The rise of employee-owned organisations

Employee ownership isn’t a new concept by any stretch, but it’s certainly having a bit of a resurgence.

Between June 2022 and June 2023, the number of employee-owned businesses in the UK grew by 37%, according to the Employee Ownership Association (EOA). More recent data indicates there were approximately 2,470 employee-owned businesses in the UK last year, with a whopping 560 companies transitioning to this structure in 2024 alone.

Many companies, however, have operated under the model for years – perhaps most notably the John Lewis Partnership, employee-owned for nearly 100 years.

As numbers continue to rise across countless industries, employee ownership is taking on many forms. And in my world, it’s got people talking for the right reasons.

What ‘employee ownership’ means

In a nutshell, employee ownership is where all employees – no matter their role – have a significant and meaningful stake in the business they work for, both financially (most commonly through owning shares) and with a genuine say in how things are run.

At these businesses, employee voices matter more than ever. At John Lewis, for example, they don't even refer to employees as ‘employees’. Instead, they are known as ‘partners’.

The benefits of employee ownership

To anyone who's ever worked for someone else, it’s safe to say the benefits immediately jump out. This concept promises not just a say in how things are done, but a genuine feeling of being heard – alongside financial rewards. You’d be forgiven for asking what the catch is. And to be honest, there isn’t a glaringly obvious one.

Employee-owned businesses benefit both employees and leaders – and that’s before the end customer, suppliers, and all other stakeholders are even considered.

The most obvious advantage is a more engaged, fulfilled, and less stressed workforce, which in turn makes the business a more attractive employer. Employee-owned businesses also tend to see higher productivity (with employees having a vested interest in its success), greater resilience during economic turbulence, and cleaner lines of communication.

A 2023 study found that UK-based employee-owned companies were 8–12% more productive per employee, based on Gross Value Added (GVA), while promoting employee wellbeing, fair pay, and community resilience. They are also said to invest roughly 12% more per year in staff training and skill development. When employees call the shots, they naturally prioritise these essential people-centric improvements.

While this structure is seen in businesses of all shapes and sizes, it’s easy to assume it lends itself best to large corporations. However, using it to lay the foundations for a family business could be the difference between a truly engaged workforce and one with low staff retention.

Why it works in practice

Julian Richer, owner of Richer Sounds (the UK’s largest hi-fi retailer), believes their employee-owned structure benefits every external stakeholder. In his words, no matter who they contact, they will always talk to an owner! Similarly, the CEO of Shaw Healthcare – the UK’s largest employee-owned care provider – values how the model puts employees at the heart of the organisation’s mission, empowering them to provide the kind of care any person would want for their own loved ones.

Looking at operational success, Riverford Organic Farmers – a fruit and vegetable delivery service – became employee-owned in 2018, with the founder selling his final 23% of shares in 2023. Following the transition, the business continued to expand geographically and even grew its total number of subscribers, suggesting that the change deepened brand loyalty and attracted new, committed customers. Perhaps the model resonates particularly well with their customer base, reinforcing the brand’s values and appearing more trustworthy and authentic than competitors.

On the employee side, many state that being part of an employee-owned business not only gives them greater input into how things are managed, but also allows them to make decisions aligned with their own values. Unlike traditionally corporate environments, where founders often don’t understand the everyday challenges staff face, these companies ensure that such issues get the attention they deserve.

Embedding ownership into culture

To my mind, employee ownership is a no-brainer when we consider the kind of stimulating workplace so many seek. That said, the model only works if it’s firmly embedded into a company’s culture. Employees should feel compelled to take on responsibilities beyond their day-to-day role because they genuinely feel like owners – not just employees with a different label.

If it’s done properly, the increased attention to detail, consistency, and honesty when changes are needed will show in the finished product a customer receives. Plus, you’ll have a much happier workforce.