Employee-owned companies create life-changing wealth for workers. On average, employee-owners have about $90,000 more in retirement wealth.
Broad-based ownership creates alignment up and down the company. Employee-owners benefit from increased respect, trust and job stability.
Employee ownership is a proven model for making companies more successful. Employee-owned businesses see increased productivity, growth and engagement.
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Ownership can create wealth and success for your employees, and in many cases, it contributes to a higher quality of life for them and their families. But it’s not always just about the profit—there are rights and responsibilities to consider, too. Typically, these fall into one of three categories.
All employee ownership structures are about sharing the wealth with the workers who make a business successful. In an employee-owned business, a worker gets their own piece of the pie either through profit sharing, share or option grants, or company stock ownership.
A key notion across all forms of employee-ownership is that wealth sharing must be broad-based. In other words, access to ownership must be open to every employee in the company on a reasonable timeline, and concentration of ownership must be limited.
Many employee-owned companies set up practices that expand employee participation in decision making. These practices may increase the role of employees in setting the company’s overall direction, encourage employees to generate new product and service ideas, or simply offer greater autonomy over day-to-day work.
Often increased involvement in decision making goes hand in hand with education about financial literacy and open book management. The idea is that providing workers with transparent access to information about the business and the knowledge required to use this information can help them better think and act like owners, which ultimately improves the company’s performance.
At some employee-owned companies, workers play a role in nominating, electing, and potentially serving on the board of directors. At companies with majority employee governance, workers effectively control the organization and management is formally accountable to the workforce. For instance, worker cooperatives are governed by workers who elect the board democratically (on a one-person-one-vote basis). Some companies take this even further and have employees vote on major strategic decisions, though today this approach is rare.
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