Scottish business owners urged to consider employee ownership

With 16,000 employers in Scotland looking to transfer ownership in the next five years, Co-operative Development Scotland (CDS) is urging business owners to explore employee ownership as a viable succession route as it celebrated EO (Employee Ownership)Day.

Sarah Deas, director of CDS, said: “Over the next ten years we aspire to achieve a tenfold increase in employee ownership in Scotland. As the baby boomer generation reaches retirement age, many business owners will be considering what will happen to their business when they choose to take that step back. Starting that process early opens up more options.”

Research shows that selling a company to its employees, or implementing an employee share plan, can boost productivity, increase employee engagement and keep the business in the community. The Employee Ownership Index (EOI) has outperformed the FTSE All Share in ten of the last thirteen years by an average of nearly 14 per cent per annum.

Glasgow-based architects Page \ Park transferred to an employee ownership model three years ago.

It celebrated EO Day on Friday by implementing the next part of its transition.

Karen Pickering, who has been with the firm for 25 years, will take on the role of chair of the board with Andrew Bateman appointed managing director.

Ms Pickering said: “The move to employee ownership has been one of evolution. It has undoubtedly led to the growth of our business and we are seeing greater innovation that is being driven by the team as a whole rather than just those at the top. Employees are no longer wage earners but company owners and that brings with it greater engagement, productivity, energy, drive and pride.”

Edinburgh-based Black Light is the latest business to become employee-owned. Founder Gavin Stewart sold 80 per cent of the company to the 21 employees at the beginning of this month as part of a first step towards an eventual exit of the business.

Gavin Stewart explained: “By selling to the employees, I’m acknowledging the contribution made by them in creating the success the company is today. It provides a secure platform from which to grow and build Black Light.”

Ms Deas added: “Both Page \ Park and Black Light chose to sell to an employee ownership trust with the vendors being paid the value of their business from current and future earnings. That way business owners receive a fair price for the company and employees don’t have to dig deep into their own pockets.”

Deb Oxley, CEO for the Employee Ownership Association (EOA), which launched EO Day in 2013 said: “Statistics consistently demonstrate that employee-owned businesses outperform their non-EO counterparts in terms of higher levels of profitability; display improved business resilience during times of recession; benefit from increased productivity brought about by higher levels of engagement, and enhance employee wellbeing.

“Recent research2 led by the EOA also clearly indicates that there is a growing appetite from businesses, and especially owner-managed SMEs, for more innovative and financially viable succession solutions.

“EOA members like CDS provide all the evidence needed to demonstrate the success of this model and their achievements act a source of inspiration for other like-minded businesses looking to make the move to employee ownership.”