Ownership Culture
Employee Ownership Benefits Everyone
August 30, 2024
Employee ownership isn't a buzzword or a trendy business model — it’s a fundamentally different approach to business that is a game-changer for everyone involved. Whether you’re an employee-owner, a customer, or part of the local community, employee ownership benefits you. Here’s how. Employee-Owners Benefit Employee-owners inherently have a stronger relationship with the company than workers at a conventional business. The nature of employee ownership shifts the dynamic between employees and their workplace, empowering and motivating workers while creating a people-first culture. 1. Wealth-Building The biggest benefit of employee ownership is the ability to build life-changing wealth. Our analysis of Federal Reserve data shows that if every American business were to become employee-owned, median household wealth would increase by over $100,000. Employee owners automatically benefit when their company does better, and they have the opportunity to build wealth outside of traditional retirement and investment accounts. 2. Ownership Culture When employees are financially invested in the growth of the business, they develop a sense of ownership, knowing they are part of something bigger. This direct link between effort and reward means they're more likely to be motivated and engaged at work. From daily decision-making to building relationships with team members to suggesting ideas for improvement, the ownership mindset influences every aspect of the job and leads to a culture of ownership. Customers Benefit Customers who work with employee-owned businesses stand to benefit from their positive culture. 1. Better service with trusted partners Good customer service is key to business success, and employee-owners have an incentive to ensure their company does well. Clients of employee-owned companies can naturally expect better customer service than they'd receive elsewhere. A vital component of the client-business relationship is trust. Employee-owned companies offer job stability and a favorable work environment, which leads to lower turnover. Customers benefit from strong relationships with people who are familiar with their needs and committed to providing good service for the long haul. 2. Dealing directly with an owner Dealing directly with employees who have a stake in the business can lead to more efficient decision-making. Employee owners are empowered to shape decisions, which means customers benefit from working with business partners who have more agency and autonomy. Non-Participant Employees Benefit Some workers at employee-owned companies may not directly participate in the employee-ownership model or aren't eligible yet. For example, some companies have a union that does not participate in an ESOP (Employee Stock Ownership Plan), preferring instead to be part of the union’s pension plan. Non-participants still see benefits from employee ownership. They might not own shares, but they are still part of the culture and will benefit from the positives such as stronger relationships, lower turnover, team members who care more about their work, and happier customers. And while they may not have the direct effort/reward relationship with the company that employee-owners do, non-participant workers still indirectly benefit when the company does well. The Community Benefits 1. Stable jobs Communities gain from having employers who provide stable jobs for local people. The job stability offered to employee-owners translates into a stronger and more resilient local economy. For example, during the COVID-19 pandemic employee-owned companies were 4x more likely to retain jobs. 2. Wealth stays local Employee-owned companies tend to have deep roots in their communities because employees are invested in them. They're less likely to make decisions that would have a negative economic impact on a community to achieve bottom lines, such as moving to a cheaper location. Research has also proven that the benefits of employee ownership also lead to better business outcomes. The result is stronger companies that are rooted in place, which creates robust local economies. Overall, employee ownership is a structure that benefits companies and allows the people who contributed to the business to share in its success. Whether you’re an employee-owner, a customer, part of the community, or someone seeking a job at an employee-owned company, there are clear benefits that make this approach to business a win-win for all.
Read More ▶Why You Should Talk About Being "Employee-Owned" Instead Having An “ESOP”
May 14, 2024
When it comes to employee ownership, ESOPs (Employee Stock Ownership Plans) have often been the go-to choice. And rightfully so — ESOPs have proven their worth over the past 50 years and currently in use at over 5,700 employee-owned companies. They are responsible for helping millions of workers benefit through share ownership and have produced inspiring stories of life-changing wealth. Despite the benefits of the structure, there's a crucial communication pitfall that comes with the term "ESOP" that is holding companies back. For many people, "ESOP" is another acronym in a sea of business jargon. The term ESOP lacks the familiarity and resonance needed to truly engage. Today just 1% of the labor force currently participates in private-company ESOPs, meaning the vast majority of people have no personal experience. On top of that, someone new to the idea cannot intuitively grasp what’s involved with an ESOP because there is no context that can be gathered from the term. Finally, “ESOP” is not a great jumping off point with a job seeker or employee. If someone is engaged enough to even ask what an ESOP is, the typical response involves concepts like “retirement plan” and “ERISA,” which are not energizing. These issues combine to create a lack of connection that can lead to disengagement rather than enthusiasm. Luckily there's a more effective way to communicate your company's employee ownership structure: "employee-owned." Employee-owned is an intuitive concept that has positive influence and is already connected to exciting ideas like better compensation and a more employee-friendly environment. It opens up a conversation about how your company takes a different, more people-focused approach. “Employee-owned” speaks to the financial benefits of ownership but also a better culture that matters the first day someone walks through your doors. We’ve long counseled our 680+ Members to frame external and internal conversations around being employee-owned, and we’ve seen it work. The communication advantage of “employee-owned” over “ESOP” is intuitive, but it’s also grounded in science. I first became interested in public opinion on employee ownership as a PhD student at Stanford Graduate School of Business. I had read research on the many benefits of employee ownership to workers and companies, but was struck by the complete lack of visibility. Why had I never heard of this before? The most recent study on public awareness was decades old, so I decided to run my own survey and found strong interest. We’ve continued to conduct public opinion research because we see it as foundational to our mission to help our Members share their ownership stories. Our most recent survey illustrates the advantages of “employee-owned” over “ESOP.” In 2022, we surveyed a national audience and asked them a simple question: “You’re thinking about applying for a job and you see this on the job description, how does that affect how likely you are to apply?” When we tested “employee-owned” we found that 23% of respondents were more likely to apply. When we tested “ESOP” we see just 9%. Moreover, 25% said they were less likely to apply for a job at an ESOP company, indicating a net negative influence for “ESOP” but a net positive influence for “employee-owned.”. Our work is corroborated by the 2018 General Social Survey, which found that 72% of respondents preferred working for an employee-owned company over one owned by investors or the state, irrespective of their political affiliations. So why does "employee-owned" resonate? To answer that question we conducted a follow-up study. We surveyed a national audience and asked a different question: “What are the advantages of working at an employee-owned company?” Respondents could type whatever they thought made sense and we did a bottoms-up categorization of similar answers. Four themes emerged: increased agency, better compensation and benefits, a sense of ownership, and an employee-friendly environment. This indicates that, contrary to “ESOP”, “employee-owned” comes with many positive associations in the minds of Americans. Our work demonstrates that “employee-owned” communicates a deeper, more meaningful relationship between the company and its employees beyond just stock ownership. This makes it the obvious approach when communicating with job seekers and current employees. Positioning your company as employee-owned can also benefit your relationships with customers because it emphasizes values such as better service, longer-term relationships, and the advantages of dealing directly with an owner. This can be particularly compelling in industries where trust and personal connections are paramount. In summary, while ESOPs are undoubtedly valuable structures for employee ownership, the term itself is not great for communication. By shifting the focus to "employee-owned," you can better engage job seekers, current employees, customers, and even your community. It's not just a semantic change, it's a strategic shift that can enhance your company's branding, marketing, and overall appeal in the eyes of stakeholders. So, the next time you talk about your company's ownership structure, remember to lead with what truly matters — being employee-owned.
Read More ▶Become an Owner With Employee-Owned Jobs
October 19, 2023
Two months ago we launched Employee-Owned Jobs, the first and only job board for employee-owned companies. We were guided by a vision to bring together companies building broad-base prosperity and job seekers who want to become employee-owners. We expected excitement from the employee ownership community, but we’ve been blown away by the response. In roughly three months, we’ve had over 19,000 users and the positive feedback from our Members has been tremendous. This blog post shares more about our vision to connect job seekers and employee-owned companies. We’ll cover:The Advantages of Becoming An Employee-OwnerGreat Hires Amplify Ownership CultureStronger Together: Building Support For Employee OwnershipOwn Your Job: The Advantages of Becoming An Employee-OwnerThe promise of employee ownership is simple: if you work for a good company and put your time in, you will be treated well. First and foremost, there’s the opportunity to build life-changing wealth. Looking across our Members, employee-owners tend to receive an allocation of company stock between 5% - 15% of their annual salary. The benefit increases the more they make, but the average value is around $5,000 a year. Stock allocations cost employee-owners nothing and generally come on top of the usual benefits. Employee-owners also see increased job stability and career growth. Companies exist to benefit their owners, so a company that is owned by its employees is going to approach big decisions a bit differently. For example, during the COVID-19 pandemic, employee-owned firms were three times more likely to retain staff. We also see companies investing in their employee-owners with training and education. Finally, many employee-owned businesses prefer to grow leadership through internal promotion, opening career pathways for entry-level workers.Perhaps the most immediate benefit of working at an employee-owned company is being a part of an ownership culture. Broad-based ownership creates alignment up and down a company. It increases engagement, strengthens bonds, deepens relationships, and creates an elevated sense of accountability. The result is a more motivated and effective team working together towards a common goal. Best of all, it’s a benefit that a new employee experiences the first day they walk in the door.If the benefits of employee ownership sound good to you, you’re not alone. In nationally representative opinion surveys, we’ve found that 3 out of 10 job seekers would be more likely to apply to a job if they learned the company is employee-owned. But there’s an issue: how would you go about finding a job at an employee-owned company? Employee-Owned Jobs solves this issue by aggregating over 9,000 open positions, making it easy to become an employee-owner. Great Hires Supercharge Ownership CultureHiring great people can strengthen a company’s culture and create a tremendous competitive advantage. Engaged employees put in more effort, are better team members, and care more about the customer. A recent meta-analysis from Gallup found that teams scoring in the top quartile on engagement had 10% higher customer loyalty, 23% higher profitability, and 18% lower turnover. Hiring great employee-owners creates a positive feedback cycle that supercharges engagement. Motivated new hires will put more energy into getting up to speed, will be less likely to leave in the crucial ramp-up period, and will be faster to understand the benefits of employee ownership. The energy they bring will boost culture, which in turn will make it easier to attract more of the right candidates. Employee-owned jobs is the best way to tap into an applicant pool that is excited about employee ownership. Users find us through a variety of channels. Maybe they have already worked at an employee-owned company. Perhaps they know someone who has benefited from an ESOP. Or maybe the idea just strikes a cord deep inside. Whatever the case, the pull is real: in the first three months we’ve had over 19,000 users and we’re just getting started with our promotion.Stronger Together: Building Support For Employee OwnershipMaking it easy to hire great employee-owners is the next step towards our vision of building an employee-owned economy. Over the past six years we’ve grown our network to 600+ Members and a simple theme has emerged: we’re stronger together. Companies do a great job talking about employee ownership on their careers pages, in interviews, and on job offers. But what has been missing is a comprehensive effort to drive massive awareness and interest.With Employee-Owned Jobs, we’re able to mount this campaign. We’ve begun by promoting EO Jobs within the employee ownership community. In Q4, we will begin outreach to 1,462 community colleges and 7,271 trade schools across the United States. We will equip career centers with resources to share the advantages of employee ownership, we will participate in webinars, and we will drive massive interest in becoming an employee-owner.The Advantages of Becoming An Employee-Owner Great Hires Amplify Ownership Culture Stronger Together: Building Support For Employee Ownership Own Your Job: The Advantages of Becoming An Employee-Owner The promise of employee ownership is simple: if you work for a good company and put your time in, you will be treated well. First and foremost, there’s the opportunity to build life-changing wealth building. Looking across our Members, employee-owners tend to receive an allocation of company stock worth between 5% - 15% of their annual salary, an average dollar value of around $5,000/year. Stock allocations cost employee-owners nothing and generally come on top of the usual benefits. Employee-owners also see increased job stability and career growth. Companies exist to benefit their owners, so a company that is owned by its employees is going to approach big decisions a bit differently. For example, during the COVID-19 pandemic, employee-owned firms were three times more likely to retain staff. We also see companies investing in their employee-owners with training and education. Finally, many employee-owned businesses prefer to grow leadership through internal promotion, creating greater career opportunities. Perhaps the most immediate benefit of working at an employee-owned company is being a part of an ownership culture. Broad-based ownership creates alignment up and down a company. It increases engagement, strengthens bonds, deepens relationships, and creates an elevated sense of accountability. The result is a more motivated and effective team working together towards a common goal. Best of all, it’s a benefit that a new employee experiences the first day they walk in the door. If the benefits of employee ownership sound good to you, you’re not alone. In nationally representative opinion surveys, we’ve found that 3 out of 10 job seekers would be more likely to apply to a job if they learned the company is employee-owned. But there’s an issue: how would you go about finding a job at an employee-owned company? Employee-Owned Jobs solves this issue by aggregating over 8,500 open positions, making it easy to become an employee-owner. Great Hires Supercharge Ownership Culture Hiring great people can strengthen any company’s culture and create a tremendous competitive advantage. Engaged employees put in more effort, are better team members, and care more about the customer. A recent meta-analysis from Gallup found that teams scoring in the top quartile on engagement had 10% higher customer loyalty, 23% higher profitability, and 18% lower turnover. Hiring great employee-owners creates a positive feedback cycle that supercharges engagement. Motivated new hires will put more energy into getting up to speed, will be less likely to leave in the crucial ramp-up period, and will be faster to understand the benefits of employee ownership. The energy they bring will boost culture, which in turn will make it easier to attract more of the right candidates. Employee-owned jobs is the only place to find a wide variety of jobs at employee-owned companies. That means it’s also the best way to tap into an applicant pool that is excited about employee ownership. Users find us through a variety of channels. Maybe they have already worked at an employee-owned company. Perhaps they know someone who has benefited from an ESOP. Or maybe the idea just strikes a cord deep inside. Whatever the case, the pull is real: in the first three months we’ve had over 19,000 users and we’re just getting started with our promotion. Stronger Together: Building Support For Employee Ownership Making it easy to hire great employee-owners is the next step towards our vision of building an employee-owned economy. Over the past six years we’ve grown our network to 600+ Members and a simple theme has emerged: we’re stronger together. To date, a number of companies have done a great job talking about employee ownership on their careers pages, in interviews, and on job offers. But what has been missing is a comprehensive effort to drive massive awareness and interest. With Employee-Owned Jobs, we’re able to mount this campaign. We’ve begun by promoting EO Jobs within the employee ownership community. In Q4, we will begin outreach to 1,462 community colleges and 7,271 trade schools across the United States. We will equip career centers with resources to share the advantages of employee ownership, we will participate in webinars, and we will drive massive interest in becoming an employee-owner.
Read More ▶The #1 Best Practice For Building Ownership Culture
July 14, 2023
Every company wants to best engage their employees. When it comes to engagement, employee-owned companies have a secret weapon: building an ownership culture. If done correctly, an ownership culture unleashes people’s full potential by creating an environment where everyone can think and act like an owner. Companies see increased growth and profitability while employees experience a better day-to-day environment and wealth building through ownership. Our experience working with 575 employee-owned companies for over five years is that the number one best practice for building an ownership culture is cultivating a dedicated group of internal champions who are passionate about employee ownership. These champions are typically organized and empowered by the organization through the creation of an Employee Ownership Committee. This article outlines Certified EO’s perspective on creating and running a successful Employee Ownership Committee including: Getting Started With The Right People Structuring & Training Your Committee Introducing Your Committee Keeping Your Committee On Track Getting Started With The Right People What is a committee? It’s group of at least three people focused on a specific and shared goal. The key in the beginning is to start small. It’s better to have fewer people with higher average engagement. One way to find your initial members is to reach out to your workforce to let them know that you are starting an Employee Ownership Committee and provide easy ways for them to apply. It’s also fine to hand select people who you feel are passionate about employee ownership. Generally it’s nice to have your committee broadly represent the company. It’s better to have people from different levels within the company, and if your workforce is distributed across multiple locations, you might consider having a committee member from each location. But you have to start somewhere. Our recommendation is to focus on finding at least three people who truly understand employee ownership, and then build from there over time. Structuring & Training Your Committee In our experience, successful committees have leadership buy-in but are led by employee-owners. Once your committee is established, you’ll want to create a committee charter and by-laws to align on goals and expectations. Typically, this involves aligning on a mission statement, deciding on term limits, clarifying responsibilities of committee members, and defining leadership roles such as chair and vice chair. The consensus among our Members is that it’s best for the chair to come from the rank and file of the company, but it’s okay for the inaugural chair to be a member of management or leadership to ensure the committee gets off to a strong start. Your committee members should feel confident answering questions about your employee ownership. Your first few meetings as a committee might need to be spent entirely on educating the committee members, but this will be a worthwhile investment because the more knowledgeable your committee, the more successful they will be at building your ownership culture. Providing your committee with a budget will multiply their impact. Even though the committee should be run mostly by employee-owners, working with leadership will be key to ensure alignment and resource availability. Many Employee Ownership Committees have an executive sponsor who can advocate for the committee’s budget each year. Introducing Your Committee Your committee should be visible and accessible. Be sure to introduce the committee so employees know who to reach out to for questions. The committee announcement is also a good time to let your employee--owners know that they can expect more regular communication about employee-ownership. This is also a great time to remind your employees that, as owners, everyone at your company has a stake in the outcome. This way the committee announcement reinforces a key message about employee ownership. To make the committee accessible, we recommend creating a committee-specific email that employees can email with questions that anyone from the committee can answer. Many of our Members have seen great results from setting up office hours, where one or multiple committee members are available at a regular time (in-person or virtually) so that employee-owners can drop-in with questions. Even if nobody comes by, it’s nice for people to feel supported. Keeping Your Committee On Track Starting a committee is just the beginning of building a strong ownership culture. Maintaining a successful committee over time can be challenging. It’s important to keep things fresh. Rotate themes, responsibilities and committee roles so that your committee members stay interested and engaged. Consider adding new members annually, but always be sure to prioritize passion. Creating an annual communication plan is another way to keep your committee on track. Align on a theme for the year, decide on the right number of touchpoints, and identify who is responsible for each. A common pitfall is for the Employee Ownership Committee to become the party planning committee. An annual event is a great idea, but make sure your committee is focused on building your ownership culture throughout the year. The goals of your committee should change over time with your company and your employee-owners. In the beginning, your committee might be focused on building a strong foundation of EO basics. But over time the needs might evolve as understanding grows. At Certified Employee-Owned, we help guide our Members through this evolution while providing them the tools and playbook they need to share their ownership story. You can learn more about our work here.
Read More ▶How Certification Protects and Grows Employee Ownership
March 31, 2023
Employee ownership is an exciting idea that has the potential to address some of our country’s biggest challenges. By changing the relationship between company and employee, employee ownership helps workers build wealth, creates a better day-to-day environment for employees, and makes companies more successful. But the employee ownership community also faces challenges that impeded our growth. Employee ownership can be confusing and hard for people to understand. Worse, the goodwill that we have created is threatened by pretenders because any company can call themselves employee-owned. By setting a standard that people know and trust, Certified EO plays a unique role in helping our community overcome these issues. By making employee ownership easy to understand, building trust, and protecting our goodwill, certification benefits everyone in the employee ownership (EO) community including companies, trade organizations, lobbying groups, research hubs, state centers, service providers, and most importantly employee-owners. Certification Makes Employee Ownership Easy to Understand The details of employee ownership can be confusing to insiders, let alone someone with no prior knowledge. There are many different structures - ESOPs, Worker Cooperatives, Employee Ownership Trusts, and Direct Share Ownership - each with their own nuances. For example, ESOPs have allocations, contributions, vesting, valuation, distributions, and forfeitures. From a technical point of view the details are critical, but for most people they are overwhelming. Certification makes employee ownership easy to understand. Our standard of significant, broad-based employee ownership is a yardstick that applies across all structures and boils employee ownership down to the basics: Ownership: at least 30% of the company must be owned by employees (excluding founders). Access: reasonable access to ownership must be open to every employee. Concentration: employee ownership must not be too concentrated. These simple concepts help people understand if they’re aligned with our community in terms of basic principles. It also helps companies communicate this alignment with an easy-to-recognize mark. And it resonates! Last year we ran a nationally-representative opinion poll and found that 25% of Americans would be more likely to apply to a job if the description had our certification mark. Certification Builds Trust People understand third-party certification. There are many examples of successful certifications across the United States: Great Place to Work, Made in America, USDA Organic, Fair Trade, and Veteran- and Women-Owned Businesses. Certifications are a familiar concept that help people understand whether a company’s claims are potentially misleading or indeed truthful. The independent validation of third-party certification builds confidence, especially with people who are unfamiliar with employee ownership. It can help job seekers, new hires, existing employee-owners, clients, customers, purchasing agents, and government officials trust that EO is truly as good as it sounds. For example, when a manager is explaining the wealth-building potential to a skeptical new hire, it helps to say, “you don’t have to take my word for it, we’re certified.” The rigor of our process amplifies the trust-building. Just 1 in 200 American companies qualify for Certified Employee-Owned. We have worked with academics to verify that 30% employee ownership would transform the lives of tens of millions of Americans. And we conduct a comprehensive review of every new Member. All these efforts pay off in trust and confidence. Certification Protects Our Goodwill As employee ownership becomes more well-known, our community will face a major issue: anyone can call themselves employee-owned. Maybe the CEO is the sole owner and they claim that they are also an employee, so technically their company is 100% employee-owned. Or maybe a company that has distributed 1% of shares across all employees starts talking about their employee ownership. Afterall, every employee is also an owner. You might be think these claims are absurd, but unfortunately we’ve already come across companies making such misleading statements. These examples show there is a lot of gray area around what it means to be employee-owned. This creates the possibility for the employee ownership equivalent of “greenwashing” and it will become more common as awareness of this amazing idea continues to grow. Impersonators damage the concept of employee ownership and, if left unchecked, will create negative opinions and impressions that do irreversible damage. As a community, we must defend our goodwill before it is diluted to the point of being meaningless. Aligning around a common standard with a clear and rigorous process and building a common brand will help fend off pretenders. Goodwill is an amazing asset, but it is fragile and we must protect it with certification.
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