Could employee part-ownership help productivity?

08 October 2018 -

Opinion: one management expert looks at whether giving employees shares could transform UK productivity

Speaking at the Labour Party conference in September 2018, John McDonnell, the Shadow Chancellor, proposed a change to the way that companies are led and empowered. He referred to the greatest extension of economic and industrial democratic rights this country has ever seen, through the introduction of an Inclusive Ownership Fund.

Simply put, employees would be offered shares in part of the business that they work for.

Part-ownership schemes are a growing phenomenon, although the application of industrial democracy has been practiced for almost 100 years. Many are based on the long-standing John Lewis scheme. The schemes are currently delivering four per cent of the UK GDP, as reported by the Employee Ownership Association.

Read more: an interview with John Lewis chairman, Sir Charlie Mayfield

At its heart, the part-ownership business model includes a focus on positive contributions, creating an inclusive culture and having a clear vision. It involves employees in decision-making to encourage greater performance and identify individual potential. The net result is a cultural change of people’s expectations at work: it can also result in greater workplace motivation.

For this reason, some managers are suggesting that part-ownership schemes could be the solution to the UK’s productivity crisis.

Reference is made in the CMI’s Management Manifesto to the 18% lag in average productivity levels within the UK when compared with other G7 countries.

The CMI also recommends a ‘productivity through people’ solution. Poor management costs UK employers around £84bn per year and restricts the growth of the economy. Nearly three-quarters of employers admit their management training is insufficient, and 83% of Chartered Managers state that they are more productive as a result of training.

While there are other factors that may affect productivity – such as a lack of investment in technology – looking at leadership structures is a great place to start.

Crucially, the employee part-ownership approach can be enhanced and implemented through effectively trained managers.

Dr Jan Green is a Reader and MBA programme leader at Wrexham Glyndwr University. The Management Manifesto is available here.