In a recently published article by the Cambrian News Wavehill, a social and economic research firm that transitioned to employee ownership via an EOT in 2020 reported the following:

Founding director of Wavehill, Mark Willis, said: “Employee ownership offers a perfect split between securing a robust succession plan, but also keeping your current employees happy and knowing the business is in safe hands.  “Since our transition to an employee-owned business, we’ve seen a 25 per cent growth [bold added] our order book, and have met all of our objectives. I think it revitalised the whole organisation.

“We’ve set up the structures so that employees really feel that they have a key role to play in the management of Wavehill. It’s an attractive prospect for future employees – such as bringing in senior staff to the business.

“We have also introduced an Employee Management Initiative (EMI) to develop more senior consultants who, over a period of years, will also get ownership. It is a nice, virtuous circle, and a lovely model to help us go forward.”

This is consistent with other research which has identified positive financial outcomes for companies transition to an employee ownership model – and who build an employee ownership culture.

For Example Rosen (2009) stated, Companies that combine ESOPs with what we call an “ownership culture” (they share financial information and get people involved in work–level decisions) grow 6% to 11% per year faster than would have been expected; companies with top-down cultures grow more slowly post-ESOP than would have been expected (p. 42).   Winther and Marens (1997) noted that those ESOPs with an employee–ownership culture “on average grew 11.4 percent faster than their match in the post-ESOP period” (p. 410). Conversely, ESOPs, which were less participatory, lagged non-ESOP match firms by 3.4% in employee growth and 4.2% in sales. Van Doel (2017), identified that revenue per employee, in employee owned professional services firms, was positively related to employee ownership culture. Participants’ revenue per employee increased by $164,264.50 per one point increase in psychological mechanism of stewardship.

References:

Rosen, C. (2009). Twelve bogus reasons not to do an ESOP (and seven good ones). Journal of Employee Ownership Law & Finance, 21(3), 39-45. Retrieved from http://www.nceo.org

Winther, G., & Marens, R. (1997). Participatory democracy may go a long way: Comparative growth performance of employee ownership firms in New York and Washington states. Economic and Industrial Democracy, 18(3), 393-422. doi:10.1177/0143831X97183003

Van Doel, R. M. (2017). Exploring stewardship characteristics in professional, scientific, and technical services employee-owned companies. (Doctoral dissertation). Retrieved from ProQuest Business Collection database. (UMI No. 10286641