Sharing profits and power: Harnessing employee engagement to raise company performance

The financial crash of 2008 brought the underlying weaknesses of British capitalism out into the light. Our over-dependence on the finance sector has driven a focus on short-term maximization of profits and weakened incentives for investment and innovation in some parts of the British economy. While many British firms are highly productive and innovative, too many rely on a low-quality growth model based on weak regulation, low skills and low wages.

Drawing on examples from the UK, US and Europe, we show how the financial and democratic participation of employees in the running of their company can improve its performance. Britain lacks many of the institutions that elsewhere have traditionally enabled employees to take greater responsibility for improving company performance and to share in the rewards. Yet in an era of limited public resources, working people can no longer rely on the state to support rising living standards.

Our findings and recommendations fall under three broad headings:

• Sharing profits and financial rewards, including profit-sharing and employee ownership
• Creating democratic workplaces, including establishing a 'responsibility to participate' for employees and opening up the books of Britain's leading public companies
• Employees and corporate governance, including a focus on day-to-day involvement as more effective and engaging than token and irregular employee representation on the board.