Is employee ownership right for your business?

Kevin Crawford at Designing Success takes a balanced look at the pros and cons of employee ownership

 

As a business owner, thinking about the future of your company is both a privilege and a responsibility. Whether you’re considering succession, growth, or simply trying to build a more resilient organisation, employee ownership is an increasingly visible option. Once a niche model, it’s now firmly on the radar of many UK business leaders, and for good reason.

 

At Crawford Architecture, a family-run practice founded in 1987, we recently made the transition to employee ownership. With the founder John (71) and myself (41) both thinking about the future, albeit on different timelines, it became clear that traditional succession models didn’t quite fit.

 

However, upon exploring employee ownership, we realised it offered a path that aligned with our values, our people, and the long-term legacy of the business. We didn’t have a succession plan and quickly learned that it’s never too early to put this in place. 

 

This article isn’t about our story, but it is shaped by the lessons we’ve learned, and is our advice on what other business owners should weigh up when considering if employee ownership is the right fit for their business.

 

 

What is employee ownership?

At its core, employee ownership means that the people who work in a business also have a meaningful stake in it. This can take a few forms, but the most common in the UK is the Employee Ownership Trust (EOT), where a trust holds a controlling stake on behalf of all employees.

 

The appeal lies in the shift of ownership to those who contribute daily to the success of the business. So, it’s not just about who holds the shares - it’s about who shapes the future.

 

Why consider employee ownership?

1. Succession planning without selling out

Many owners reach a point where they want to step back; but selling to a competitor or private equity firm can feel at odds with their values or the culture they’ve worked hard to build. Employee ownership offers a succession route that keeps the business independent and protects jobs, whilst preserving identity and longevity.

 

2. Boosting employee engagement and retention

When people have a stake in the outcome of the business, they think differently. Ownership can create a stronger sense of accountability and alignment across the team. It’s not a magic switch, but in the right conditions, it can enhance productivity, morale, and loyalty.

 

3. Protecting culture and values

If your business is built on a strong set of values or has a particular ethos, employee ownership can help embed and protect that over the long term. It discourages short-termism and prioritises sustainable growth.

 

4. Potential tax efficiencies

While the tax benefits shouldn’t be the only reason to explore this path, they’re worth noting. For example, a sale to an EOT can be exempt from Capital Gains Tax if certain conditions are met, and bonuses of up to £3,600 per employee per year can be paid tax-free. Taking professional advice on this is essential of course, but these advantages can be a contributing factor.

 

Challenges and considerations

1. It’s not a quick exit strategy

If you’re looking to sell fast and walk away, this likely isn’t the right route. Employee ownership often involves a phased handover of leadership and responsibility, which can take time and ongoing involvement.

 

2. Governance can get complex

Introducing a trust, employee representation, or shared ownership models means new structures. Decision-making needs to remain clear and effective, even with more voices at the table. Striking the right balance between inclusivity and leadership is crucial.

 

3. It requires cultural maturity

Not all teams are ready to think and act like owners, and that’s OK. But for employee ownership to thrive, you’ll need transparency, open communication, and a culture where people understand and care about the business as a whole. This doesn’t happen overnight.

 

4. You still need strong leadership

Ownership doesn’t replace leadership. If anything, it raises the bar. Owners still need a clear strategic direction and strong operational oversight. Employee ownership is a framework, not something that fixes everything.

 

 

What kind of businesses might benefit?

In my view, employee ownership tends to work best for values-driven, stable businesses with a long-term outlook. If you have a strong team, a healthy culture, and leadership potential within your ranks, it can be a natural evolution. Size-wise, there’s no one ideal - it’s about mindset more than headcount.

 

It’s particularly attractive to businesses that value independence and want to reward the people who helped build their success. I know architecture practices, creative studios, consultancies, manufacturers, and professional services firms that have all made the leap.

 

 

A thoughtful transition

Employee ownership is not a silver bullet by any means. But it is a powerful tool for the right kind of business. It offers a way to align purpose, people, and performance. The key is to go in with your eyes open: understand the practicalities, invest in communication, and give it the time it needs to embed.

 

If you’re starting to think about succession - or simply want to future-proof your business in a way that reflects your values - I would suggest it’s well worth exploring employee ownership and doing your own research.

 

The transition to employee ownership has made it a really exciting time at Crawford Architecture and now we very much look forward to sharing a strong vision and growing together even further in the future. 

 

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Kevin Crawford is Managing Director of Designing Success, supporting architects and business leaders in generating more time, more freedom and more profit

 

Main image courtesy of iStockPhoto.com and PeopleImages