What is Employee Ownership and Employee Ownership Trusts (EOTs)?
Employee Ownership is a powerful way for businesses to share ownership with their employees, creating a sense of shared purpose and long-term commitment. At the heart of this model in the UK is the Employee Ownership Trust (EOT), a structure designed to hold shares on behalf of employees, often providing a smooth succession route for family businesses. Baxendale Employee Ownership are experts in this field, advising on all forms of employee ownership and alternative ownership models. With over twenty years of experience, they have become the UK’s leading advisors on EOTs, helping businesses transition into employee-owned enterprises.
Main Benefits of Employee Ownership and EOTs
Employee Ownership via an EOT offers a range of benefits that can transform a business and its culture. Some key advantages include:
- Long-term ownership solution for family businesses facing succession challenges
- Secures business independence and protects the founding family’s values and legacy
- Provides opportunity and reward to employees, many of whom have been with the business for years
- Enables hybrid ownership structures combining EOTs with direct employee share ownership
- Creates a potential future buyer for shares directly owned by employees
- Supports employee engagement through communication, workshops, and training
- Expands globally as EOTs gain acceptance beyond the UK
How Employee Share Schemes Complement EOTs
Beyond EOTs, employee share schemes play a vital role in direct employee ownership. These schemes often run alongside an EOT, creating a hybrid ownership model. This means employees can directly own shares while the EOT holds a controlling stake, providing stability and a clear exit route. This combination offers flexibility and aligns employee interests with the company’s long-term success. Implementing these schemes requires careful structuring and legal documentation, ensuring compliance and clarity for all parties involved.
Effective Communication and Employee Engagement
Transitioning to employee ownership isn’t just about legal structures; it’s about people. Communication is key. Businesses that thrive in employee ownership invest in employee information sessions, workshops, and training to help everyone understand and embrace their new roles as owners. This engagement fosters a true ownership culture, which can be challenging but incredibly rewarding. Support is often extended to businesses that have recently transitioned or are in the process, even if they haven’t used the same advisors for legal work.
Governance and Board Support in Employee-Owned Businesses
Strong governance is essential for successful employee ownership. Experienced advisors provide support for both Trust (EOT) Boards and Company Boards, offering training sessions for newly formed trusts and directors. For established boards, workshops can explore roles, responsibilities, and collaborative ways of working within the employee ownership framework. Regular reviews of governance systems help ensure everything runs smoothly or identify areas for improvement, tailored to the unique needs of each business.
Project Impact: Supporting Sustainable and Inclusive Business Models
- SDG 8: Decent Work and Economic Growth – promoting fair and rewarding employment
- SDG 9: Industry, Innovation, and Infrastructure – fostering resilient business models
- SDG 10: Reduced Inequalities – enabling wealth sharing and inclusive ownership
- SDG 12: Responsible Consumption and Production – encouraging sustainable business practices
- SDG 17: Partnerships for the Goals – supporting collaboration between owners, employees, and advisors
Ongoing Support and Resources for Employee-Owned Businesses
Employee ownership is a journey, not a one-time event. Ongoing support includes employee ownership reviews to keep governance and engagement healthy, assistance with employee councils and voice mechanisms to boost participation, and continuous advice for Trust and Company Boards. Resources such as downloadable guides, explainer videos, and expert insights are available to help businesses navigate the complexities of employee ownership transitions and maintain sustainable, thriving employee-owned enterprises.
