A report by St Andrews, Edinburgh Napier and Stirling universities has found that employee-owned businesses outperform their competitors on employment, sales and productivity.

Employee share ownership arrangements can be an excellent non-cash way to reward employees who have contributed to success and can provide a means of recruiting or retaining quality employees, while not requiring existing shareholders to relinquish control.

As this report and others have indicated, putting in place employee share ownership arrangements has been shown to result in greater employee engagement, innovation and business growth – as well as increased profitability. They can be used for all employees or key individuals, by long-established companies or new ones, and can even provide a potential market for the ultimate sale of the business.

Many family-owned private companies in the Scottish SME market, entrepreneurs and institutional investors are adopting employee ownership practices, by putting in place employee share and incentive schemes.