About Employee Ownership (EO)

Employee Ownership (EO)

Employee ownership is when an employee has an ownership stake in the company for which they work - by owning company stock or holding stock options, for example. Employee ownership is a common-sense, widespread practice that benefits businesses and employees.

Employee-Owned Companies

For a company to be employee-owned, it takes more than having just some employee ownership.

A company is said to be employee-owned when its employees have a significant and broad-based ownership stake. Significant means that employees own at least 30% of the business. Broad-based means that meaningful access to ownership is open to every employee and that concentration of ownership is limited.

Many brands you know and love are employee-owned, although you might not know it! A few examples are listed below.

  • Mountain HardwareMountain Hardware & Sports
  • Harrell RemodelingHarrell Remodeling
  • Salem DistributingSalem Distributing
  • LifetouchLifetouch

Fast Facts

Employee-owned companies operate in every industry in the economy and every state in America. They range in size from just a few to more than 180,000 employees and in revenue from less than $1 million to more than $20 billion.

5,000
Number of companies
1,500,000
Number of employee-owners
>$200B
Combined Revenue

Benefits

There’s a lot to like. Employee-owned companies have been shown to be more productive than regular companies. They get competitive advantages from having highly engaged employees and low turnover. Employee-owned companies also provide a number of benefits to their employees, their customers, and their local community. Last but not least, employee-owned companies make the American economy more productive and spur economic growth.

Fair compensation

Employees receive fair compensation and benefit from a stable, secure job. When the company does well, they do well.

High quality

Customers benefit from high-quality products and employees who place a high-emphasis on customer service. Imagine a business where everyone you deal with thinks and acts like an owner.

Local jobs

Communities benefit from businesses with strong local roots. Employee-owned companies provide stable jobs that will not be outsourced. Profits made by EO companies are re-invested in the local economy.

Engagement, Governance, and Culture

While significant and broad-based ownership is the hallmark of EO companies, many complement their ownership with:

  • Employee engagement practices such as open book management, self-directed teams, and employee input on strategic goals

  • Employee governance such as voting for members of the board (on a per-share or even per-person basis)

  • Ownership culture that ensures all employees think and act like owners

Common Types of Employee-Owned Companies

Employee-owned companies are organized in a number of different ways:

  • Employee Stock Ownership Plan

    Employee stock ownership plan (ESOP) companies are the most common type of employee-owned company in America.

  • Worker Cooperative

    Worker cooperatives combine employee ownership with employee governance.

  • Perpetual Trust

    Perpetual trusts are a new form of employee ownership in the US based on the UK’s John Lewis Partnership.

  • Direct Share Ownership

    Direct share ownership (DSO) companies are the most flexible type of employee-owned company.

While these companies differ in key ways, they all have significant and broad-based employee ownership.