Moves to encourage staff ownership win broad approval, say Hesham Zakai and Hugo Greenhalgh

The government’s launch of measures intended to increase the number of businesses designed along the lines of John Lewis, the retailer owned by it’s staff, has been met with broad approval by small and medium sized enterprises.

The moves announced by Jo Swinson, minister for employment relations on October 30th, include the establishment of an “implementation group”, a consultation on the viability of an independent institution for employee ownership and the development of “off- the- shelf” templates for employee owned companies. The measures follow the publication of the Nuttall Review into employee ownership earlier this year.

Peter Gradwell, founder of Gradwell, the internet and business telephone company, welcomed the moves, adding that they would have a positive effect on the economy. He said:” The ‘John Lewis’ effect is real: having a wider ownership of an enterprise can genuinely encourage greater employee engagement and motivation. This announcement presents a real opportunity for employees to have a genuine stake in an enterprise, and for employers to reach out to potential recruits.”

The Fear Group, an international trading business has employed a John Lewis model for more than four decades. Its managing Director, Stephen Fear, says that the structure helps to ensure employees do not feel detached from their company, boosting profits.

“Everyone involved has an incentive to make the business work as they know they will share in the benefits as a result” he said.

The government’s announcement has led to some confusion about Chancellor George Osbourne’s similarly-named “employee-owner” status scheme, which would see employees given tax free shares in return for a renunciation of various employment rights.

The department for Business, Innovation and Skills stressed that the two measures were distinct. “The employee-owner status is an employment and tax measure. The new status will offer employers an additional way to share ownership of their company with their workforce”, it said.

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