It was a quiet Tuesday when John Henderson, founder of the struggling Manchester engineering firm Henderson & Co., signed the papers that would change everything. He didn't sell to a conglomerate. He didn't sell to private equity. He sold to his 47 employees. Now, three years on, the company is profitable, staff turnover has plummeted, and a quiet revolution is spreading across British industry.
Sources close to the Employee Ownership Association confirm that the number of employee-owned businesses in the UK has more than doubled in the past five years, from just over 300 in 2018 to over 700 today. The model, known as an employee ownership trust, or EOT, allows owners to sell a controlling stake to a trust that holds shares on behalf of workers. Capital gains tax is waived, and profits are shared among staff.
Henderson told me: “I could have taken a cheque from a private equity firm. But that would have meant job cuts, debt, and losing control to faceless suits. Instead, my staff own the company outright. They now have a real stake in the business. Productivity has jumped 30 per cent. Absenteeism is down. And we haven’t had a single redundancy.”
Uncovered documents from Companies House show that employee-owned firms in sectors from engineering to retail have outpaced their traditionally owned rivals in growth and resilience. A 2023 study by Cass Business School found that EOT companies experienced 8 per cent higher productivity and 12 per cent lower staff turnover compared to peers.
But it’s not all roses. Critics argue that the model can lead to slower decision-making and that not all employees want the responsibility of ownership. “It’s a happy-clappy idea that works in theory but not always in practice,” says one corporate finance adviser who asked not to be named. “When things go wrong, workers can’t just fire the boss. Decisions get bogged down in committees.”
Yet the data tells a different story. According to the Employee Ownership Index, a basket of 30 publicly traded employee-owned companies, share prices have outperformed the FTSE 250 by 15 per cent over the past decade. And with the government’s 2014 tax incentives, the trend shows no signs of slowing.
For Henderson, the decision was personal. “I saw too many friends sell out to venture capitalists who stripped the assets and left the workers on the dole,” he said. “This way, my legacy isn’t a pile of cash. It’s a business that will outlive me, owned by the people who made it.”
As Westminster debates the future of corporate governance, this quiet revolution from the factory floor may hold the key to a more equitable capitalism. The question is: will the suits in Whitehall let it flourish, or will they smother it with red tape?
