Creating an Entrepreneurial and Innovative Culture through Employee Ownership

Sarah Deas, Head of Inclusive Models at Scottish Enterprise, discusses the potential of employee ownership in driving an entrepreneurial and innovative culture within businesses.

 Latest figures show that there are 86 employee owned (EO) companies operating in Scotland, with approximately 6,800 employee-owners generating a combined turnover of around £925million.

What are the reasons behind the rising popularity in an EO structure?  Aside from being a popular succession option, evidence shows it also drives an entrepreneurial and innovation orientated culture within a business.

Bright Ascension, experts in space technology, recently became employee-owned in order to help meet plans for growth and to continue developing and creating innovative products. The Dundee and Edinburgh based business specialises in software products and services for satellites.

In order to build a world-class business the directors recognised that they needed to attract, retain, motivate and harness the best talent in the field.  Their main priorities were to scale up the business by attracting investment and then fully engage employees to drive performance within the business.  These goals have been achieved through employee ownership.

Similarly 4C Design, Hunter Adams and Accord Energy Solutions have all chosen the model to drive an entrepreneurial and innovation orientated culture. By having a stake in the business, employees have a vested interest in increasing productivity and driving innovation.  This sense of ownership leads to employees being more willing to contribute ideas, from developing new products to identifying new markets.

Statistics consistently demonstrate that employee-owned businesses outperform their non EO counterparts in terms of higher levels of profitability, improved business resilience during times of recession, increased productivity, enhanced employee wellbeing and greater desire to innovate. Recognising the benefits of the model, the Government recently introduced tax incentives to increase its adoption.

With the fifth EO Day (Employee Ownership Day) on Friday, June 30, we believe the appetite for employee ownership has never been greater.  In the last five years the number of employee-owned businesses headquartered in Scotland has trebled and we are forecasting a ‘deal a month’ on average over the next year.

I’m anticipating that in the years ahead employee ownership will increasingly be adopted as a way to recruit, retain and reward employees, enabling business growth and higher levels of performance.

Through Co-operative Development Scotland we provide free support to businesses considering employee ownership, offering specialist advice and support to help them adopt the model.

 Co-operative Development Scotland is the arm of Scottish Enterprise that supports company growth through collaborative and employee ownership business models.

For more information on the services provided by CDS, visit www.scottish-enterprise.com/cds

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