Employee ownership is on the rise

With 3 of the top 5 employee owned (EO) companies in the UK rooted in the construction and engineering sector, it seems entirely plausible that this is a business model that is helping companies in our sector to thrive, in what can be a challenging and highly sensitive environment.

It’s a given that some of the perks of this alternative approach to business are focused on employee welfare, progress and happiness, transitioning hierarchical structures to more inclusive models that bring about intuitive, proactive employees and assist equal opportunities.

But what about the cold, hard measures of commerce? The stats that the alpha-dogs really want to know. Being happy can’t possibly be the key to profitability; or can it?

There are over 300 businesses in the UK currently operating under an EO model, a number growing at around 10% a year. This group contributes over £30bn GDP into the UK economy annually, that’s almost 4% on the national figure - not bad going for circa 300 companies.

One of the most favorable vital signs, productivity, has been found to increase on average 4.5% year-on-year in employee owned business, a figure that has been flat-lining in standard ownership models in the UK for years. Could this be attributed to the sense of ownership that is created through an EO model?

Perhaps the most interesting of findings in the studies undertaken, and the reason for growing interest in EO in the construction industry in particular, is the mounting evidence that this is a model that is providing businesses with resilience. Employee owned businesses vastly outperformed their competitors in the recession, with sales growing by 11.1% compared to standard models, which grew only by 0.6%. With construction often regarded as one of the hardest hit and most severely affected industries, the growing interest in EO makes a lot of sense.

I work for Architype, an architectural practice that became 30% employee owned in December 2015, a decision taken due to one of the founding partners approaching retirement. Eventually the aim is to be 100% employee owned, with employee’s gifted shares via an elected trust.

For Architype, the decision to change the ownership structure was a seemingly organic process, with the benefits of an EO Trust very much inline with our existing culture and policy for management transparency. It’s still early days, as far as measuring the performance trend, but factors such as low staff turnover, improved KPI performance and increased staff satisfaction are already benefitting the business. Last year for instance, we topped Building Magazine’s Good Employer Guide Survey.

Our 60-strong team is in good company, with known firms such as Make Architects, Page Park, Formation Architects, and multi-disciplinary practice Arup, all operating under the same model. With the continual pressure for fees to be curtailed in the industry, product differentiation has never been more important. Establishing EO is regarded by many as a self-serving catalyst for improvements across all areas of practice, promoting added value from the inside-out.

Jessica Taylor is marketing manager for Architype