Understanding Employee Ownership in the Context of French Family Firms

Family firms, in which a family controls a majority stake in the organisation, are often considered characteristically different from non-family firms. However, our understanding of employee ownership in the specific context of family firms suffers from the concerns raised by owners of several family firms about such ownership. The decision to open the capital to its employees goes beyond the question of the ownership of family business. Nevertheless, it impacts the governance of the company and raises several concerns including the transmission of information, transparency, increased formalism, and taxation. This study aims to analyze how family firms benefit from an employee ownership plan and how governance practices impact the mechanism of employee ownership plans. This study examines the financial communication of French family firms in terms of mployee ownership activities.

Employee Ownership or How to Anticipate Financial Crises Within a Company

The COVID-19 pandemic has turned the world of work upside down. It is having a dramatic effect on the employment, livelihoods, and well-being of workers and their families, as well as on businesses around the world, especially small and medium-sized enterprises. It started in China at the end of 2019, with that country's economy mainly the first to be affected. The global economy was then impacted as the virus spread. It is a bit early to estimate precisely the extent of the economic crisis on a company, but it is already certain that it is more brutal than before. Companies that have opened their capital to their employees are more likely to keep their employees than other companies that offer a significantly higher level of security to their employees (maintenance of working hours and compensation). What practical economic logic will be found in the company once employee ownership is applied? Would it be an effective way to overcome the various situations of discontent and anxiety among employees, where these feelings are already very strong?

Employee ownership – pros and cons – a review

PurposeThe purpose of this paper is to give an updated overview of the research on employee ownership. What does the scientific literature reveal about advantages and disadvantages? What can be learned from different models used in Italy, France, Mondragon (Spain), UK and US with many employee-owned firms in contrast to Denmark.Design/methodology/approachA structured review of the literature on employee. The paper identifies different mechanisms leading to effects on productivity, job stability, distribution, investment etc., and reviews the empirical evidence. The main barriers and drivers are identified and different models for employee ownership in Italy, France, Mondragon (Spain), UK and US are reviewed to identify potential models for a country like Denmark with few employee-owned firms.FindingsThe article gives an overview over the theoretical predictions and the main empirical evidence of the effects of employee ownership. The pros are greater employee identification with the firm and increased productivity reinforced by increased participation. Employee-owned firms have more equal distribution of wages and more stable employment, and they have greater mutual control between employees and fewer middle managers. The motivation effects may be smaller for large firms and lack of capital may lead to lower levels of investments and capital per employee.Originality/valueComprehensive and updated literature review on the effects and successful formats of employee ownership to identify models for implementation in countries with few employee-owned firms.

Race and gender wealth equity and the role of employee share ownership

PurposeThe paper discusses the relationship between systemic inequity and wealth disparity and advocates for expanding employee share ownership as a strategy to address divides in income and wealth by race and gender. It targets diverse actors including policymakers, philanthropic leaders and social investors and presents a set of policy proposals and practice ideas that seek to advance a broader understanding of employee share ownership and build the capacity of key organizations to support employee-owned businesses.Design/methodology/approachThis paper draws on data indicating positive outcomes from employee share ownership programs (ESOPs) related to job quality, economic stability and wealth-building, as well as widespread political support for ESOPs.FindingsThis paper suggests that employee share ownership can help to strengthen job quality and address race and gender income and wealth gaps. It argues that there is both public support and a range of different strategies actors can implement to expand awareness and access to different forms of employee share ownership.Research limitations/implicationsAdditional research focused on other forms of employee share ownership (beyond ESOPs) is needed to deepen understanding of how each form can play a role in addressing racial and gender wealth inequities. The paper acknowledges that despite the potential of employee share ownership to mitigate racial and gender wealth gaps, additional simultaneous strategies are required to address the range of systemic barriers that have disproportionately limited women and people of color's participation in ESOPs.Practical implicationsPolicymakers are actively seeking new proposals, while philanthropic leaders, social investors and others are also eager to build awareness and understanding of employee ownership models and develop the institutional capacity necessary to support strong employee-owned businesses. This paper directly responds to these needs and contributes to a broader collaborative effort to spread employee share ownership policies and practices that support economic recovery and lay the foundation for a more equitable and resilient economy.Social implicationsEmployee share ownership is not yet a strategy that is well understood among policymakers and the public, but it connects to and supports outcomes that are top of mind for many, including increasing local ownership and bolstering local economies, helping small business owners retire in ways that preserve local jobs and businesses, strengthening job quality and workforce development, addressing racial inequity and economic inequality and providing workers greater voice and agency. This paper seeks to connect employee ownership to these high-priority issues and support efforts by a range of organizations to implement policy and practice solutions.Originality/valueThis paper fulfills an identified need to aggregate recent research on the relationship between employee share ownership and wealth inequities on the basis of race and gender. It also offers a timely argument that employee ownership strategies can play an important role in responding to the challenges facing communities and workers – particularly women workers and workers of color – as we rebuild from the COVID-19 pandemic.

Case study: Central States Manufacturing, Inc

PurposeThis case study examines employee share ownership at Central States Manufacturing, where the employee stock ownership plan (ESOP) shares stunning sums of wealth with employees. Central States designs its ESOP to allow participants to access a portion of their ownership wealth while they are still employed at the company, through hardship and in-service withdrawals. This may make the “wealth benefit” of employee ownership more meaningful to lower-wage workers navigating economic challenges. The case study adds to the discussion about how employee ownership can benefit low- and moderate-wage workers and close the wealth gap.Design/methodology/approachData were collected via: (1) published accounts, (2) structured qualitative interview with the chief financial officer (CFO), (3) follow-up emails and phone communication with company contact and (4) review of plan document language.FindingsWorkers at Central States Manufacturing – including truck drivers and production workers – build large sums of wealth through the ESOP. Central States innovates in its ESOP by permitting workers to access a portion of their ownership wealth while they are still working through hardship and service withdrawals.Research limitations/implicationsThis is a mini-case study heavily reliant on the information provided by the CFO, in combination with background publications, and plan document language. It does not include employee interviews.Originality/valueThis paper lifts up an innovative company whose success and innovative ESOP plan design benefit frontline workers.

The response of majority employee-owned firms during the pandemic compared to other firms

PurposeThe purpose of this study is to understand how majority employee-owned firms responded to the pandemic compared to firms that were not majority employee-owned. The Employee Ownership Foundation partnered with Rutgers University and the SSRS survey firm to survey ESOP and non-ESOP firms about their responses to the COVID-19 pandemic. A key purpose of the survey was to estimate firm-level changes in employment from mid-January to August (current employment figures were adjusted to August 5 using BLS industry employment trends). The survey also looked at other forms of adjustment and responses to the pandemic as reviewed below. The focus in this study is on the differences between firms that are majority owned by ESOPs and those that are not.Design/methodology/approachThe survey included 247 executives from ESOP Association member companies and 500 executives from an SSRS business panel constructed to be representative of US companies with 50 or more employees. The survey started on August 5 and ended on September 23, 2020.Findings(1) Majority ESOP firms had employment declines from January to August that were on average only one-fourth as large as for other firms. The difference is maintained when controlling for industry membership. (2) Majority ESOP firms were more likely to be declared “essential,” but the lower employment cutbacks among majority ESOP firms remain among essential and non-essential businesses. As essential businesses, majority ESOP firms were more likely receive Paycheck Protection Program or other government pandemic assistance, but both assistance recipients and non-recipients had lower employment cutbacks among majority ESOP firms. (3) The extent of employment cutbacks was higher for non-managers than for managers, but the manager/non-manager gap was higher among other firms than among majority ESOP firms.Research limitations/implicationsThis study supports empirical findings done previously.Practical implicationsThis study suggests to non-EO firms what they can do.Social implicationsThis study suggests strengths of EO firms.Originality/valueA very original and one-of-a-kind dataset.

Member surveys on employee ownership and the COVID-19 pandemic

PurposeTo gather data about how employee-owned companies performed during the COVID-19 pandemic and whether employee ownership was a competitive advantage.Design/methodology/approachSurveys of members of the National Center for Employee Ownership.FindingsEmployee-owned companies were more likely to have positive than negative outcomes and many attribute part of their success to their employee ownership structure.Research limitations/implicationsData was from NCEO member companies and not a representative sample of employee-owned companies.Practical implicationsCompanies should consider employee ownership as a strategy; employee-owned companies should consider employee engagement efforts.Originality/valueThis includes the first data gathered specifically on employee-owned companies during the pandemic.

Employee Ownership: Structuring Opportunities for Racial Wealth Building and Family Well-Being

Policies and practices of the 19th and 20th centuries have had a lasting impact into this century. This is most evident when examining racialized wealth inequality between Black and White families. This study of low-income employee owners examines the following questions: (1) Does employee ownership reduce the racial wealth gap? (2) How does employee ownership reduce the racial wealth gap, and (3) To what effect does employee ownership reduce the racial wealth gap? Findings indicate employee ownership impacts wealth building, advancement opportunities, and family economic security among Black employees and other marginalized populations. Policy and practice implications to advance employee ownership to address racial wealth inequality are highlighted.