Certified EO Blog
What's New for Certified EO in 2026
January 23, 2026
2025 brought with it many new developments, investments, and areas of growth for Certified EO.First and foremost, to meet the growing demand for education and engagement in the employee ownership space, we’ve expanded our team. We have brought on full-time hires in software development and data analytics to support our membership team and accelerate the delivery of high-value tools like the Wealth Calculator and EO Base.On that note, we want to highlight three key offerings that are significantly expanded or brand-new for 2026:The Wealth Calculator Our Wealth Calculator has received a major upgrade designed to make employee ownership more tangible and accessible than ever before. We’ve streamlined the setup process with updated 2025 regulatory limits and clearer guidance, while introducing highly requested features like the ability to embed the tool directly into company intranets. The most significant improvements include a revamped Shares Model for more accurate equity projections and new, robust analytics that help leaders track member engagement over 6- and 12-month periods. These updates ensure the tool remains a "sticky," high-value benefit that empowers members to visualize their long-term wealth with confidence.EO Base After dozens of conversations with members about how to improve the ease of sharing resources with employees, we are thrilled to launch EO Base: a highly customizable landing page designed to serve as the central hub for your employee ownership resources and education. This new site eliminates administrative friction by hosting your documents and videos in one accessible location, while seamlessly integrating your Wealth Calculator tool for direct employee access. Best of all, EO Base requires no additional login for your team, ensuring a barrier-free experience for your workforce. We are already rolling out initial access to members (that have opted in), with further branding and customization features arriving in February. Contact your membership manager today to begin your configuration.Benchmarking Our benchmarking initiative continues to be a cornerstone for identifying the "engagement gaps" that often prevent employee-owned companies from reaching their full potential. In 2025, we expanded the report to include critical data on workforce age ranges and financial metrics to help companies correlate specific engagement practices with bottom-line performance. Furthermore, participation in the benchmark grew by over 50% year-over-year. This increased participation, coupled with insights into how different generations interact with their benefits, has significantly increased the value of this report for our members.Questions? If you have any questions or want to learn more, please don’t hesitate to reach out to your membership manager. If you are not currently a member, schedule a call with us to learn more!
Read More ▶How Employee-Owned Companies Can Win the Next Generation of Talent
September 25, 2025
As Gen Z and Millennials continue to reshape the workforce, employee-owned companies (EOCs) have a unique opportunity—and challenge—to connect with younger workers. By 2030, these two generations will make up nearly three-quarters of the global workforce. Their expectations around work, purpose, and financial security differ from those of previous generations, and tailoring engagement strategies is essential for getting them excited about employee ownership. We just held a webinar this past month for our members summarizing recent trends, data, and best practices for how employee-owned companies can leverage employee ownership to better engage younger generations. We highlight some of the key takeaways in this blog: Reframe the Financial Benefit According to TIAA’s 2025 trends, younger generations aren’t “vibing with retirement savings.” While retirement might feel distant to a 25-year-old, the idea of building wealth now hits home. Research shows younger employee-owners report lower financial anxiety and greater confidence in their future compared to non-EO peers. By emphasizing account growth, annual share price increases, and relief from debt worries, companies can highlight how EO supports stability today—not just decades down the road. Focus messaging on building wealth vs. saving for retirement. Purpose and Ownership Culture Beyond paychecks, younger workers want purpose. Roughly 9 in 10 Gen Z and Millennials say meaning at work drives job satisfaction. EOCs are well positioned here: ownership fosters pride, accountability, and a sense that daily contributions truly matter. Practices like open-book management and regular feedback sessions reinforce transparency and strengthen that culture of shared success. Speak Their Language Employee ownership can sound abstract or even jargony to someone hearing about it for the first time. Terms like “ESOP” don’t resonate nearly as well as “employee-owned.” Clear, simple communication—backed by peer stories and visual tools—helps younger workers understand that this isn’t just another benefit, it’s a powerful wealth-building opportunity. Tools like “wealth calculators” make the long-term financial upside tangible today. The Bottom Line For employee-owned companies, engaging younger generations is about shifting the narrative: from retirement to wealth creation, from jargon to clear stories, from distant benefits to immediate impact. By showing Gen Z and Millennials that EO provides both financial security and meaningful work, companies can attract, retain, and inspire the next wave of employee-owners—ensuring not just continuity, but a thriving ownership culture for decades to come.
Read More ▶Top U.S. Cities Championing Employee Ownership
June 24, 2025
Employee ownership is gaining traction across the country, but in some cities, it’s becoming a cornerstone of local economic strategy. These urban centers aren’t just hosting more employee-owned companies—they’re actively creating ecosystems to support the model and help it flourish.Cities wanting to boost employee ownership can learn from those already taking concrete steps to support ESOP transitions. These metros are backing up talk with action—launching funding, technical assistance, and public programs to make ESOPs happen.1. Cleveland, OHSuccession subsidies & training – The Ohio Employee Ownership Center (OEOC), backed by a Cleveland Foundation grant, provides free succession planning workshops and subsidizes ESOP feasibility studies with $5,000–$10,000 awards in Cuyahoga County reddit.com+15democracycollaborative.org+15employeeownedamerica.com+15fiftybyfifty.org+2nyc.gov+2ssir.org+2.Annual ESOP conference – The OEOC’s statewide event brings together hundreds of owners, advisors, and ESOP companies, fostering peer learning and dealmaking .2. New York City, NYMunicipal ESOP program – In 2020, NYC launched the city’s first dedicated municipal Employee Ownership program under Mayor de Blasio ssir.org+2nyc.gov+2employeeownedamerica.com+2.Comprehensive service offerings – Through NYC Small Business Services, the city provides initial consultations, succession planning, business readiness assessments, financing guidance, and ESOP implementation support—partners include Democracy at Work Institute and ICA Group nyc.gov.Racial equity focus – The initiative is framed as a tool to help close the racial wealth gap while preserving local jobs and building community wealth .3. Trenton/New Jersey (NJ)Statewide ESOP assistance program – In April 2025, the New Jersey Economic Development Authority (NJEDA) launched a $2.7 million ESOP Assistance Program njeda.gov.Feasibility & technical support – The program connects businesses with approved contractors for feasibility studies and technical advice, helping reduce conversion costs .Structured rollout via Rutgers – NJEDA partnered with Rutgers University to offer ESOP education, informational programming, and broad outreach that began in March 2025 reddit.com+4njeda.gov+4democracycollaborative.org+4.Key TakeawaysThese cities aren’t just promoting ESOPs—they’re investing real resources:Cleveland uses grant-funded succession planning and education to make ESOP transitions actionable.NYC offers a municipally backed, end-to-end ESOP program with equity and small-business support partners.New Jersey is rolling out a state-supported feasibility and advisory fund to lower financial barriers.A Blueprint for CitiesCities looking to support employee ownership can follow this playbook:Secure public funding or grants for succession and feasibility assistance.Build one-stop ESOP support centers through economic development agencies.Host public events, educational series, and peer networks.Center equity goals by tying ESOP initiatives to wealth-building for underrepresented communities.By backing these strategic actions—funding, education, coordination—cities can turn ESOPs into practical solutions for business succession, job stability, and long-term community prosperity.
Read More ▶Building a Plan to Maximize Employee Owner Engagement
April 25, 2025
We had the privilege of presenting at NCEO’s conference this month on “Building a Plan to Maximize Employee Owner Engagement”. Clearly the topic resonated, because the presentation was standing room only and many of the feedback comments submitted focused on having a bigger space for the audience. It is exciting to see how well received this topic is. With our experience helping hundreds of employee-owned companies work to educate and engage their workforce, we have firsthand seen how important it is to have a well-thought out and intentional plan for doing so. Our average member is contributing nearly $10,000 annually per employee to their ESOP account which is a massive investment that can and should be generating a large ROI for the business, yet only 26% of employee owned companies are measuring employee engagement. So we wanted to share some of the key takeaways from our presentation on best practices for building a plan to maximize your employee engagement: 1. Establish Regular Cadences Establishing regular and consistent cadences is very important for your employees. While you don’t want to dilute or overload the message with constant messaging, you also don’t want your communication and education efforts to be sporadic and off the cuff. We often recommend a communication, event, or other similar educational effort every 6 - 8 weeks. 2. Matching Communication Methods to Your Workforce We consistently hear about challenges some businesses face in regards to being spread out or having large field teams that don’t have or regularly use company emails and other similar issues. However, there is still a solution for every situation. Some examples we’ve seen include printing out the handout and leaving it on-site instead of sending it as an email, or providing messaging to share during in person team meetings. So being intentional about identifying the communication methods that will work for your workforce and leaning into those is a fundamental building block for an employee engagement plan. 3. Understanding What Messaging Lands with Your Team We often find people in the industry are surprised to learn that data from our members shows that “Pride of Ownership” resonates more with employees than wealth building. So before building an employee engagement plan, survey or talk to your workforce and figure out what messaging will be most effective for your workforce. We covered quite a bit more in our presentation, but these are some of the key highlights. If you’re interested in learning more about how Certified EO could help your company build an employee engagement plan, please reach out here and we’d love to connect with you.
Read More ▶How Employee-Owners Can Help Increase Share Price
March 27, 2025
How Employees at ESOP Companies Can Help Increase the Value of Their ESOP SharesWhen you work at an ESOP company, you’re not just an employee—you’re also an owner. That ownership comes with a powerful incentive: as the company becomes more valuable, so does your ESOP account.And ESOP contributions are often a significant investment made by the company. In fact, our recent benchmark found that the average company contributes nearly $10,000 per employee per year.Given the size of this investment and the effort involved in running an ESOP, it’s critical that companies generate a strong return on that investment. One key way this happens is when employees recognize and act in line with being owners—not just employees.The good news? Employees at ESOP companies actually have a lot within their control that can influence the share price.A Quick Primer: How ESOP Shares Are ValuedEach year, an independent valuation firm determines the value of your company’s stock based on financial performance, industry trends, risk factors, and future outlook. That stock value directly impacts the value of your ESOP account.So, if the company becomes more profitable and operates efficiently, the share price typically goes up—and so does your retirement benefit.How Employees Can Help Increase Share Value1. Use Zero-Based BudgetingFor employees or managers who have oversight or influence over budgets, one powerful strategy is zero-based budgeting. Instead of copying last year’s budget and rolling forward the same expenses, start from zero each year and have your team justify each line item.Large organizations often fall into the trap of spending to "protect" budget line items, even if those expenses no longer move the business forward. Zero-based budgeting helps eliminate unnecessary spending and redirect resources more effectively.2. Share Financials Transparently and Highlight SavingsSharing financial information with employees, highlighting examples of when employees have identified savings opportunities, and connecting it to share value does two things:It educates employees on how savings and efficiency impact the ESOP share price and overall performance, so they become more mindful of spending and saving day to dayIt empowers them to think and act like owners—spotting waste, suggesting improvements, and understanding their role in the company’s financial healthAfter implementing this on a monthly basis with our team at Certified EO, one team member immediately identified an expense we could cut in half, which resulted in thousands of dollars of savings per year for the business.3. Educate Your Team on How You Measure ROI of InvestmentsA few months ago at Certified EO, we used a recent research report to significantly increase our conversations with ESOPs at a conference—for only a few thousand dollars. We then walked the team through how we calculated the average value of each intro call and demonstrated the ROI of that investment.That transparency helped our team understand how management evaluates spending and return. Soon after, an employee identified a similar opportunity. They presented a short write-up outlining the cost and expected ROI. We moved forward with it—and it delivered a 5x return for the business.When employees understand how ROI is measured and are encouraged to think this way, it builds a culture where everyone is on the lookout for high-impact opportunities.By thinking like owners, being mindful of costs, and looking for ways to improve results, employees can directly influence the value of their ESOP shares. The more you educate, empower, and celebrate that mindset, the stronger your ownership culture—and the more value you’ll create together.
Read More ▶Helping Employee-Owned Companies Foster Economic Growth for the U.S.
February 24, 2025
Given the increasing risk of job security and layoffs, as well as difficulties younger generations are having saving for retirements, employee-owned companies offer a needed mechanism for fostering economic growth in the United States.Employee owned businesses experience layoffs much less frequently than their counterparts, in addition to the median ESOP account balance being more than double the median 401(k) balance (meaning significantly higher retirement savings for employees).These are only two of many economic benefits that ESOPs have for our economy. And the more we are able to do to help employee owned companies grow and prosper, the more money is put back into our workforce and thus the economy since the companies are owned by the employees. State-Level Support for Employee Ownership In order to realize and accelerate these benefits, it is critical for states to support both the creation and growth of employee owned businesses, similar to the countless precedents set around supporting other types of small businesses and startups for the purpose of economic development. Several states have already started to lead the charge with initiatives that encourage and support employee owned businesses. Two standout examples are California’s Employee Ownership Hub and North Carolina’s Disadvantaged Business Contracting Program. California’s Employee Ownership Hub: The state of California has launched an Employee Ownership Hub, which provides resources, education, and financial support for businesses considering transitioning to employee ownership. They originally had included grant funding for feasibility studies, helping businesses assess the viability of converting to an ESOP or worker cooperative, although that was ultimately removed with hopes of adding it in the future. North Carolina’s Disadvantaged Business Contracting Credits: North Carolina has taken an innovative approach by offering contracting credits to employee-owned businesses under its disadvantaged business program. This initiative gives employee-owned firms a competitive edge in securing government contracts, encouraging more businesses to adopt employee ownership structures while also promoting economic equity. While some states have taken significant steps to support employee ownership, more needs to be done on a national scale. Expanding government contracting incentives especially for public RFPs, increasing funding for technical assistance programs, and raising public awareness about the benefits of ESOPs can help build a more resilient economy for our workforce and ensure a higher percentage of our economic growth is flowing back into the workforce.
Read More ▶2024: A Banner Year for Certified EO and Our Members
January 21, 2025
2024 was a great year for Certified EO, filled with significant milestones that brought value to our 700+ members and advanced our mission of helping employee-owned businesses recruit, educate, and engage their workforce.One of our standout achievements was the growth of an industry job board. Launched in late 2023, we grew the Employee Owned Job Board to become an industry-leading resource in 2024, reaching over 325,000 job views and more than 200,000 job application clicks from candidates. These clicks represent an estimated $300,000 to $900,000 in job advertising value—an incredible return for our membership, especially considering it takes no involvement or work from our members on their end. Beyond the numbers, the job board helps connect job seekers with fulfilling opportunities at employee-owned companies, promoting the unique advantages of employee ownership.Another highlight of 2024 was the launch of our benchmarking initiative. Designed to provide members with insights into best practices and trends across our expansive network, this tool allows companies to evaluate their progress and identify opportunities for growth. The positive reception from members motivates us to further expand the scope and depth of the benchmark in 2025, offering even greater value to our network.Member feedback has always been central to our mission, and in 2024, it drove the creation of our quarterly discussion groups. These peer-led sessions, now in their beta phase, enable members to dive deeper into topics explored in our webinars and content. These groups foster collaboration and knowledge sharing, creating a stronger sense of community within our network.We also continued our strong history of providing tailored content to our members to educate and engage their workforce. In 2024, we customized 3,848 pieces of branded and personalized content, saving our members more than 25,000 working hours. From marketing materials to internal communications, this service allowed organizations to focus on what they do best—empowering their employees—while ensuring they had professional and effective resources at their disposal.Lastly, we built on the momentum and popularity of our animations from members – completing 150 customizations and planning many new templates for the 2025 roadmap, based on customer feedback."Your Ownership Journey" animation for new employeesAs we look ahead to 2025, we’re excited to build on this momentum. Certified EO remains committed to helping our members thrive and elevating the profile of employee ownership nationwide. Thank you to our members for being part of this incredible journey. Together, we’re shaping a future where employee ownership is recognized and celebrated as a model for success.
Read More ▶The Biggest Engagement Gap Revealed in Our New Benchmarking Report
December 10, 2024
Employee ownership is a powerful model that transforms workplaces, fostering greater engagement, productivity, and retention. But many employee-owned companies are leaving critical opportunities on the table. To help our Members unlock the competitive advantages of employee ownership, we recently launched a new Certified EO Member Benchmarks Report. By gathering insights about employee ownership plan design and communication from across our 700+ Members, we’re answering some of the most common questions companies have about how to do employee ownership right. This blog highlights one surprising finding from our initial report: 74% of employee-owned companies don’t have a formal way of measuring employee engagement. This insight underscores a significant opportunity to improve engagement. Let’s unpack what this finding means, why it matters, and how companies can begin addressing this critical issue. Unlock the Competitive Advantages of Employee Ownership At Certified EO, we’re 100% focused on creating value for our Members. Our growing network of over 700 employee-owned companies represents a large body of collective knowledge. In October we launched a new initiative to help our Members harness the experience of our network: the Certified EO Benchmarking Survey. Designed to identify common challenges and best practices across our Member companies, this tool represents the first step in creating actionable resources for the community. We launched with a simple 25-question survey aimed at identifying hard data on the most common questions we’ve received from Members, for example “what is the typical 401k match offered by an ESOP” or “how many people are typically on an employee ownership committee.” As the report grows, we can also loop in insight gathered through our unique Certification process. Since this was the first version of our benchmarking report, we weren’t sure what we would learn, but we couldn’t have been happier with the results. The answers provided by Members showed us insights that we never would have guess. The most striking finding was in response to the question, “Does your company currently have a formal way of measuring employee engagement?” To our surprise, 74% of our Members said no! Why Measuring Engagement Matters for Employee Ownership Employee engagement is central to the success of employee ownership. The core value of being an ESOP lies in fostering a sense of ownership among employees—both in their roles and in the broader success of the company. When employees are engaged, companies see higher productivity, lower turnover, and better financial performance. However, without a way to measure engagement, many companies are flying blind. Consider this: if you don’t know how engaged your employees are, how can you improve? The opportunity cost of disengagement is significant. Studies have shown that disengaged employees cost companies up to 18% of salary costs in lost productivity annually. For ESOPs, the stakes are even higher. Without engaged employee-owners, the benefits of the ESOP structure are largely unrealized, despite the massive investment in funding employee shares. The lack of measurement tools points to a larger knowledge gap in the ESOP community. Many companies may not know where to start or assume engagement will naturally follow from the ESOP structure. However, our findings suggest otherwise: without intentional effort and measurement, engagement may falter. What Can Companies Do? While the data highlights a challenge, it also points to an opportunity. Here are some practical steps companies can take to begin addressing this issue: 1. Start with Simple Surveys: Begin by implementing a basic employee engagement survey. Quarterly pulse checks or annual surveys can provide valuable insights into employee sentiment and areas for improvement. Surveying was the #1 method mentioned by Members who do have a formal system for measuring engagement, with many mentioning Gallup and eNPS. 2. Focus on Communication: Engagement begins with understanding. Companies should prioritize communication and education efforts that help employees fully grasp their roles as owners. 3. Leverage Community Knowledge: Many companies in our network have already begun tackling these challenges. Our webinars, discussion groups, and benchmarking efforts allow our Members to learn from these success stories and adopt best practices. It’s important to remember that measuring engagement doesn’t need to be complex or overwhelming. The key is to take the first step.
Read More ▶A New Chapter for Certified Employee-Owned
November 6, 2024
I am proud to share that Ten28 Holdings has made a majority investment in Certified Employee-Owned. As part of this exciting step, we are welcoming Joe Belsterling into the role of President. This is a major milestone for Certified EO and another step towards our vision of building an employee-owned economy. Kramer and I launched Certified Employee-Owned in 2017 to help companies unlock the competitive advantages of employee ownership. Over the past seven years, we’ve grown our network to over 700 companies - nearly 10% of all ESOPs across the United States. I’m proud of the work we’ve done with our Members and the visibility we’ve created for employee ownership. For all the success we’ve seen, I think Certified EO remains at the beginning of its journey. With millions of businesses reaching critical inflection points in the coming years as part of the Silver Tsunami, employee attrition and churn trending consistently higher, and the ever increasing wealth gap, the employee ownership community is reaching a critical juncture and employee-owned companies have an increasingly important role to play in the future of the economy. Now is the time to invest heavily in the next chapter of growth for Certified EO to accelerate this vision. Joe brings extensive and relevant leadership to Certified EO. He most recently founded and served as CEO of MajorClarity, an education technology and career certification company. Under Joe’s guidance, MajorClarity launched national career readiness benchmarking initiatives, built a best-in-class customer success team that achieved the highest student usage rates in their space across the U.S., and grew to serve over 6.5M students at 5,000 schools. He shares our passion for employee ownership, which is why Ten28 Holdings has invested in Certified EO. I’m confident that Joe’s expertise, skillset, and commitment to our mission and vision will help Certified EO continue its growth and success into our next chapter. In the coming months, Kramer and I will transition to advisory roles. We are excited to see Certified EO reach new heights.
Read More ▶Young Employee-Owners Have the Most to Gain
October 15, 2024
Young Employee-Owners Have the Most to Gain Only 1 in 200 American companies are employee-owned. That means employee ownership can be an unfamiliar concept for most American workers, especially those new to the workforce. Companies that are employee-owned can struggle to convey the real benefits of employee ownership to their younger workforce. Ironically, young employees often have the most to gain from employee ownership both financially and culturally. So how can companies unlock the engaging power of employee ownership with this tough audience? The key lies in framing employee ownership so that it resonates with younger workers' priorities today instead of focusing on a distant future. The Problem: Employee Ownership Can Feel Abstract Employee Stock Ownership Plans (ESOPs) are often discussed with employees as retirement benefits. Technically, an ESOP is a retirement plan, so the connection is logical and the communication naturally centers on saving for the distant future. But for young professionals, the concept of "retirement" may seem abstract. They’re usually focused on more immediate goals, such as paying off student loans, purchasing their first home, finding a partner, or starting a family. In addition, job-hopping is more common in the modern economy. Many younger employees don't know how long they will stay with their current employer. An ESOP that's framed as a retirement plan may not feel like a priority or enough motivation to stay at a job. As employee ownership is relatively uncommon, younger workers may not comprehend the benefits of working at a company that follows this model. If none of their peers have experienced this environment, it’s harder for them to see how they could benefit. It’s just too abstract. How Employee Ownership Benefits Younger Employees While it’s true that the financial benefits of employee ownership take time to build, many other aspects of this model appeal directly to the needs of younger employees. Here’s how companies can better communicate the value of employee ownership to the next generation: 1. A unique workplace culture with ownership from day one All employees immediately benefit from the unique workplace culture fostered by employee ownership. There are tangible day-one benefits to working at a business that has an employee ownership model. Employee ownership motivates employees to take charge of daily work decisions and gives them a sense of shared responsibility. For younger professionals, this ownership culture can provide a sense of belonging and purpose from day one. They can witness how invested employee-owners are in the company's success and how they work together to achieve goals. 2. Growth opportunities without job-hopping Many young professionals feel the pressure to change jobs often to advance their careers. Staying too long at one workplace can be viewed as stunting your professional growth and income. Employee-owned companies are different because they provide a stable job environment that rewards tenure. There are more opportunities for skill-building, professional development, and career growth than at traditional companies. Employee-owned companies value managers who understand the unique model, so they’re more likely to promote from within. For young workers, employee ownership is an opportunity to experience personal and professional growth without jumping from job to job. Studies show that employee-owners tend to stay at a job longer than their peers at traditionally structured companies. The stability that comes with employee ownership means that younger employees can experience upward mobility while staying in one place. They can build long-term relationships with coworkers and customers and grow with their company, accumulating knowledge, experience, and equity. 3. Harnessing the power of compound growth The financial benefits of employee ownership and its role in building long-term wealth are undeniable. But while younger professionals may not feel the urgency of preparing for retirement, they actually stand to gain the most from an ESOP. As with any form of investing, time is a powerful ally. The longer an employee-owner stays with the company, the more shares or stock they accrue. Over time, the value of those shares can grow significantly through the power of compounding. On top of that, employee-owners generally hold shares in a private company, a form of ownership that can often outperform publicly traded shares, although results are never guaranteed. As Warren Buffett – investor, businessman, and chairman of Berkshire Hathaway – famously said, “The stock market is a device for transferring money from the impatient to the patient.” What Buffett and other legendary investors have long understood is that time in the market – or in this case, time in the employee-ownership plan – can yield life-changing results. For young professionals, joining an employee-owned company is a real opportunity to build wealth. According to our analysis of Federal Reserve data, if every American business were to become employee-owned, median household wealth would increase by over $100,000. Framing Employee Ownership for the Next Generation In order to effectively engage younger workers in the concept of employee ownership, organizations must adapt their messaging. Instead of focusing solely on retirement benefits, they should highlight the unique cultural advantages, the opportunities for personal and professional growth, and the long-term financial potential of employee ownership. Employee ownership offers younger workers stability, meaningful work, and a sense of purpose. While the long-term financial rewards might not be front-of-mind for someone new to the workplace, framing employee ownership as a way to build long-term wealth while experiencing career growth is a powerful message.
Read More ▶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 ▶100% Member Funded: Our Journey to 700 Members
August 8, 2024
I’m thrilled to share that Certified Employee-Owned just welcomed our 700th Member! We’re excited to pass this major milestone a few months shy of our seven-year anniversary. Our growing member network represents progress towards our vision and demonstrates the value of certification. By helping our Members unlock the competitive advantages of employee ownership, we are strengthing the companies that turn the idea of employee ownership into action. Our continued success can be traced back to a single decision made in the early days of Certified Employee-Owned: the choice to be 100% Member funded. This guidepost has kept 100% focused on providing value to our Members and ensures that we are we are always striving to grow the employee ownership community. This post gives background on that decision and how it has influenced our growth over the years. Why Be 100% Member Funded? The decision to be 100% Member funded dates back to our beginning. Kramer and I launched Certified Employee-Owned in 2017 because we loved the idea of employee ownership, but we were struck by the lack of awareness and understanding among the general public. When we learned that there were over 6,400 employee-owned companies in America, all we could think was, “why haven’t we heard of this before?” Our vision was to combine the reach of employee-owned companies, create national recognition of the model, and turn employee ownership into a major advantage in terms of hiring, retention, engagement, and customer acquisition. It was clear to us that a major lever for scale was to help companies share their ownership story. But we also knew that there would be any challenges along the road. How could we ensure that our new organization would stay focused on it’s mission? Every business person knows that growth comes with challenges and potential distractions, so it was critical for us to stay focused on our Members. We also understood the power of incentives, so we started to think about our revenue model and how we could link that to our mission. We realized that a commitment to generate 100% of our revenue from employee-owned companies would hardcode our mission into our DNA. 100% Member Focused Being 100% Member funded means that we have always had an intense focus on creating value for our Members. We have no other choice. Every dollar we make comes from employee-owned companies, and they only pay us if certification provides them more value than it costs. Focusing on our Members is more than just an ideal for us, its a way of life. Member focus has been behind many of our best decisions. After our launch in 2017 we received a ton of positive feedback about the idea of a big network amplifying the voice of employee ownership, but not everyone saw the value of the network because we only had a few dozen Members. We needed to create a strong direct incentive to get certified, so we set up conversations with our founding Members who helped understand an immediate need: sharing their ownership story with current employee-owners. With that direction we set out to create the tools and playbook that would help companies save time and increase engagement, which has turned into our most popular service today. Members have been instrumental in providing the ideas and insights that have fueled our growth. Their feedback and suggestions have helped us grow our template library to over 100 pieces of content. Member feedback on hiring led us to create EO Jobs, the first and only job board for employee-owned companies. Members have joined our webinars to share their insights with the network, and have provided hundreds of examples that have made their way into our case studies and best practice library. The decision to be 100% Member funded has also helped us decide what not to do. With over 700 Members, we’ve built a valuable source of information about the community. Perhaps there might be a way for us to package our data and insights into something useful for service providers? While we love the community of companies that support employee-owned businesses, that would divide our focus and our attention. We prefer to stay 100% Member focused. 100% Aligned on Growing Employee Ownership The commitment to be 100% Member funded also keeps us focused on growing the employee ownership community. At the end of the day, there are two ways to grow the number of employee-owners: you can create a new employee-owned company or you can make an existing employee-owned company more successful. By focusing 100% on our Members, we’re growing the community by making employee-owned companies stronger. Here’s how it works. Members love supporting our work to promote employee ownership, but the decision to get and stay certified is made like any other business decision. Members maintain their certification if the benefits outweigh the costs. By creating surplus value for our Members, we’re providing them a direct financial benefit that increases their growth and profitability. Through 100% Member focus, we’re directly growing the employee ownership community. While we’re thrilled to have 700 Members, we still feel like we’re at the beginning. We will continue to grow our network and exponentially increase the value we provide to our Members. The future of employee ownership is bright, and we’re proud to be a part of making that future happen. Everything we want to accomplish happens through our Members, and that’s why we are so happy to be 100% Member funded.
Read More ▶I’m an Employee-Owner, What Do I Own?
July 1, 2024
In his 1999 letter to Amazon shareholders, Jeff Bezos shared a story relevant to every employee-owned company: “At a recent evet at the Stanford University campus, a young woman came to the microphone and asked me a great question: ‘I have one hundred shares of Amazon.com. What do I own?’ I was surprised I hadn’t heard it before, at least not so simply put. What do you own?” A similar question is probably on the mind of your employees when you tell them that they’re owners. Everyone has had a job, but few people have had the opportunity to own a piece of their employer. Employee ownership is a unique experience, and workers learning about it for the first time are likely asking themselves: “you say I’m an employee-owner, what do I own?” There’s a direct answer to this question: legally, ownership is a claim on the future earnings of a business. The ownership of a company is broken down into fractional pieces called shares of stock. The owners of the stock, also known as the shareholders, are entitled to the current and future profits of the company. So as an employee-owner, you own a piece of the future success of your company. This answer is a great starting point, but it can be improved by integrating your company’s vision for success. This is the approach Bezos took when he answered the student by saying, “you own a piece of the leading e-commerce platform,” and then detailing his vision for Amazon. With the benefit of hindsight this answer might seem obvious, but in 1999 it was not clear that Amazon would become a ubiquitous everything store that is one of the five most valuable companies in the world. Bezos’s answer is powerful because it expresses a clear vision for the long-term future of Amazon. The lesson for employee-owned businesses is that you can help your employees get excited about ownership by helping them understand your company’s vision. In other words, by showing them what they own. But there’s a deeper level to this question when it’s asked by an employee-owner. Unlike the student who was a shareholder of Amazon, an employee-owner has a direct influence on the value of their investment. The harder they work, the more they delight your customers, and the more they contribute ideas to improve the company, the better they will do financially as an owner. Of course, a single individual’s actions might have a limited impact on the bottom line profits of their company. It’s common for employees to think, “sure I can work harder, but I’m just one employee out of hundreds, can I really make a difference?” The answer is that ultimately a company’s performance is driven by the sum of all the actions taken by its employees each day. Small improvements add up to big impact when everyone is on board. In addition to owning a piece of the change they create, an employee-owner also owns a piece of the impact of every other employee at the company. This means that employee ownership creates alignment. Employee-owners have an incentive not just to work hard themselves, but to collaborate, to be a great team member, and to ensure that everyone else is doing everything possible to make the company successful. Every company will have a different answer to the title question. A great answer will combine the insights in this article to provide a simple articulation of the vision of the company as well as a compelling elaboration of the consequences of broad-based employee ownership. It will touch on the direct financial aspects of ownership. It will help employee-owners understand the long-term vision of the company. And it will help them understand their individual role in the company’s success while also emphasizing that, as employee-owners, we’re all in this together. If you’re thinking about how to build an ownership culture, start by thinking about how you would answer if someone at your company asked this question: I’m an employee-owner, what do I own?
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 ▶There’s More Than One Way To Be Employee-Owned
March 1, 2024
Roughly 6,400 companies in America are employee-owned. They range from five employees to over 250,000, are headquartered in all 50 states, and operate at scale in every industry. One reason employee ownership has been so successful is flexibility. No matter the company size, sector, or lifecycle stage, there is an employee ownership structure that will work. At Certified Employee-Owned, we champion all types of employee ownership. Our simple and clear definition of “employee-owned” sets a standard that can easily be applied to any business. As interest in employee ownership grows, we thought it would be helpful to outline the major ownership structures including: Employee Stock Ownership Plans (ESOPs) Worker Cooperatives Direct Share Ownership Employee Ownership Trusts (EOTs) Equity Compensation Plans Employee Stock Ownership Plans (ESOPs) Most employee-owned companies in the US have an Employee Stock Ownership Plan, commonly referred to as an ESOP. An ESOP is a retirement benefit plan that’s open to all employees and invests primarily in the employer’s stock. ESOPs operate like 401(k)s, holding stock in s special trust that an employee-owner can access when they retire. Technically any business can have an ESOP but, due to the cost and administrative overheard, a company usually needs at least 30 employees for the plan to work. ESOPs can own any portion of a business and we’ve seen this percentage vary from 1% to 100%. Many large public companies have ESOPs that own a tiny fraction of outstanding shares, which is why it’s important to keep in mind that not all ESOPs are employee-owned. ESOPs are popular because they have many benefits. They have substantial tax advantages. For example, a 100% ESOP-owned S-corporation is exempt from federal income tax. By law ESOPs are broad-based, which makes them inclusive. Employees do not need to make a financial contribution to receive their shares, participation is automatic, and all employees who work at least half-time and meet a certain age threshold are eligible for ownership. Companies usually adopt an ESOP as a means of providing liquidity to selling owners. Based on an informal survey of our Members, we estimate that over 95% of ESOPs are created through conversion. As of the date of this article there are 5,734 employee-owned companies with an ESOP. Notable examples include Wawa, WinCo Foods, and Davey Tree. Worker Cooperatives Worker cooperatives are democratically owned and governed by their employee-owners. Worker participation in governance is the hallmark of a worker cooperative and usually includes employees voting on the board of directors on a one-person, one-vote basis. Worker cooperatives have a long history in the United States. There have been several waves of growth, including a large wave spanning the the 1970s and 1980s. Worker Cooperatives are currently in the midst of another wave spurred on by several development organizations including the US Federation of Worker Cooperatives (USFWC) and the Democracy at Work Institute (DAWI). Unlike ESOPs, a substantial number of Worker Cooperatives are employee-owned from the very beginning. A 2021 survey run by DAWI found that 88% of worker cooperatives are the result of startups, and just 12% are the result of business transitions. Additionally, worker cooperatives are almost all 100% owned by employees, though occasionally a company transitioning to a cooperative might have a period of joint ownership with the departing owner. Typically, worker cooperatives have eligibility requirements for becoming a worker-owner. This generally comes in the form of a waiting period of one to several years and a buy-in that ranges from a few hundred dollars up to a thousand. Not all coops have a buy-in, and those that do often offer worker-owners with favorable financing to encourage participation. As of the date of this article, there are 400 worker cooperatives. Notable examples include Cooperative Home Care Associates, Evergreen Cooperatives, and A Slice of New York. Employee Ownership Trusts (EOTs) Employee Ownership Trusts (EOTs), sometimes referred to as Employee Ownership Purpose Trusts, are quickly gaining traction as an innovative employee ownership structure. Modeled off an approach pioneered in the UK by companies like John Lewis Partnership, EOTs have been growing in the US since 2016 thanks to the work of groups like EOT Law, Common Trust, and Purpose Owned. EOTs are extremely flexible which allows selling owners to craft an employee ownership structure that closely aligns with their vision for the future. They are generally much less expensive than alternatives, especially ESOPs. And they can be set up to exist in perpetuity, which gives selling owners to confidence that their legacy of employee ownership will continue as long as their company continue to operate. EOTs are still in the early stages in the US and unfortunately don’t yet benefit from tax incentives. Despite that headwind, today there are roughly two dozen EOTs in the US and that number grows every year. Prominent examples of EOTs include Arbor Assays, Bicycle Technologies International, Text-Em-All. Direct Share Ownership Direct share ownership is another flexible option for employee ownership. While larger companies are likely to choose an ESOP for tax reasons, smaller companies sometimes find distributing shares directly to employees as a better method for implementing employee ownership. Direct share ownership has become increasingly popular thanks to Teamshares. Founded in 2019, Teamshares buys smaller companies and then sells the business back to employees over a 10- to 20-year time period. At this point we’re aware of 50 companies that use direct share ownership to achieve at least 30% employee ownership, and that number is growing rapidly. Equity compensation Equity compensation incorporates stock-based employee benefits including stock options, restricted stock, RSUs, stock appreciation rights, and phantom stock. Equity compensation is typically given to the employee at no cost. Equity compensation plans are popular ways to compensate executives and offer equity to employees at early stage startups because they are flexible and generally offer employees favorable tax treatment compared to giving them shares directly. Not many companies are using equity compensation to achieve 30% employee ownership, but there are a few and these structures offer a compelling option for newer companies that are growing and want a cheap, flexible way to bring early employees along as owners. All of the structures in this article have unique strengths and weaknesses. But they work towards the same goal: changing the relationship between company and employee by giving everyone a chance to earn an ownership stake. No matter the size, sector, or lifecycle stage, there is an employee ownership structure that can help any company build a team of owners.
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