Employee-owned companies are more ethical – New CMI research

25 September 2015 -

Workers at employee-owned companies are more likely to rate their managers highly and be more committed to the business

Jermaine Haughton

Managers in employee-owned companies are more ethical in their decision making than those working for companies with other forms of ownership, new research from CMI reveals.

The survey of 1,019 workers in employee-owned companies found managers are less likely to make business decisions based on ‘blind’ obedience to corporate rules and are more likely to take into account the interests of their colleagues, customers and communities.

Workers are also more likely to rate the leadership of employee-owned companies more favourably, with 90% experiencing high-performing, ‘democratic, visionary, affiliative, and coaching’ leadership styles compared to just 57% of workers in non-employee-owned businesses.

The MoralDNA of Employee-Owned Companies report was produced by CMI and business psychometric specialists MoralDNA, with support from Fieldfisher and the eaga Trust. The report was launched at a management industry gathering at law firm Fieldfisher, long-term supporters of employee ownership.

The report’s lead author and MoralDNA founder, Prof. Roger Steare, corporate philosopher in residence at Cass Business School, said non-employee-owned companies were “autocratic” in nature leading to “systemic corporate deceit, dishonesty and the destruction of all that we value”.

“In contrast, employee-owned companies embody the humanity, integrity and sustainability vital to our prosperity,” he added. “The shareholder value they create is truly one of sharing and I am delighted that in this research, we have been able to support the ideal that the best form of capitalism is one where workplace culture is rooted in those same moral principles that underpin democratic and fair societies.”

The research also found that 95% of workers in employee-owned companies report the ownership model having a positive effect on the workforce’s commitment to their company; 91% say it has a positive impact on their organisation’s performance; and 87% say that it enhances their company’s ability to attract new talent.

CMI chief executive Ann Francke said: “I urge company owners looking at new ways to improve business performance to read the report and its great case studies on flourishing employee-owned companies.

“The evidence here is that employee ownership improves employees’ commitment, positively shapes their thinking about ethical decisions and influences management action for the better. We should have more employee-owned companies and we should learn from their success.”

Graeme Nuttall OBE, Fieldfisher partner and the government's independent advisor and author of Sharing Success: The Nuttall Review of Employee Ownership, said: "This important report on the MoralDNA of employee-owned companies sends a strong signal to other businesses: employee ownership helps develop and sustain strong employee engagement, encourages long-term decision making and promotes a commitment to customer satisfaction.

“What's more, employee-owned businesses are in a strong position to attract, and retain, committed staff. In short, adopting the employee ownership model is a step towards long term success for your business, regardless of industry."

To read the full report, including case studies, and find out more about the ethics of employee-owned companies click here.