Employee-owned firms’ shares outstrip FTSE companies

Shares in companies that are part-owned by their employees continue to outperform the FTSE All-Share index, according to research published today.

The Employee Ownership Index (EOI), published by law firm Field Fisher Waterhouse, compared companies that are more than 10% owned by employees with the performance of FTSE All-Share companies.

An investment of £100 in the EOI when the index began in January 1992 would, at the end of June 2012, have been worth £591; the same investment in the FTSE All-Share Index would be worth £235.

Graeme Nuttall, the Government’s independent adviser on employee ownership and head of equity incentives at Field Fisher Waterhouse, said: “The Employee Ownership Index continues to demonstrate that, in the long term, employee-owned companies perform better and continue to be a successful business model.”

The Government supports employee ownership and has committed to acting on recommendations put forward in Nuttall’s review, which provides a framework to move this model into the mainstream of the economy, in July 2012.

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Jo Swinson, minister for employment relations, said: “We have already published a call for evidence on the right to request employee ownership. There are many great examples of employee ownership in Britain and we wish to promote this business model more widely.”

Further details on what the right to request employee ownership would entail can be viewed on XpertHR.