7 ms·

What does it mean for a company to be employee owned? What is the benefit to the employee?

by lIl-IIIl 3y ago

jjtheblunt 3y ago
extra compensation floats with profits and plausibly creates a positive feedback ?
HWR_14 3y ago
It avoids the issue of dividing profits between employees and shareholders, which means the employees keep it.
- EasyMark 3y ago
  and dividends!
ensignavenger 3y ago
Ability to vote on how the business operates and things like compensation and benefits. Different employee owned businesses are governed differently, but in general, the employees have more control.
- astura 3y ago
  I elaborated in a sibling comment, but this is just not necessarily true. Both employee owned companies I've worked for were effectively dictatorships where employees got exactly zero say in anything. Employee-owned just means that employees are the shareholders.
  - mixmastamyk 3y ago
    Shareholders have some rights to affect policy.
- quickthrowman 3y ago
  I work for a 100% ESOP and the only things we are able to vote on are mergers, ownership structure changes, liquidation, and dissolution. There are no other voting rights or board member nominations/votes.
  - ensignavenger 3y ago
    How is the Board of Directors chosen?
CptFribble 3y ago
think of how shareholders drive a company's behavior, and how much of most public corporations bad behavior is generating dividends or increased share price for large institutional shareholders, because the leadership (board) is voted for by those same shareholders now imagine if a company's only shareholders are the employees who work there. how much different would a company act if the people to whom the leadership are responsible are the employees themselves?
- dhc02 3y ago
  All of this is true, and on top of that, at least in the case of ESOP plans like the one at Bob's Red Mill, the outstanding stock of the company is held in a trust and distributed to employees as part of a benefits package over time, sort of like a 401k they don't have to pay anything to contribute to.
oooyay 3y ago
Employees have a say in the direction of the company. It depends on the bylaws, but employees will vote on certain things. There's a lot of talking it up here, but it can also suck. I worked for one that was very blue collar as a systems engineer and watched as our IT infrastructure decayed and our contractual promises would not be met because employees voted for bonuses rather than refreshed infrastructure.
- wavefunction 3y ago
  Sounds like white collar IT other than the bonuses
- bruce511 3y ago
  With any sufficiently large group there will be a variety of opinions when making any decision. Voting is one way to get a majority opinion, but of course that doesn't make it right. Since everyone is in a different place in life what may be good for one (maximising income before retirement) may conflict with another (ensuring job stability and sustainability for the next 20 years.) This is all true regardless of the decision making group - board of directors, c-suite, or employees. So sure, some employee groups would make decisions not aligned with my goals. But equally other decision making groups do that all the time too. This is a hard problem because, as a decision group you "can't make everyone happy." So it helps if the employee group are mostly on the same goals page, and if there are leaders who understand the decisions in terms of the agreed goals. Meaning, that regardless of profit share, its a good thing if you work at a place where your goals, and the leadership goals are aligned.
- astura 3y ago
  >Employees have a say in the direction of the company. It depends on the bylaws, but employees will vote on certain things. No, this is not necessarily true - what you're describing is more akin to a co-op, not an employee owned company. An employee owned company just means there is an ESOP (Employee Stock Ownership Plan). So employees own some or all of the company's stock. That's it, it's an ownership structure, not a management structure. It says absolutely nothing about day-to-day operations or how decisions are made. The vast majority of employee owned companies are still run like a dictatorship. Source: I've worked for multiple employees owned companies. Both were effectively dictatorships. Literally zero voting whatsoever.
pcthrowaway 3y ago
It gives employees a path to benefit from their labor directly rather than capitalized investors who aren't actually doing the work. Normally companies seek to find the balance of "saving money" by paying lower wages that are just enough to entice mostly productive employees, and profiting from the employees labor. To put it in the terms of Marx, the burgeouise pocketing the difference between the cost of their employees' labor and the value extracted from it is "surplus value", and is a manifestation of class warfare in capitalism that harms the working class. See also, "rent-seeking"

What does it mean for a company to be employee owned? What is the benefit to the employee?

jjtheblunt 3y ago

extra compensation floats with profits and plausibly creates a positive feedback ?

HWR_14 3y ago

It avoids the issue of dividing profits between employees and shareholders, which means the employees keep it.

EasyMark 3y ago
and dividends!

ensignavenger 3y ago

Ability to vote on how the business operates and things like compensation and benefits. Different employee owned businesses are governed differently, but in general, the employees have more control.

astura 3y ago
I elaborated in a sibling comment, but this is just not necessarily true. Both employee owned companies I've worked for were effectively dictatorships where employees got exactly zero say in anything. Employee-owned just means that employees are the shareholders.
- mixmastamyk 3y ago
  Shareholders have some rights to affect policy.
quickthrowman 3y ago
I work for a 100% ESOP and the only things we are able to vote on are mergers, ownership structure changes, liquidation, and dissolution. There are no other voting rights or board member nominations/votes.
- ensignavenger 3y ago
  How is the Board of Directors chosen?

CptFribble 3y ago

think of how shareholders drive a company's behavior, and how much of most public corporations bad behavior is generating dividends or increased share price for large institutional shareholders, because the leadership (board) is voted for by those same shareholders now imagine if a company's only shareholders are the employees who work there. how much different would a company act if the people to whom the leadership are responsible are the employees themselves?

dhc02 3y ago
All of this is true, and on top of that, at least in the case of ESOP plans like the one at Bob's Red Mill, the outstanding stock of the company is held in a trust and distributed to employees as part of a benefits package over time, sort of like a 401k they don't have to pay anything to contribute to.

oooyay 3y ago

Employees have a say in the direction of the company. It depends on the bylaws, but employees will vote on certain things. There's a lot of talking it up here, but it can also suck. I worked for one that was very blue collar as a systems engineer and watched as our IT infrastructure decayed and our contractual promises would not be met because employees voted for bonuses rather than refreshed infrastructure.

wavefunction 3y ago
Sounds like white collar IT other than the bonuses
bruce511 3y ago
With any sufficiently large group there will be a variety of opinions when making any decision. Voting is one way to get a majority opinion, but of course that doesn't make it right. Since everyone is in a different place in life what may be good for one (maximising income before retirement) may conflict with another (ensuring job stability and sustainability for the next 20 years.) This is all true regardless of the decision making group - board of directors, c-suite, or employees. So sure, some employee groups would make decisions not aligned with my goals. But equally other decision making groups do that all the time too. This is a hard problem because, as a decision group you "can't make everyone happy." So it helps if the employee group are mostly on the same goals page, and if there are leaders who understand the decisions in terms of the agreed goals. Meaning, that regardless of profit share, its a good thing if you work at a place where your goals, and the leadership goals are aligned.
astura 3y ago
>Employees have a say in the direction of the company. It depends on the bylaws, but employees will vote on certain things. No, this is not necessarily true - what you're describing is more akin to a co-op, not an employee owned company. An employee owned company just means there is an ESOP (Employee Stock Ownership Plan). So employees own some or all of the company's stock. That's it, it's an ownership structure, not a management structure. It says absolutely nothing about day-to-day operations or how decisions are made. The vast majority of employee owned companies are still run like a dictatorship. Source: I've worked for multiple employees owned companies. Both were effectively dictatorships. Literally zero voting whatsoever.

pcthrowaway 3y ago

It gives employees a path to benefit from their labor directly rather than capitalized investors who aren't actually doing the work. Normally companies seek to find the balance of "saving money" by paying lower wages that are just enough to entice mostly productive employees, and profiting from the employees labor. To put it in the terms of Marx, the burgeouise pocketing the difference between the cost of their employees' labor and the value extracted from it is "surplus value", and is a manifestation of class warfare in capitalism that harms the working class. See also, "rent-seeking"