Understanding Employee Ownership
Employee ownership is a shared equity model where employees have an ownership stake in the company. These employees may or may not be involved in key management decisions. However, they participate in the financial performances of the company.
A closer look at the model...
Worker Cooperatives and Employee Stock Ownership Plans (ESOP) are the primary employee-owned business structures that build employee equity. However, other shared ownership types exist such as Stock Options/Grants, Phantom Stock, and Profit Sharing. All the options available make this model adaptable to fit the unique needs and goals of each business.
What advantages does employee ownership have?
Employee ownership is a tool that assists with business growth and success regardless of the company size. It works because the employees directly correlate their vested interest to the company's financial success.
Why it matters.
Employee ownership fosters economic resiliency with higher productivity, growth, and improved longevity for the business.
Workers realize better pay, benefits, increased wealth, and job satisfaction.
Positive impacts to communities with anchored businesses, increased local spending, enhanced civic engagement, stable jobs, and community wealth building.
Owners ready to transition have a feasible buyer, value goals reached, and a lasting legacy.
Economic opportunities are created for working families, rural areas, and underserved populations. This is a step toward reducing the financial disparity frequently felt in these situations.
Why aren't more companies CHOOSING this model?
Business owners and their advisors frequently don’t realize the benefit that employee ownership can provide to the owners and their employees. This is often because of the various approaches to shared ownership that make it difficult to articulate, let alone quantify. The Center for Business Growth and Innovation recognizes these challenges and has education, training and technical assistance available to assist in the assessments and adoption of employee ownership regardless of which pathway is pursued.
Why is it necessary?
There is a small business closure crisis. Over 80% of owners are planning to exit their companies in the next decade, according to a 2022 Business Enterprise Institute (BEI) study. A problem arises as four in five business owners close the business versus selling it. The employees and community lose jobs, local dollars, and organizational support as well as owners being negatively impacted. Employee ownership is a secure option to keep the local business doors open across our nation – particularly in the rural and underserved localities.
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