned
businesses because employee owners think and
act for the long term and because employee
ownership retains jobs, skills and wealth in local
communities to a greater extent than externalowned businesses.
This government has done more than any in
recent times to encourage more firms to become
employee-owned. And as two tax changes came
into effect in October to put employee owners on a
more equal footing with employee shareholders,
more businesses are asking the question: is this for
us? Membership of the Employee Ownership
Association has doubled in the last year, with the
number of employee-owned businesses in the UK
growing at an annual rate of 9%. And the hottest
growth is among high-tech, knowledge-intensive
firms that are forecast to be the greatest source of
employment growth.
So what can be done? With local institutions and
business networks helping to bring employee
ownership further into the mainstream of doing
business in the UK, we have the tools for growing
the sector at our fingertips. Spreading the word is
crucial as more people start to recognise employee
ownership as a fantastic business model.
That is why we, along with KPMG, Nationwide
and C2MH Hill, are arranging a one-day event in
February 2015 to promote the benefits of employee
ownership. The primary audience will be family
businesses considering their succession plans,
start-up enterprises, public bodies and tax,
accountancy and legal firms.
Business owners who want a more engaged
workforce and increased productivity can find out
more about how to convert to the employee
owned model at inspireeo.co.uk

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