How will Osborne’s employee ownership idea affect engagement?

George Osborne’s speech at this week’s Conservative party conference re-ignited discussions around an employee ownership scheme.

Increased employee ownership seems, on the surface, to be likely to improve employee engagement. We know from John Lewis, which operates a partnership model, and Sainsbury’s with its share saver schemes, that employee ownership increases accountability, heightens long-term employee commitment and improves motivation. All the evidence shows that it has a positive impact on talent attraction and retention, workforce productivity, customer service delivery and, ultimately, profit/growth.

The Chancellor’s plan would see employees given between £2,000 and £50,000 of shares, which would be exempt from capital gains tax. In exchange they would give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.

But, as ever, the devil is in the detail. Removing employee rights is a contentious issue and looks likely to reduce engagement, especially in terms of reduced job security, longer-term commitment and employer advocacy. Although the intention is to create flexibility for small and medium-sized businesses, and thereby stimulate growth, it has the potential to become a large disincentive for many workers in the continuing tough economic conditions.

A YouGov poll – the results of which were released today – show that the majority (63%) of the British public think that the plans are a bad idea.

But ultimately, when it comes to engaging with their people, employers will need to make the call about what the net effect of the proposal is likely to be. To do that they will need data, analytics and insight, and advice on how to land such a scheme. They’ll also need to know which engagement issues to anticipate and which they’ll need to track.

We await the draft legislation with interest…


By Dr Andy Brown
CEO & Practice Head: ENGAGE Leadership