Ask the expert: Is employee-ownership the key to future productivity and resilience?

Mayor of South Yorkshire Mayoral Combined Authority, Mr Dan Jarvis, says there are around 1,100 employee-owned businesses in the UK, which together contribute over £40 billion to the UK economy and provide more than 200,000 jobs.  These businesses offer enhanced productivity, better employee engagement and more sustainable, resilient jobs – and there is strong evidence for this. They represent a huge untapped opportunity to create not just a bigger but a better economy.

The Ownership Hub

We were very proud recently to become the first region in the UK to partner with the Ownership Hub, which focuses on growing resilient and inclusive businesses through employee and worker ownership.

The Ownership Hub is a partnership between the Employee Ownership Association (EOA) and Co-operatives UK, as part of their campaign to create more than 1 million good jobs by 2030 through businesses giving employees a stake and a say in their work.

The Ownership Hub will be integrated into our support to business to help entrepreneurs at the start-up stage who might be considering forming co-operatives or who could benefit from that model, as well as encouraging businesses that are looking at succession after owners retire to consider employee ownership.

We want the Hub to connect people with the expertise, finance, and other help they need to create cooperatives and employee owned businesses, and to make them thrive. This is not about catering to some fashionable niche: it is about helping to unleash the entrepreneurial spirit South Yorkshire has in spades.

But this initiative is also designed to so that it will feed in to our policy making more widely – for example to support our wider efforts at reforming our spending so that it incentivizes higher wages, faster cuts to carbon emissions, and more apprenticeships. As our major new £500m Renewal Fund comes online, that will be more important than ever.

Better for South Yorkshire

The case for the Ownership Hub is first and foremost about supporting our economy and making life better for people in our region.

Giving people a direct stake in their work helps create a more inclusive, supportive and effective enterprise – and that has real, practical benefits for both businesses and workers. Employee ownership and cooperatives are associated with higher productivity and higher growth, and often with higher innovation.

To give just one example: one South Yorkshire’s best known employee-owned businesses is Gripple. It is a global success employing more than 670 employee-owners, manufacturing 6,000 products and exporting 85% of its trade to 80 countries.

Gripple’s founder Hugh Facey took the remarkable step of making his business employee-owned and run, creating a lasting legacy those workers will keep alive for future generations. Gripple’s employee owners are committed because they personally have shares in the business – putting them in a great position to grow and innovate.

This message is especially relevant now. Coops and employee owned businesses are also more resilient in the face of economic challenges, and less likely to let employees go. New research shows that in 2020 UK co-ops were four times less likely to cease trading than average businesses, and their collective turnover actually increased.

Employee ownership can make a huge difference to how we weather future economic storms, potentially saving thousands of people from the distress and disruption of unemployment. But it will also help us build the high-value, high-innovation, high-wellbeing economy we need for South Yorkshire in the longer term.

Fairer and more inclusive

But beyond that core goal of creating a more dynamic, productive and resilient economy, the Ownership Hub is also part of a wider agenda – a way to help change the system to make it fairer, more inclusive and better able to serve the needs and aspirations of the people of South Yorkshire.

As someone who served in the British Army for many years, I know the importance of that culture of cooperation – because then our survival depended on it.

Giving workers more control and a fair share of revenues fosters a sense of empowerment and makes them measurably happier. More to the point, it is just the right thing to do if we want to create a fairer, more democratic economy. It’s about fundamental reform, not just tinkering at the margins.

Goals for the future

There are currently 236 co-operative businesses active in South Yorkshire, with a combined annual turnover of almost £100 million, and employing conservatively around 1,000 paid staff. It’s a start, but it is a fraction of our potential. I want to see the sector become a much bigger part of our economy.

When I look for inspiration, it is not just to the deep roots of the cooperative movement in our own region, but to Finland, where more than 80% of people are members of at least one cooperative, and to New Zealand, where they account for 20% of the economy.

It’s surely no coincidence that the top ten most cooperative economies also occupy 8 of the top 12 spots on the Social Progress Index. That is the sort of ambition we should be aiming for.

Where to go for help

The Sheffield City Region Growth Hub acts as a ‘gateway’ so that businesses can access support when it is needed the most and within the shortest timeframe. The Growth Hub team of advisors offer guidance in the fields of business development and industry support, including innovation, growth, logistics, trade and exporting and accessing finance or training.

Any business that is interested in finding out more about employee ownership and co-operatives, should speak to the Sheffield City Region Growth Hub team today.