Celebrating employee ownership – Tom Woodcock of Hazlewoods
Employee ownership is being celebrated across the country this week culminating in employee ownership day today (June 25).
Employee-owned businesses are reportedly the fastest growing form of business ownership in the UK and, statistics released by the Employee Ownership Association (EOA) this week, show that there are now 730 employee-owned businesses in the UK, 20 per cent of which were established during 2020.
Tom Woodcock, partner at Hazlewoods said: "These stats are not surprising as I have seen a marked increase in the number of businesses looking at employee ownership as a potential business model and/or route for succession. The commercial and tax benefits of transitioning to employee ownership are wide reaching, making it a very attractive proposition."
Research also shows that employee-owned businesses are generally more productive, their employees are more engaged and, as a result, financial performance is improved.
"With employees having a say in how the business is run and linking performance to rewards, it is not hard to see how this may be the case," he added.
Despite this, the model is still relatively unknown in the wider market. In fact, when he suggested the option to a longstanding client, Capstone Foster Care, of selling their shares to an employee ownership trust (EOT), the response was "what is an EOT?".
After explaining the model and how it could work for Capstone, Simon Constantine, one of the founding shareholders said: "Being a business that is all about caring for people, there could not have been a better solution."
Mr Woodcock said: "When raising employee ownership as a possibility, the most common reaction I get from clients is that it can't be suitable for them as they are surely not big enough. With John Lewis being the most well-known example of employee ownership, it is easy to see why they may not think their business is suitable. My clients are, therefore, often surprised to hear that it can be a successful model for businesses big or small and within almost any sector."
The latest EOA stats also show that the construction industry is an emerging sector for employee ownership growth, with 18 per cent of all transitions to employee ownership in 2020 in this sector.
He added: Over the last 12 months we have helped several businesses transition to employee ownership including within the construction sector but also across a diverse range of other sectors such as logistics, tourism and healthcare.
"There are a variety of reasons as to why you may want to consider employee ownership; for example, for fast-paced growth in a start-up venture or, as was the case for Capstone, as an attractive route for succession. The tax advantages that come along with it are also very persuasive."
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