Model Growth: Do employee-owned businesses deliver sustainable performance?

The employee-owned sector – where companies are wholly or substantially owned by their staff – is estimated to be worth £25 billion annually, equivalent to 2% of UK GDP. Employee-owned businesses (EOBs) operate in a wide range of sectors, from retail, manufacturing and engineering to financial services. Employee-owned organisations also operate in the public sector, delivering services such as health and community care. Studies have shown that EOBs generally outperform non-employee-owned business (non-EOBs) where employees do not have a significant stake in ownership or the right to participate in decision-making. It has also been shown that employees who have a stake in the company they work for are more committed to delivering quality service and more flexible in responding to the needs of the business. This study examines how EOBs maintain the advantages of their ownership structure as they grow in size and complexity. It also assesses the financial performance of EOBs compared with non-EOBs. It aims to answer four key questions: 1 As EOBs pursue growth how do they perform relative to non-EOBs? 2 How do EOBs retain the employee-ownership advantage as they scale up? 3 How well do EOBs perform during an economic downturn relative to their performance during a strong economic environment? 4 How well do EOBs perform during an economic downturn relative to non-EOBs?