With the employee ownership sector more than doubling in the past 3 years, we take a look at some of the London based companies which are employee-owned…
In recent years, the world of work has changed a great deal. With work models such as remote, hybrid and the four-day week becoming incredibly popular since the start of the global COVID-19 pandemic, there has been since been an increasing demand for employers to offer a better work culture and more valuable benefits in order to retain and attract talent.
Employee share schemes are increasingly building traction within the UK’s capital and, in this article, we’ll shine a light on some of the London based companies which are owned by their employees. Keep reading to find out five employee-owned companies you need to know about…
What is Employee Ownership?
As the name suggests, employee ownership, also known as an employee benefit trust, hands ownership of a business to its employees through a share scheme. This usually involves the company selling or gifting shares or stocks in the company to its staff.
In recent years this sector of work has become increasingly popular as the model has a number of benefits. The most significant of which is that many believe that when employees have a stake in the company’s profits, they will automatically become more invested in the business’s success – and will therefore work harder.
Below we take a look at five London based companies which are owned by their employees…
#1 John Lewis
Headquartered in southwest London, John Lewis is one of the UK’s most loved department stores, selling a wide range of quality goods including clothing, homewares and food. Founded in 1864, the John Lewis Partnership now incorporates John Lewis and upmarket food store, Waitrose and, both brands are owned in trust by the company’s 80,000 partners.
In the UK, there are currently 34 John Lewis stores and 332 Waitrose stores. John Lewis’s business model works by giving every employee a stake in the company meaning, each employee is a part-owner of the business.
John Lewis refers to their employees as a ‘partners’ and each employee receives a share of the group’s annual profits, as well as a say in how the company is run. A spokesperson for the company said, “Profit share is a major factor in improving productivity, as employees are given a tangible incentive to excel and help the company thrive.”
John Lewis is known for being the first UK business to adopt the employee ownership model.
#2 Richer Sounds
Based in London Bridge, Richer Sounds burst onto the market in 1978 and soon became the go-to for those looking to update their electrical and audio equipment. With 53 stores in the UK, Richer Sounds has built its business on ‘ethical principles of being decent, honest and truthful’.
When CEO Julian Richer resigned from his position in 2019, he granted his 500 strong workforce a 60% stake in the business – as well as gifting £1000 to each and every employee.
In regard to the new model, Julian said, “People are not machines. If you treat them well, you will see so much more out of them… You will sleep better at night if you run a good business… It’s good for society if you treat your staff well and pay your taxes, and thirdly your business will benefit.”
#3 Arup
Founded in 1946, Arup is an international design and engineering company with their headquarters being located on Charlotte Street, Fitzrovia. Their office build is an impressive 321,000 square foot.
The company moved to an employee ownership model in 1977 to allow its 14,000 members of staff to share in the company’s profits. Founder, Ove Arup, said at the time, “This structure has helped us stay true to our core values and, without it, I’m not sure we could have built the distinctive culture we have today which helps us to foster excellence and innovation”.
#4 Mott McDonald
Croydon based Mott McDonald is a global engineering consultancy which employs a staggering 16,000 employees. Founded in 1989, the company has 3000 shareholders who are able to have a say on company matters, with the remainder of the business held in trust for its staff. The company chose to adopt the employee ownership in order to gain independence and freedom over the projects that the company adopts.
#5 Baxendale Employee Ownership
Close to the iconic Shard building in southeast London, Baxendale Employee Ownership was launched in 1866 as a foundry before going on to specialise in domestic boilers. In 1983, Philip Baxendale, the grandson of the original owner of the company, introduced employee ownership in order to share the wealth of the business with its employees.
Philip insisted on writing The Trust Deed himself in order to clarify that the company was not to be run solely for the benefit of the current generation. Since that time, the company has pivoted again to specialise in helping other businesses to adopt the employee ownership model.
Are Employee Owned Companies the Way Forward?
While employee ownership may not be right for every business, these are five examples of businesses who have successfully adopted the model and thereby increased their opportunities and profits, as well as creating happier and more invested employees.
There are many benefits to this model for both the employer and the employees, however it’s not always plain sailing. Before taking the plunge, employers need to be aware that, when they’re giving away shares in the company, they are also relinquishing control to a point. This in turn, could become frustrating for a company owner who is used to calling the shots in his or her business.
