Employee ownership – 5 common myths explained

We’ve all heard them: those stubborn myths about employee ownership (EO).

Sometimes it's hard to know what's true, especially if you're a company owner exploring EO as a succession plan – or have already sold your business to an Employee Ownership Trust (EOT) but are struggling to make EO work effectively as a leader, board or team.

Here, our experienced consultant Jeremy Gadd busts five common myths about EO. He covers everything from the reasons owners choose employee ownership to how to make it work long-term.

Myth 1: It's not about the money

Jeremy Gadd with fellow Telos Partners consultant Corrine Thomas

People often say that choosing to sell your business to an EOT isn't about the money. However, Jeremy disagrees.

'In my experience, it’s not about the money until it’s about the money,' he says.

'Whatever your reasons for choosing employee ownership – whether you're committed to preserving your legacy, sustaining jobs or safeguarding your culture – transitioning your company to EO is still a sale of a business from one owner to another.

'It’s not a gift; it’s a legal transaction. As a founder or owner, you need to be realistic about that.

'If you don’t get an accurate valuation or if your business isn’t financially sound, it won’t be able to fulfil all you need it to do. A building block of success is being honest about what you’re doing and why – with yourself, your stakeholders and your employees.

'Successful employee ownership is about adult-to-adult relationships and honest conversations. You’re giving people rights and responsibilities in the business they now own.

'As a founder or owner, you can be as philanthropic as you like with the proceeds of that sale. However, it’s important to recognise that your decision to transition to EO has consequences and impact. This includes the ability of your business to pay you back.'

Myth 2: Nothing will change in the business

'If you want to leverage EO's benefits and the competitive advantage it can bring, you need to enable your employee owners to take more personal responsibility for the business's success'

It’s true that although your ownership model will change, your business can remain the same in how it operates, its services, products, people and culture.

However, Jeremy is clear that becoming employee-owned is more than just a signature on a piece of paper.

'If you want to leverage EO’s benefits and the competitive advantage it can bring, you need to enable your employee owners to take more personal responsibility for the business’s success.

'Becoming EO affords you the opportunity to have a different conversation and gain their psychological discretionary effort.

'It’s now a business held in trust for its employee owners and they’ll share in ownership’s rewards.

'Those rewards might include a share of the profits, as well as a greater ability to influence and participate in a business where their input makes a difference.

'But with opportunity comes the responsibility to build that success. As a founder or owner, you must create a narrative for change and bring it to life.

'Depending on how strong your business is in terms of purpose, culture and engagement, that can be hard work. However, the benefits can also be huge.'

Myth 3: Becoming employee-owned will slow the decision-making process

Telos consultant Alex Bloom (centre) at work with one of our EO clients

Yes, becoming employee-owned will change the rhythm and pace of decision-making. However, the bigger picture is the benefits EO can bring.

'When you’re running your own business you can make decisions quickly,' Jeremy explains. 'Once you’ve become EO, leadership will still lead but it will be more accountable. You need to be clear about how and when people can influence and be involved in the business they own.'

What will this mean in practice?

'It means that as you come to decision-making, the process may take longer but you should make better decisions because employee owners have been more involved.

'This means that the change lands better so the overall process may be shorter. It can certainly be more effective because of the realistic conversations you’ve had.'

Myth 4: Employee ownership is a good thing so everyone will ‘get’ it

In an ideal world? Yes. In the real world? Not quite.

Successful employee ownership can indeed be a force for good.

Commercially, EO businesses have been shown to be more productive and invest more in supporting employees' wellbeing and career development, according to the eoa’s research.

'But it’s a myth that everybody will automatically ‘get’ it,' Jeremy says. 'There’s no legal definition of employee ownership – you have to create your own version of it.

'Often, when clients reach out to Telos JGA for support they’ll say: ‘Our people don’t get it.’ When I ask what it is that their people don’t get, the reply is ‘being EO.’

'Enabling your employee owners to understand the rights, responsibilities and rewards of EO will go a significant way to helping them ‘get it.’ But you need to invest time and energy in it because this won’t happen by itself.'

Myth 5: Employee ownership only works in ‘white-collar’ businesses

Not true.

Although the eoa and WRCEO's latest data on where EO is ‘trending’ shows that the Professional, Scientific and Technical Activities sector is on top (28%), Manufacturing (15%) and Construction (14%) are next in line. The wider sector is thriving and diverse.

'Employee ownership can work in all types of business, not just those that are consultancy or office-based,' Jeremy confirms. Telos JGA’s own client list backs this up.

Riverford Organic Farmers' story shows that it's not only 'white collar' businesses where EO can work

Since 2015, those Jeremy has been involved in supporting range from Riverford Organic Farmers and Jerba Campervans to the Rooflight Company and Lodge Brothers – an eighth-generation funeral services family business that became EO in 2024.

Next steps for you and your business

So that’s five myths about EO successfully busted. If it’s got you thinking, what should you do next?

1. Read about the experienced employee ownership support we can offer – including the clients we've successfully worked with – here.

   
   

2. Talk to Telos JGA in confidence to find out how we can work with you to shape, embed and renew the elements of successful EO in your business. Get in touch and arrange a no-obligation meeting with us here.