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Does anyone work for a company that is owned by its employees?
The way I understand it is the company buys shares off the founders (either all at once with cash or over several years from the profit) these shares are owned by a trust which each employee becomes a member of. There are tax incentives to do this and it enables the founders to take money out or exit entirely.
From an employee point of view I am wondering how meaningful it is - the idea is because you have a stake you are more motivated to work late etc.. To me the stake seems nominal, you can't sell or take it with you. Typically the trust owns around 20% so you have very limited say in how the business is run. A key principal if EO is everyone is made aware of the financials - sharing the burden.
Can it be the democratic happy work environment I thought it would be before it was explained to me?
It seems to work quite well for John Lewis?
If the business makes profit and pays dividends then those are shared with the employees too. If the business is sold then you all benefit from the proceeds. I'd expect a 20% shareholder to have some influence in setting policy on dividends, and even express a view on strategy like selling, investing, acquisition, although most employee trusts I am aware of own the whole business AFAIK. Obviously there might be a time to transition to that.
I can see an immediate benefit in small Co's too. People are always encouraging me to hire more staff to make their life easier. If N+1 staff was dividing your bonus/income by N+1 people would be more focused on ensuring that it increased the numerator too.
There is a guide from John Lewis on the Web but I can't get the link to paste on my phone.
If, since you posted this in bike forum, it is cycle related then you might want to look at Edinburgh bicycle cooperative as a model.
It seems to work quite well for John Lewis?
I think John lewis is 100% owned by the employees - I think this makes it much more meaningful.
If the business makes profit and pays dividends then those are shared with the employees too
I guess this is done as a negotiation with the trust (which could have little influence) and could you not achieve this anyway with profit related bonuses ?
you might want to look at Edinburgh bicycle cooperative as a model.
Very interesting thanks, I like the co-operative model
I do - company founded about 6 years ago from the start to set up as employee-owned and it's working well. [url= http://www.accord-esl.com ]Accord Energy Solutions[/url]. Up in Aberdeen - so not surprising that it's oil/gas-related.
We have 3 sets of shareholders
* Founders - 3 of these. They are gradually selling shares to the other groups.
* SIP - share incentive plan - they hold shares on behalf of employees and sort out trading days etc.
* EBT - employee benefit trust - this will eventually hold the majority of shares and is set up "to act on behalf of employees".
Overall, it works really well. It's sometimes hard to tell if it's a result of the folks who started and set up the company just being decent, ethical folks or if it's a due to the employee-owned nature of the company (I suspect both of these are related) - but it's a very nice place to work. We've seen very few people leaving, morale is good and we are doing pretty well.
Feel free to drop me an email (in profile) if you have any questions. There are various associations advocating/advising on Employee Ownership and meetings such as [url= http://employeeownership.co.uk/events/eoa-annual-conference/ ]EO conference[/url].