Appendix 9 - Do internal shareholders hold the key to company success? (Test blog entry)

(Below is test blog)
Many companies have employed a certain structure within their company which sees employees having a share in ownership. As well as working a day-to-day job for the company employees also have ownership of the company.

The advantages of employees having a share of ownership are;

•  Employees who have ownership think more about business needs rather than personal needs.
•  Employees who have ownership also more motivated to drive company success.
•  Employees who have ownership often work for the company for their whole careers meaning lower staff turnover and less cost towards the company.
•  Employees who have ownership often make changes to satisfy customers meaning greater customer satisfaction and often look at ways to beat the competition.

John Lewis & Waitrose group Success story

John Lewis is a company that offers share in ownership to their employees. They have seen from offering ownership to employees that they have sought advantages over their completion especially during the Christmas and New Year’s period. They have gained advantages over the competition as the employees are shareholders in the company therefore they will work longer hours during this period to gain more sales and this therefore affects their annual bonus over the year while offering a positive attitude to customers’ demands by offering flexibility during these busy times over the Christmas and New Year period. In 2010 employees with ownership received an annual bonus of 15% of their salary. Ms Armstrong who is the manager of Waitrose supermarket in Witney has said that business is still growing and due to VAT increase and higher inflation the rivals are getting jealous eyeing up the John Lewis and Waitrose growth. Ms Armstrong said “It’s about what sets us apart. It’s the quality of staff that we have, and the services that they give. The reason they give that service is because they do own the business”.

Delta Airlines Failure

Delta Airlines was another company which did also offer ownership to their employees but the company filed for bankruptcy in 2005. The reason behind the failure was due to the following reasons;

• Higher fuel costs
• Low-fare competitors 
• New expensive security measures

Delta Airlines failure can be summed up that it was unable to keep up with the competition and unable to work with the day-to-day costs of running the airline hence why the company failed. Employees who also had shares in the company may have lost their jobs along with their shares been worth nothing due to the company filing for bankruptcy. The company did however manage to exit bankruptcy in 2007 due to a management overhaul, aggressive cost cutting and merging with North West airlines which helped with the companies sustainability. The company is still in the business world today.

Summary

Overall giving employee’s share of ownership making the employee a shareholder can be advantageous to the company, employees and customers as with the case with John Lewis and Waitrose group but in other cases such as Delta external influences can heavily impact the company you work for and have share of ownership for and the external influences in this case was rising costs and been unable to compete with competition in the airline industry.