Selling to Staff
The John Lewis Partnership has been one of the most consistently successful businesses in recent UK corporate history.
Their model of staff ownership – each employee is a ‘partner’ – is thought to improve morale, reduce absenteeism, and foster a unique loyalty to the John Lewis brand.
SME companies can also benefit from employee ownership. Share Option schemes are now more popular in the UK (though by no means as prevalent as they are in America), particularly with the tax advantages offered by the Enterprise Management Investment (EMI) scheme.
A more comprehensive strategy involves promoting the ownership of shares through salary sacrifices or awards, which can be enhanced through tax incentives. Such ownership strategies are generally administered through trusts. This structure can create a mechanism for entrepreneurs to sell the business to employees over a period of years.
We can advise on ways to encourage employee participation in your business and improve motivation, as well as ensuring the business does not fall into tax traps. These schemes can be very beneficial but are, at the same time, very complicated. We aim to simplify these schemes for you and your staff (a Management Buy Out is another way of involving your staff – which is a different approach to employee ownership).