Question:

Some of my employees have asked about how they can build equity in my company and become owners. I am interested in finding out more about the advantages of sharing ownership with my employees as a way of improving their motivation and performance. What do you think?

Answer:

Employee ownership is not a new idea, in fact, many businesses that are household names—companies such as Publix Super Markets, UPS, and Herman Miller—as well as numerous much smaller businesses are in large part employee owned.

Says Dr. J. Robert Beyster, founder of Science Applications International Corporation (SAIC) and author of the book The SAIC Solution: How We Built an $8 Billion Employee-Owned Technology Company (John Wiley & Sons, 2007), “Employees benefit by working in an environment that challenges them, values their opinions and ideas, and then rewards them with an ownership stake. The shareholders, including employees, benefit by enjoying the increased returns that this innovative, efficient organization creates. Ultimately, customers are the real winners, benefiting from the good work of motivated and highly skilled employee owners who help solve critical problems.”

According to Dr. Beyster, employee ownership offers the following specific advantages to companies that embrace it:

Employee ownership allows a focus on long-term goals. Employee ownership helps free companies from the need to meet short-term performance goals dictated by pressures from outside shareholders, instead establishing growth and profitability goals that best suit its own short- and long-term objectives and the interests of patient stockholders.

Employee ownership helps attract and retain a superior workforce. Employee-owned companies enjoy greater freedom to use stock ownership to maintain an entrepreneurial culture and to preserve a focus on individual effort and initiative.

Employee ownership facilitates the alignment of key corporate constituencies. With employees as owners, management perceives an obligation to be more responsive to the needs and concerns of employees.

Employee ownership promotes adaptability to maintain customer focus. Performance-based ownership incentives encourage employee-owners to maintain a customer-driven focus. The adaptability of employee-ownership systems has been a key element in many companies’ successes, giving them an advantage over slower-moving competitors.

For further information, you can contact Dr. Beyster at www.beyster.com