The Employee Share Ownership Centre
Centre member Robert Postlethwaite, ceo of the eponymous law firm specialising in employee share ownership, outlined the different models of employee share schemes and explained how they differ from partnerships (such as John Lewis) in a recent interview by David Kuo of the Motley Fool UK.
Listen to the whole podcast from the MoneyTalk programme here.
The main difference between employee share schemes and partnerships is that in the latter case employees do not actually own any share of the company, and cannot therefore make any direct profit out of it.
- said Postlewaith, remarking that a perfect model does not exist: each company should choose the scheme that suits them best.
According to him, enforcing share ownership is not the way to go:
I’d favour a “carrot” rather than a “stick” approach: I think that a better approach is to increase the number of incentives that a company gets if they implement employee share schemes.
Postlewaith underlined how difficult it can be to grasp which share scheme would suit their circumstances:
It’s actually quite difficult for an employee to easily decide which share scheme is beneficial for them, and which one is not – here is where consultancy from professionals and financial education can be of great help. It makes sense to try and arrange employee share ownership schemes in a way that reduces the risk of becoming a shareholder.
About the wider use of employee share ownership schemes, which had a boost from Clegg’s and Cameron’s speeches on the topic, Postlethwaite is very positive:
I see a wider implementation of employee share schemes happening. We are likely to see a very high growth of employee share ownership schemes in the public sector over the next 12 months, whereas I think that they will pick momentum in the private sector in the next 2 to 3 years. A large number of company owners will implement share schemes once they understand their benefits.
“We must all hang together, because otherwise most surely one day we will all hang separately.” – were David Kuo’s closing remarks.
