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>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 -

by 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.

oooyay 3y ago
It was maybe a bit of both based on the corporate bylaws, but it was and is an employee owned company. What I described (bonuses over reinvestment) is a decision shareholders (employees) get to make.
- astura 3y ago
  That's why I said "necessarily." >What I described (bonuses over reinvestment) is a decision shareholders (employees) get to make. Sure, My only point is there's nothing about being employee-owned that requires or even encourages allowing employees to vote on how money is spent, or anything at all for that matter. A privately owned company is just as likely to consider input from employees as an employee-owned company is. Both employee owned companies I worked for the board made those sorts of decisions without any say from employees.
  - eep_social 3y ago
    An ESOP requires that employees certain voting rights but they’re narrow and if I am reading right, may also vary with state law. https://www.irs.gov/pub/irs-tege/epchd804.pdf https://www.irs.gov/pub/irs-tege/epchd804.pdf
  - pbourke 3y ago
    > A privately owned company is just as likely to consider input from employees as an employee-owned company is. > Both employee owned companies I worked for the board made those sorts of decisions without any say from employees. If there was 100% (or majority) employee ownership, would the employees not have the ability to use the general meeting process to eject board members they didn’t like? Aren’t employees voting for nominees to the board, allowing them to use a write-in process to bypass a hostile board?
    - astura 3y ago
      Both were 100% employee owned. >would the employees not have the ability to use the general meeting process to eject board members they didn’t like? Lol, no. Trust me, it would have happened if it were possible at one, the board was public enemy #1 among rank-and-file employees. >Aren’t employees voting for nominees to the board, allowing them to use a write-in process to bypass a hostile board? Lol, no. The board itself selects board members. I'm not exaggerating, we literally had zero input on anything.
  - cowsandmilk 3y ago
    > there's nothing about being employee-owned that requires or even encourages allowing employees to vote on how money is spent, or anything at all for that matter. I.R.C. § 409(e) requires voting rights for the employee shareholders in an ESOP on certain matters, so your “anything at all” is not true.
ensignavenger 3y ago
It is true that there is no single definition of "employee owned". However, in most contexts having a small monority of company stock owned by employees doesn't really count, if only a small percent of the company is actually owned by the employees. I understood the context of the question to be cases where employees own the majority of the company. Maybe that is not what the questioner was meaning though.
- astura 3y ago
  I'm speaking of 100% employee-owned companies here. That's my experience. In general, once a company established an ESOP[1], they eventually become 100% employee-owned. Usually when an owner establishes and ESOP that's the end goal. It just takes many years to get to 100% because the company has to purchase shares from the owner and distribute them to the employees. It's not something that can happen overnight because the company has to fund those share purchases. Yes, the owner is paid, they don't actually "give away" the company. [1] I should mention, in case it's not clear, that ESOP is not a general concept - it's a specific type of retirement plan in US law that's got a bunch of requirements associated with it. Here's a bit more info - https://www.esoppartners.com/how-esop-works https://www.esoppartners.com/how-esop-works it's directed at company owners and actually touts staying in control as an advantage of an ESOP - >An ESOP is also a flexible, tax-advantaged business transition and corporate finance tool that enables stakeholders in closely held companies to access their equity without giving up management control of the company, which enables an owner to carefully plan leadership succession and a smooth transition

by astura 3y ago

oooyay 3y ago

It was maybe a bit of both based on the corporate bylaws, but it was and is an employee owned company. What I described (bonuses over reinvestment) is a decision shareholders (employees) get to make.

astura 3y ago
That's why I said "necessarily." >What I described (bonuses over reinvestment) is a decision shareholders (employees) get to make. Sure, My only point is there's nothing about being employee-owned that requires or even encourages allowing employees to vote on how money is spent, or anything at all for that matter. A privately owned company is just as likely to consider input from employees as an employee-owned company is. Both employee owned companies I worked for the board made those sorts of decisions without any say from employees.
- eep_social 3y ago
  An ESOP requires that employees certain voting rights but they’re narrow and if I am reading right, may also vary with state law. https://www.irs.gov/pub/irs-tege/epchd804.pdf https://www.irs.gov/pub/irs-tege/epchd804.pdf
- pbourke 3y ago
  > A privately owned company is just as likely to consider input from employees as an employee-owned company is. > Both employee owned companies I worked for the board made those sorts of decisions without any say from employees. If there was 100% (or majority) employee ownership, would the employees not have the ability to use the general meeting process to eject board members they didn’t like? Aren’t employees voting for nominees to the board, allowing them to use a write-in process to bypass a hostile board?
  - astura 3y ago
    Both were 100% employee owned. >would the employees not have the ability to use the general meeting process to eject board members they didn’t like? Lol, no. Trust me, it would have happened if it were possible at one, the board was public enemy #1 among rank-and-file employees. >Aren’t employees voting for nominees to the board, allowing them to use a write-in process to bypass a hostile board? Lol, no. The board itself selects board members. I'm not exaggerating, we literally had zero input on anything.
- cowsandmilk 3y ago
  > there's nothing about being employee-owned that requires or even encourages allowing employees to vote on how money is spent, or anything at all for that matter. I.R.C. § 409(e) requires voting rights for the employee shareholders in an ESOP on certain matters, so your “anything at all” is not true.

ensignavenger 3y ago

It is true that there is no single definition of "employee owned". However, in most contexts having a small monority of company stock owned by employees doesn't really count, if only a small percent of the company is actually owned by the employees. I understood the context of the question to be cases where employees own the majority of the company. Maybe that is not what the questioner was meaning though.

astura 3y ago
I'm speaking of 100% employee-owned companies here. That's my experience. In general, once a company established an ESOP[1], they eventually become 100% employee-owned. Usually when an owner establishes and ESOP that's the end goal. It just takes many years to get to 100% because the company has to purchase shares from the owner and distribute them to the employees. It's not something that can happen overnight because the company has to fund those share purchases. Yes, the owner is paid, they don't actually "give away" the company. [1] I should mention, in case it's not clear, that ESOP is not a general concept - it's a specific type of retirement plan in US law that's got a bunch of requirements associated with it. Here's a bit more info - https://www.esoppartners.com/how-esop-works https://www.esoppartners.com/how-esop-works it's directed at company owners and actually touts staying in control as an advantage of an ESOP - >An ESOP is also a flexible, tax-advantaged business transition and corporate finance tool that enables stakeholders in closely held companies to access their equity without giving up management control of the company, which enables an owner to carefully plan leadership succession and a smooth transition