Employee retention during The Great Resignation – the advantage of Employee Owned businesses
Tuesday, November 16, 2021
According to two recently published surveys by Ranstad UK1 and Autonomy2, almost a quarter of UK workers are planning on leaving their current employment in the next few months. Some are calling this ‘The Great Resignation’, and fear a mass exodus may be on the cards if companies do not act to improve their offer to employees soon.
While the reasons for workers choosing to move jobs are diverse (on average it’s expected that 11% of workers will move jobs every year1), in some sectors such as care, transport and logistics, and hospitality, the number of workers expecting to leave their job in the next 12 months sits at a whopping 41%2.
Clearly, there is more at play here than simple staff turnover. Companies will no doubt point to macro social and economic headwinds, such as the decreased fluidity and availability of labour in the post-Brexit economy, global supply chain bottlenecks, and the impact of post-Covid burnout on employees as they step back to reassess what employment means to them in the context of their lives as a whole1.
However, according to the Autonomy survey of workers in the care, transport and logistics, and hospitality sectors2:
The problem facing UK companies is clear, and the potential costs to the economy are enormous1. The solution, on the face of it, seems simple: to retain their workers companies must treat them better.
An existing sector of UK businesses is already well-documented as treating their workers better. These businesses use different ownership and governance structures, along with cultures of empowerment and engagement, to create a sense of shared endeavour and responsibility – and in some cases shared reward – which enables a feeling of fairness and well-being at work.3 Ultimately, these businesses’ focus on people, job security, health, equality, and wellbeing has improved staff recruitment and retention at a time when many businesses have experienced the opposite.
These businesses are employee owned.
In April 2020, we wrote an article highlighting the resilience of employee owned businesses, and how having strong governance structures enables them to make good decisions in the interests of all their stakeholders. We predicted that this resilience would be an advantage in the face of a global pandemic. But were we right?
The Covid-19 pandemic and its aftershocks are clearly ongoing, but the evidence for the benefits of employee ownership in terms of worker productivity, recruitment, and retention both before and during the pandemic is growing.
Having a stake in the company they work in encourages employees to innovate and improve efficiency, and to deepen their contribution as they think and act as owners. Productivity grew by 6.9% in the Top 50 employee owned businesses during 2019 compared to – 0.1% growth in the rest of the economy.3
The Employee Ownership Association (EOA) found that in 2020, whilst 78% of the employee owned sector said they had felt detrimental effects of the pandemic, 60% had still managed to pay a dividend to their employee owners during that period.4
In Scotland, a recent survey found that 97% of the Scottish employee-owned businesses surveyed cited job protection as extremely or very important key organisational objective; and 67% cited ‘paying the living wage’ as an extremely or very important organisational objective. This made such a difference that 76% of those surveyed believed their ownership model helped them get through the Covid-19 crisis.5
As the evidence shows, not only can an employee owned structure help businesses to weather the storms of Covid, Brexit, and supply chain issues, but it can provide a competitive edge for companies looking to retain and recruit new employees in a labour market where employee turnover is projected to hit unprecedented levels.
Companies have faced an unprecedented challenge in the past 18 months, but the lasting difficulties in terms of being able to retain a motivated and committed workforce are only beginning to set in.
Employee ownership provides a clear alternative to traditional ownership models, and makes use of strong systems of governance designed for a sustainable, multigenerational, independent future that take into account the best interests of all stakeholders in the business including its’ employees.
The evidence is clear that employee owned models give businesses the leading edge in staff recruitment, retention, and all-round resilience. For businesses looking to protect themselves from the Great Resignation, a shift into employee ownership can be extremely advantageous.
If you are interested in finding out more about employee owned structures and what options are available to you, get in touch with Simon Everingham. Simon is an employee ownership consultant and Manager with Baxendale who advises businesses exploring and transitioning into employee ownership, and supports employee owned businesses post-transition.
