Imagine if every employee acted like an owner. Not due to a motivational poster but because they are an owner. Employee share ownership (ESO) schemes – such as share option plans, direct share purchases, or employee ownership trusts – enable staff to hold a genuine stake in their company.

When people have a real stake, some remarkable things happen – productivity rises, loyalty deepens, and innovation flourishes. ESO aligns employees’ interests with the long-term success of the business. The Esop Centre spells it out. Overall, employee-owned businesses outperform their peers, weather economic storms better, and build stronger workplace cultures.

Succession
For London’s SMEs, ESO can also solve a pressing challenge: succession. Instead of selling out, why not sell in – to the team that already knows and believes in the business? It’s succession planning with soul. Yes, it takes a bit of work – valuations, legalities, tax, and good governance – but it’s worth it.

The national social dividend of widespread employee ownership is powerful. Employee ownership spreads wealth more evenly, narrows the gap between the boardroom and the watercooler, and strengthens communities. In an age of widening inequality, ESO should be a quiet levelling up – ownership with purpose.

Liquidity
One could argue that trendy unicorns demonstrate the motivational power of ESO. In the UK we seem to ignore that ESO could ignite SME growth too, particularly if we make it broader and less complicated. PISCES (Private Intermittent Securities and Capital Exchange System) is a new government-backed trading platform that allows employees and shareholders in private companies to buy and sell shares on an intermittent basis. It aims to create liquidity in private company shares. The Esop Centre points out that recent HMRC guidance accepts PISCES transaction prices as fair market value, and not in conflict with Enterprise Management Incentives, Company Share Option Plans), Save As You Earn, or Share Incentive Plans.

Support
To unlock ESO’s potential,
co-ordinated support in four areas is essential:
Education – raising awareness among employees, management, and advisors
Tax incentives – structuring simple, favourable reliefs and regimes
Legislation – simplifying regulatory environments and removing barriers
Research – gathering longitudinal evidence and benchmarking best practice.

Roadmap
LCCI does its bit, but I’d call on others, particularly government, to lean in more strongly. The policy roadmap is clear: educate, incentivise, simplify, and support.
So, here’s the takeaway for London’s business leaders: employee ownership isn’t a fringe idea, it’s a competitive advantage. When employees own a share of the business, they don’t just turn up for work – they show up for mutual success.

Professor Michael Mainelli served as Lord Mayor of London 2023-24 and remains an international ambassador for the City. He is chair of Z/Yen, the City of London’s leading commercial think-tank, known for its work in economics and finance, and science & technology.