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Employee Ownership

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Work + Employee Ownership = Happiness

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Several months ago the U.K.-based Employee Ownership Association published an exceptionally important and insightful report about the tremendous benefits of employee-owned companies. The report has some invaluable observations for all businesses, and I highly recommend it. Here are just a few highlights:

  • Employee owned businesses have the potential to meet two vital objectives, which are too often seen as diametrically opposed. They are ideal vehicles for meeting productivity challenges but also for generating happiness; an employee-owned company is a wellbeing creator as well as a wealth creator.
  • The Employee Ownership Index (EOI) has consistently outperformed the FTSE All-Share. In cash terms, an investment of £100 in the EOI in 1992 would have been worth £349 at the end of June 2003; the same amount invested in the FTSE All-Share would have been worth £161.
  • For a worker on a $65,000 a year salary, an increase from a job satisfaction score of 8/10 to 9/10 delivers as much extra happiness as an extra $35,000 in their annual pay check.
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Employee Ownership & Satisfaction = Better Financial Performance

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Two weeks ago the Financial Times reported some impressive results from the Employee Ownership Index.

“In the UK in recent years, the Employee Ownership Index has outperformed the FTSE All-Share. An investment of £100 in the EOI in 1992 would have been worth £349 at the end of June 2003. The same amount invested in the FTSE All-Share would have been worth £161.”

Beating the FTSE index by over 100% is no small feat. And it supports prior related research that was reported in the Financial Times back on October 27, 2005 that noted that if you had bought stock in all the public companies in Milton Moskowitz’s survey ranking the 100 best companies to work for in 1998, when it was first published by Fortune magazine, and held it until 2005, you would have made twice the annualized return of the S&P 500 Index. If you had sold each year and reinvested in the new list, you would have made three times the S&P return.

Great news!

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