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Comparatively to people who don't work here, they're incentivized against that.

phyzix5761 2y ago
They're not. If they let go of 10% of the staff the value of their shares (or number of shares) increases. This means that the next time there's a dividend they'll get more money. They're incentivized to decrease the number of workers and not hire any more until it starts hurting their returns. Same exact thing that happens when shares are owned by external shareholders.
- charles_f 2y ago
  That's an interesting proposition, and honestly I can't tell if you're right or not. If it's worker owned, what happens to the shares when a worker leaves? Do they have to sell? In which case, is the company buying back, or the remaining workers (or is that the same thing?). If that's so, the share behaves less like a regular share, and more like a vested interest that doubles as a layoff package. Also, is the value of a share that's owned by someone expecting a salary going up when there's a layoff? Since the only people who can buy are internal to the company (which is a very small pool), do you apply the same rules when it comes to valuation? I wouldn't presume its value behaves in the same way as an externally owned shareholder. The incentive to keep the number of workers low is certainly there, though ; I'm wondering if that's more of an incentive against hiring (which you can see as a healthy thing).
  - phyzix5761 2y ago
    You're right. There are a lot of questions that need to be answered in order to get a more accurate picture of the situation. If we're only looking at dividends and the profit generation of the company stays roughly the same from year to year then its in the worker's interest to reduce the number of workers so that the same profits are shared among fewer individuals; increasing the per share value of those dividends. A buyout of exiting workers doesn't actually reduce the value of the company as you're either decreasing the number of outstanding shares or redistributing those shares to the remaining workers. You're just trading one asset (cash) for another (shares).

They're not. If they let go of 10% of the staff the value of their shares (or number of shares) increases. This means that the next time there's a dividend they'll get more money. They're incentivized to decrease the number of workers and not hire any more until it starts hurting their returns. Same exact thing that happens when shares are owned by external shareholders.

charles_f 2y ago
That's an interesting proposition, and honestly I can't tell if you're right or not. If it's worker owned, what happens to the shares when a worker leaves? Do they have to sell? In which case, is the company buying back, or the remaining workers (or is that the same thing?). If that's so, the share behaves less like a regular share, and more like a vested interest that doubles as a layoff package. Also, is the value of a share that's owned by someone expecting a salary going up when there's a layoff? Since the only people who can buy are internal to the company (which is a very small pool), do you apply the same rules when it comes to valuation? I wouldn't presume its value behaves in the same way as an externally owned shareholder. The incentive to keep the number of workers low is certainly there, though ; I'm wondering if that's more of an incentive against hiring (which you can see as a healthy thing).
- phyzix5761 2y ago
  You're right. There are a lot of questions that need to be answered in order to get a more accurate picture of the situation. If we're only looking at dividends and the profit generation of the company stays roughly the same from year to year then its in the worker's interest to reduce the number of workers so that the same profits are shared among fewer individuals; increasing the per share value of those dividends. A buyout of exiting workers doesn't actually reduce the value of the company as you're either decreasing the number of outstanding shares or redistributing those shares to the remaining workers. You're just trading one asset (cash) for another (shares).