Sir Peter Thompson, president of NFC and a companion of the British Institute of Management, lists the benefits of giving the majority a share of the action.
Industry has included a new word in its vocabulary as it strives to gain competitive advantage through quality. That word is "own". At many seminars, conferences and internal meetings, employees are encouraged to become "part owners" of business problems. The thought process is that in day-to-day living the individual behaves in a special way towards the things that he possesses. The argument goes that if the workforce can be persuaded to behave as if they own a problem, a service or a product, their behaviour will change and from that change will flow better quality.
This mirrors the changing attitude towards ownership in the political arena. The whole of the privatisation programme, apart from its obvious benefit to the Exchequer, is centred on the belief that the change from state ownership to mainly City, and in part employee, ownership creates a better environment in which management can flourish and hence produce better services for the customer. A similar behavioural change is postulated if you transfer houses from council ownership to individual ownership.
With all of this activity on the ownership front, when I was invited to lead the Confederation of British Industry task force looking at the health of individual share ownership and popular capitalism, like many others, I suspect, I thought that the 1980s was the decade when popular capitalism really took root in the UK. Driven by the privatisation programme, the number of shareholders increased threefold. Encouraged by the Government, many companies introduced employee share ownership schemes. The seeds had apparently been planted and all that was required to sit back and wait for the harvest.
The reality is very different. Millions of the new investors have never traded a share, nor do they know how. They own only one or two shares bought in the generously priced and heavily marketed privatisation issues. They tend to see share ownership rather as a sophisticated gamble than as long-term investment in the wealth creating process. Only two million employees own shares or have options in the company that they work for. Less than one third of all UK quoted companies have introduced share schemes for their employees for which the majority are eligible.
While the ownership of British companies continues to move out of the hands of private investors and into the hands of institutions (today only 20% of quoted British companies are owned by individuals), the growth of the pension funds, and the success of the unit trusts and the life assurance companies in selling their financial products, continues unabated. Each year they attract a larger proportion of the nation's savings. It is a fact that, together, the top 60 fund managers could determine the ownership of British companies.