EOT-owned businesses are more profitable, efficient and resilient according to research led by the Employee Ownership Association. The positive impact on employees can combine to add motivation, purpose and team spirit to drive top and bottom-line results.

• Teams bond closer behind a shared purpose and target that everyone owns and stands to benefit from when achieved.
• Creativity grows as staff have more opportunities and motivation to contribute their ideas
• Individuals feel invested in the business and performance. This creates more scrutiny of investment decisions, a drive on commercial operations and creates an additional “extra mile”

The collective impact on productivity can be significant and not just for your current employees. We spoke with a professional services firm in Yorkshire last week that transitioned to be EOT-owned last year – one of their headline objectives was to provide a competitive edge for hiring their future leadership team in the future. They saw the tangible benefits of being EOT-owned as giving them a material edge in attracting their future leaders.

Undoubtedly the EOT ownership of itself can be a real competitive advantage when attracting and retaining high calibre managers, where the managers are really excited about being part of a model that wants to do the best for their employees, customers, the environment, the community, and their partners. However, the lure of having skin in the game is never far away for some managers, so this blog looks at whether EOT's can offer something similar.

The private equity backed businesses will be recruiting on the promise that in three to five years' time (maybe longer) there will be an exit event for managers to crystalise some if not all the capital value they have created. Salaries and bonuses are not usually the attraction but are likely to be market rate.

The downside of this model, is, however, there has to be a regular churn in the ownership of the business as the Investors seek a return on their investment. This is the complete opposite with the EOT model, where the long-term sustainability of the business for its employees, customers and partners is of vital importance. So, can the talent in the business have the best of both worlds? They can, where the EOT is able to adopt an Enterprise Management Incentive Scheme (an EMI scheme) and create an internal market for its shares.

Geldards have advised a number of EOTs on implementing an EMI scheme for key staff. There are a number of pitfalls to avoid that are specific to EOTs so it’s best to get professional advice before implementing one.