Employee ownership of Scotland's businesses can make people happy in their work while also improving productivity – Carole Leslie
When McVitie’s ceased to be a family business, decisions to close the Glasgow factory were made by people hundreds of miles away looking at balance sheets and maximising financial returns, not the long-term health of business and the provision of jobs.
Despite the factory being a mainstay within its local community, and generations of families rooted to the business, nearly 500 members of staff were handed redundancy notices ending a 100-year relationship with the area.
Perhaps this scenario could have been avoided through employee ownership. The model is designed to give those knitted into the very fabric of a business the chance to have their say, and their slice of its success.
At first, the thought of staff owning and running a business could be perceived as farcical. However, Scotland has seen the number of transitions rise exponentially over the years. With the country recently welcoming its 100th employee-owned business earlier this year, there is evidence to suggest it could benefit our economy more than we realise.
The Volkswagen campervan converter, Jerba Campervans, became fully employee-owned in January 2018, and it reported its most successful year on record following its one-year anniversary with turnover rising from £2.2 million in 2017 to £2.7m; the East Lothian-based company’s productivity increased by 12 per cent.
It is argued that staff who own a share in the business are more invested and committed to its success, and are likely to be happier in their jobs. A Qualtrics Employee Pulse report in 2019 suggested only 45 per cent of UK employees were engaged in their employment, a figure which is significantly less than in France, Australia and the USA. However, employee-owned businesses, perhaps unsurprisingly, perform much higher in this metric.
East Kilbride-based manufacturer Clansman Dynamics conducted an employee survey in 2019 and concluded the model had made the company more successful.
The survey found 88 per cent of staff were happy at their work, with a further 93 per cent saying management-workforce relations were positive – an increase of 37 per cent on the previous survey in 2017.
However, has the employee ownership model stood up to scrutiny when the pressure of the pandemic really mounted?
Like all industries, Covid-19 hit employee-owned businesses hard, but research commissioned by Co-operative Development Scotland and Scotland for Employee Ownership found more than half of the surveyed businesses reported their turnover was unaffected or even grew during the pandemic. More than 90 per cent of the employee-owned businesses had experienced only minor or no issues in retaining staff.
So it begs the question, is employee ownership the answer to economic growth?
The Scottish Government has set a target of achieving 500 employee-owned businesses by 2030. While this may be difficult to achieve, more can be done by politicians and business leaders to raise awareness of the profile of the model across the country.
For those at the Mcvitie’s factory perhaps it has come too late; but consumers, suppliers and the wider public would benefit from a better understanding of what the model means.
The evidence is substantial – employee ownership is better for business, employees, the community, and the economy.
Carole Leslie is the founder and director of Ownership Associates, a Stirling-headquartered advisory firm that has helped more than 70 businesses transition into employee ownership
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