Telstra and miners lead in giving employees a stake in the business

by Employee Share Ownership on May 31, 2013

SYDNEY, 27 May 2013: Australian companies taking the employee ownership route were rewarded with industry prizes at the Employee Share Ownership Plan of the Year Awards, on Friday 24 May, at the Shangri-La Hotel, Sydney.

“Employee Share Ownership Plans or ESOPs, are becoming more popular here as a greater number of Australian businesses recognise the benefits to productivity and profits when their employees are offered a meaningful stake in the business,” said Angela Perry, chair of Australia’s national employee ownership advocacy group, Employee Ownership Australia and New Zealand (EOA).

“The awards are the opportunity to recognise excellence in employee ownership strategies. We applaud all the winners which included Telstra and a number of mining firms, for their vision and commitment to engaging with their workforce,” said Perry.

The Federal Parliamentary Enquiry into Family Business found that there would be stark policy implications for our economy from the number of family businesses transferred or closed in the coming decade as a result of the retirement of the baby boomer generation.

Senator Ursula Stephens, on presenting the award for best SME/Succession Plan to Deswik Mining Consultants said,  “The issue of small and medium businesses planning for the retirement or exit of the owner is vitally important given the scale of this business sector in the economy. The sale of a business to employees is a proven succession solution and I’m delighted to present this award recognising excellence in the area of ESOPs.”

In a recent review of the tax arrangements for employee share plans, EOA found that changes were urgently required in order for Australia to keep pace with international trends to increase the level of employee share ownership in the economy.

Elsewhere in the UK and US, ESOPs are a more mainstream part of the business landscape and are an important part of planning for business succession.

The 2013 winners:

  • Most Effective and Innovative Communications Program – Yum! Restaurants (2013 AND 2012 winner)
  • Best New Employee Share Plan – Newcrest Mining Limited
  • Best Performance in Fostering Share Ownership (less than a 1000 employees) – Mutiny Gold Ltd
  • Best Performance in Fostering Share Ownership (more than a 1000 employees) – Telstra
  • Best International Plan – Telstra
  • Best SME/Succession Plan – Deswik Mining Consultants

ENDS.

Download the above Media Release

Media Contact

Angela Perry, Employee Ownership Australia
0424 557 297 | angela.perry@employeeownership.com.au

Editorial Notes

In the USA there are around 10,900 Employee Share Ownership Plans (ESOPs) employing more than 13 million US employees.   In a joint project with the Employee Ownership Foundation, the NCEO found that employee ownership averts a substantial amount of unemployment and saved the US Federal Government over $23 billion in 2010. Data from the General Social Survey shows that in 2010, for instance, 12.1% of all working adults in the private sector reported having been laid off during the prior 12 months, compared to just 2.6% of those respondents who own stock in their company through a company-sponsored employee ownership plan. This dramatic difference remains even after adjusting for different conditions faced by employee-owners and non-employee-owners.

High profile employee owned companies include John Lewis (UK) and Publix (US, retail sales of $27 billion in 2011 and more than 152,500 employees).

Employee-owned firms have, on average, 4-5% higher productivity than other businesses and the Employee Ownership Index has outperformed the FTSE All Share Index by an average of 10% annually since 1992. The UK Coalition Government is taking action to enable these models to flourish in both the private and public sectors.

Why are employee-owned businesses better?

Employee-owned firms are more productive and their employees are better off: *

  • Firms that are owned by their employees or where they have a stake in the business through a share ownership plan are 4-5% more productive than comparable companies
  • They are also 25% more likely to survive than comparable companies and the employees are four times less likely to get laid off in a downturn
  • 98% of co-operatives are still trading after their first three years compared to 65% of all business
  • Over a 25% year period employee owned companies have 25% higher job growth
  • Employees at employee-owned firms receive 5-15% more in wages
  • Employee owned businesses do not close for reason of moving to another country

*Sources

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