[fordfiesta]

Hello all,

I have recently been thinking about an interesting idea for our economic future - employee-owned businesses.

Basically, companies would be owned by the employees, rather than wealthy investors (pretty self-explanatory), an example being the John Lewis Partnership.

The benefits are potentially large:
- Firstly, profits wouldn't be siphoned-off to wealthy investors who have no connection to the production process, but would be distributed to employees. Thus, has potential to be a huge step forward in reducing inequality.

- It provides an incentive for hard work - the employees have a vested interest in the well-being of the company, thus are more likely to take thier jobs seriously.

- Could potentially reduce the effects of companies on communities, as they are themselves of the community and will take social responsibility more seriously.

However, there are downsides, the most notable being not raising significant amounts of cash from IPOs.

So, what does everyone think? Should we attempt to construct our economy around these, or are they a load of rubbish?

Discuss!!

[TimHuak]

You can do whatever you want. You and your buddies can get together to live out this fantasy.

What exactly do you mean by " Should we attempt to construct our economy around these?"

[Darth Stewie]

So people who create companies would be forced to give up their sole ownership if they hire someone? Doesn't sound fair.

Also a lot of businesses need investors to get off the ground, no one is going to work for free or on a promise of shares, 1% of nothing is nothing.

The John Lewis partnership model is good for them and might be good for a few other businesses but having an economy where no one invests in new companies and where people can have their companies taken from them by their employees will probably result in the downfall of our country, so i wouldn't say it is a load of rubbish but it is a very delicate model that has very limited real world applications which are mainly restricted to large retail chains.

[otester]

Anything above a section manager at JLP is selected from outside the company, the days of working from the ground up are long over. The last store meeting I went to was rather dire, without the cost cutting measures of last year, they would have dropped 10% profit, they can only cut so much then the cracks will start to show.

Regarding peasants running the show, peasants are peasants for a reason, they lack the motivation/direction to become an entrepreneur and start their own business, putting these types straight into positions of power is business suicide, like I said above, even JLP isn't stupid enough to do that anymore, it invites stagnation.

[ufo2012]

(Original post by fordfiesta)
So, what does everyone think? Should we attempt to construct our economy around these, or are they a load of rubbish?

Don't think you could construct the entire economy around these, but they are certainly a possibility if people were willing to buy into them.

[fordfiesta]

(Original post by Darth Stewie)
So people who create companies would be forced to give up their sole ownership if they hire someone? Doesn't sound fair.

Also a lot of businesses need investors to get off the ground, no one is going to work for free or on a promise of shares, 1% of nothing is nothing.

The John Lewis partnership model is good for them and might be good for a few other businesses but having an economy where no one invests in new companies and where people can have their companies taken from them by their employees will probably result in the downfall of our country, so i wouldn't say it is a load of rubbish but it is a very delicate model that has very limited real world applications which are mainly restricted to large retail chains.

Well, companies wouldn't be forced to do this. They would do it if they decided it was in their interests. Many companies choose to do this, such as giving share options, eg. BT and countless others. This would just be on a larger scale.

[fordfiesta]

(Original post by TimHuak)
You can do whatever you want. You and your buddies can get together to live out this fantasy.

What exactly do you mean by " Should we attempt to construct our economy around these?"

I have no intentions of doing this myself. And its not really 'fantasy' for a company to be run by a well-recognised development model.

And by 'construct our economy around these', I was questioning whether they are worthy of the government taking steps to encourage them. Both Clegg and Cameron have been talking big of them in the last couple of years, but haven't actually taken any action to encourage their development.

[jacketpotato]

Its a great idea. Where it has been done it works really well. At the moment, the government is on a big push to increase the number of employee-owned businesses as part of the "Big Society" initiative.

The problem is that most businesses need a big wodge of cash to get started. Employees can't usually provide this - the capital has to come from investors, and investors want to see a return on their money. A better solution would be to do what Germany does - force listed companies to have an employee representative on their board of directors.

[calikesindobabes]

In principle, co-operatives are not a bad idea.

However:

- if the firm makes a loss, there can be no employee dividend
- do the employees also help develop corporate strategy, as they own the firm? Can they do this though, since how many would have understanding of the business environment, competitors, etc?

Getting start-up capital is no problem IMO. Banks are willing to lend based on a good business plan and prospect of a viable return.