New insights are published today into how Employee Ownership Trusts (EOTs) are bedding into small businesses across the UK.
Independent think tank Ownership at Work (OAW) shares new research that draws out emerging best practice in a currently under-researched but rapidly growing part of the economy.
The short study into the governance of EOTs, titled Employee Ownership Trusts – In search of best practice, highlights a series of key findings in businesses of 50 to 150 employees that adopted an EOT ownership model between 2017-2019.
“We set this out as a pilot survey,” says Sue Lawrence, co-author of the paper with Simon Carter, who used their significant expertise around governance structures to gain a snapshot of the sector.
“Because of the growth of the market so many SMEs were transitioning to employee ownership, and we knew there would be a lot of focus on the sector and wanted to see whether there was any good practice or similarities in the way governance is applied within EO companies.”
The employee ownership sector has doubled in size since 2019 to over 700 businesses in the UK, the majority of whom are small or medium-sized (SMEs). That growth has been principally driven by the introduction of the EOT in 2014, a trust that holds company shares on behalf of and for the benefit of all employees.
The report addresses a gap in insight and hard evidence into the ownership mechanics of these companies. The project was delivered by a partnership of OAW and Independent Directors and Trustees Ltd, which was founded by Sue Lawrence in 2018, and supported by the sector’s trade body the Employee Ownership Association.
In addition to offering insights into common and emerging best practice, the report highlights key areas that will require further exploration, including that there is a bigger role for the sector to play moving forward in helping the leadership teams of employee owned (EO) businesses to understand what good looks like and to unlock the full benefits that EO can deliver.