10 Reasons the Gaming Industry Should Consider Employee Ownership

Sep 8, 2021

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Employee ownership has been rising in popularity over the past decade, particularly in the gaming industry. Here’s why….

The gaming industry has had its fair share of backlash for its treatment of its employees over the past decade. Creators have claimed to be burnt out and desperate for change, while several whistle-blowers, along with the help of major news corporations, have scrutinised the toxic work culture, discrimination, and inadequate pay. 

Last year Bloomberg News reported that employees at Blizzard Entertainment, which makes World of Warcraft, circulated a spreadsheet to anonymously share salaries and hold the company accountable for pay disparities. Since then, employers have been made aware of the public impact of unfair treatment, and strides have been made to correct longstanding grievances. 

In order to avoid further problems, gaming companies should be putting their staff first through various methods. Pay reviews, a culture overhaul, and employee ownership schemes to give their staff greater autonomy over the success of the business are just a start. But, what is employee ownership, and why might it benefit the gaming industry?

What is Employee Ownership?

Employee stock ownership, or employee share ownership, is where a company’s employees own shares in that company and take responsibility for its success.  

Employees typically acquire shares through an option scheme, and seek advice from employee ownership advisors to implement the strategy. There are two ways employees can own part of their company under these schemes:

  • Direct employee ownership: employees hold shares in the company directly and can purchase them at a tax-efficient rate.
  • Indirect employee ownership: the company is owned by an employee share ownership trust on behalf of the employees.

Types of Employee Ownership Schemes

Several different schemes are worth looking into, but the ones with tax advantages tend to be the most popular. Here’s a list of tax-advantaged employee ownership schemes that are worth considering in the gaming industry:

  • Save as you Earn (SAYE)
  • Company Share Option Plan (CSOP)
  • Share Incentive Plan (SIP)
  • Enterprise Management Incentives (EMIs)
  • Employee Ownership Trust (EOT)
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Each scheme has different tax benefits, employee benefits, and certain rules that need to be followed. So, it’s worth doing your research before you decide which plan you’d like to move forward with. 

Why Should the Gaming Industry Consider Employee Ownership?

Considering the poor reputation the industry has for staff treatment, there are plenty of reasons why employee ownership could work for gaming companies. Here are just a few:

  1. Empowers Staff

Staff who are part of employee-owned companies tend to have much more of a voice and say on what the business does. If an employee has felt begrudged or under-appreciated in the past, an employee ownership scheme could be the chance for a fresh start.

  1. Incentive to Work Hard

Staff who are involved in the running of the business and are responsible for its success are a lot more likely to work efficiently for the business. Hard work reaps rewards, and these schemes are perfect incentivising opportunities.

  1. Staff Retention 

Last year, a study by the Guardian found that giving workers a stake in their business is universally popular. Shaun Revill of Gripple even claimed he had a 99 per cent retention rate because of it! Employees are more likely to stay within the business if they are financially invested.

  1. Boost Creativity

An employee ownership scheme gives staff autonomy to speak their mind, which lends itself to creativity. Gaming companies that encourage shareholders will find that employees are a lot more likely to come up with new, original ideas, they were perhaps too afraid to talk about before. 

  1. Improve Reputation

As discussed previously in this post, the gaming industry hasn’t received the best publicity when it comes to employees and their well-being. By putting some power back into the hands of the workers, businesses are recognising their wrongdoing and making amends.

  1. Succession Planning

Under the traditional model, it’s often difficult for retiring directors to find suitable staff to buy out their shares. With the employee ownership model, the company is shared, no one needs to borrow to buy-in, and the succession of the business is already sorted for you.

  1. Quick to Implement
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Businesses often think setting up an employee ownership scheme is extremely complicated, and they don’t have the time or resources to do so. In reality, the schemes only take around two to three months to set up.

Top Tip: Speak to a specialist advisor and accountant will help to ensure the process runs smoothly.

  1. Tax Breaks

In the UK, shares being sold through employee ownership schemes do not require capital gains tax for the business owners to pay. What’s more, those benefitting from the trust can claim a bonus of up to £3,600 (tax-free).

  1. Attracts New Talent

In an incredibly competitive industry, new talent is paramount. With it brings new ideas, fresh energy, and an abundance of experience. Nowadays, large corporations are offering several incentives to keep their employees, so an EOT scheme can make a business stand out from the crowd. 

  1.  Strengthens Collaboration

Finally, an employee ownership scheme opens up new channels of communication between people in all sorts of job roles. The flatter structure encourages collaboration, something that is incredibly important when working in the creative industries.

What’s Next for Employee Ownership in the Gaming Industry?

In this post, we’ve looked at the different types of employee ownership schemes and given you an insight into why it’s a suitable option for the gaming industry. 

To move forward with turning your company into an employee-owned business, it’s important to do your own research and to speak to a variety of specialists in the field. For example, The Employee Ownership Association is a great place to start. 

Hopefully, this article is a jumping-off point to help you make an informed decision.

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