Study confirms employees owned business model more efficient

10.07.2013 - Silvia Swinden

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Study confirms employees owned business model more efficient
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In his speech at the Deutsche Welle Global Media Forum Roberto Bleuh, Chilean Entrepreneur, explained: ‘Considering the times of crisis in the economy, we believe it is right and necessary to incorporate the delivery of property to the worker, where the company’s employee participates not only through wages but also in the profits and especially in its management.’ He was talking about an economic model guided by the principles of New Humanism.

As the British Government studies how to promote a workers ownership type of company to emulate the successful John Lewis Partnership, research carried out in the last few years confirms that this way of organising production is also more resilient at the time of economic crisis. Studies had already highlighted that cooperatives, where the model means that investment is directed to improving both production and the situation of the workers, is not only resilient in crisis but essentially a fairer and more humane model.

A study published in January 2010 states:

“Research by Cass Business School, sponsored by The John Lewis Partnership, looks at how employee-owned businesses performed before and during the recession. Based on an in-depth survey of senior executives and an analysis of the financial data of over 250 companies, the study finds that employee-owned firms:

• create new jobs more quickly than conventionally structured businesses – they recruit more employees at a faster rate and reward employees with higher wages;

• are nevertheless as profitable as conventional businesses;

• are more resilient: their performance is more stable over business cycles, and they have outperformed the market during the downturn;

• are also more robust: employee-owned businesses have a lower risk of business failure”.

Currently, the sector accounts for 3% of UK GDP, in spite of Government statements in the last two years about promoting this model as a way to help stabilise the economy. It has been mentioned as an option in the process of privatising the Post Office but there seems to be an in built resistance in the system as employee ownership does not lead to the get rich quick ethos favoured by business school model orthodoxy, which also attracts more easily bank loans.

Furthermore, “At present, payments such as the annual John Lewis staff bonus are taxed at up to 40%, the same level as the rest of their pay, whereas dividend payments to shareholders in publicly listed companies are taxed at 20% and are not subject to National Insurance.”

Nevertheless we should consider good news that at least some news about these alternative economic forms are reaching the mass media to challenge the classic litany: “there are no alternatives”…





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