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.
