John Swinney sets out how employee ownership can deliver business success

John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, gave a timely boost to Scotland’s dynamic co-operative sector last night (November 28) by hosting an 'Influencers’ Dinner' in Edinburgh.

With the ‘John Lewis economy’ becoming a clarion call from UK political leaders, the event highlighted the value of employee ownership in Scotland.

The dinner was designed to inform professional advisors such as lawyers, accountants and bankers, about the merits of employee ownership as a worthwhile business model. Employee Ownership Ambassadors – all senior figures from employee owned companies – were also invited by Co-operative Development Scotland (CDS) to explain how their own workforces have become shareholders in their firm.

A recent independent review - 'Sharing Success' by Graeme Nuttall - says that at present: "employee ownership is insufficiently understood".

Among the companies who attended the event at the Macdonald Holyrood Hotel were: Tullis Russell, Clansman Dymanics, Woollard & Henry and Arup.

The Cabinet Secretary said: “Employee ownership can stimulate entrepreneurial culture, innovation and growth. An employee owned company is one in which the employees hold the majority of shares either directly or in trust, which gives them a genuine say in how the business is run.

“Evidence tells us that this often gives a more sustainable business in difficult times and one that creates jobs faster in better times. It is also becoming clear that a performance benefit can be gained through employee ownership – with productivity boosted by four to five per cent.

“Over the last 20 years the Employee Ownership Index has outperformed the FTSE All-Share by an average of 10 per cent each year.”

Sarah Deas, chief executive of Co-operative Development Scotland (CDS), said: “We are delighted to have the support of Mr Swinney to promote employee ownership. We believe the model helps sustain businesses in their communities, engage employees and deliver productivity, innovation and growth.

“Our goal is to ensure that professional advisers such as lawyers, accountants and bankers are well informed as to the potential merits of employee ownership. Such advisers play a key role in guiding businesses. The Influencers’ Dinner will play an important role in broadening the advice available to Scottish firms.”

An employee-owned business is one in which staff hold the majority of the shares, either directly or through an employee benefit trust. Such a move boosts productivity as workers feel they have a proper stake in their business. John Lewis is one of the most famous and successful employee-owned companies in the UK.

Employee-owned businesses account for a combined annual turnover in excess of £30 billion, more than two per cent of GDP and growing in the UK. Employee-owned businesses are typically five per cent more productive. There is significant policy interest in employee ownership. This has resulted in the Government initiating the Nuttall Review, HM Treasury Review and BIS Review.

Mr Swinney is also planning to visit two of the Employee Ownership Ambassadors: Dick Philbrick at Clansman Dynamics and Dennis Overton at Aquascot.