At the National Center for Employee Ownership (NCEO), an American not-for-profit membership and research organisation, its task is to provide accurate, unbiased information about employee stock plans such as ESOPs and serve its thousands of members. But the often technical information the NCEO provides doesn’t always give interested people with straightforward illustrations of where employee ownership is found and how it works, and it doesn’t always provide the right tools to communicate employee ownership and its benefits.
The Visual Guide to Employee Ownership website exists to illustrate the world of employee ownership (for now, in the U.S. only) through maps, infographics, and other means (more content will be added soon).
Highlighting the link between employee ownership and economic/social performance is the following data from the NCEO.
- Employee ownership keeps businesses and jobs in local communities
– Employee owned companies are 25 per cent more likely to survive than comparable non-employee owned companies.
– Employee-owners were four times less likely to be laid off during the recent recession than employees who did not own shares in the business which employed them.
– Employee owned companies never close for reasons of moving to other countries.
- Employee ownership improves business performance
– Productivity improves by 4 per cent to 5 per cent on average in the year an employee share ownership plan (ESOP) is adopted, and the higher productivity level is maintained in subsequent years.
– ESOPs increased sales, employment, and sales per employee by about 2.3 per cent to 2.4 per cent per year.
– ESOP companies had on average an 8.8 per cent higher sales per employee than their non-ESOP counterparts in the same industry and same size.
– Private-company-based ESOPs had job growth of 60 per cent between 2001 and 2011 while other companies remained flat.
- Employee ownership builds community wealth
– Employees at ESOP companies have additional retirement savings that are 2.2 times greater than at comparable, non-ESOP companies.
– On average, employees at employee-owned companies receive 5 per cent to 12 per cent more in wages
As can be seen from the above, employee ownership in the form of ESOPs can play a critical role in building community wealth because they help stabilize the economic base of local communities. Also, as income and wealth inequality increases, community leaders look for ways to create good jobs and revitalize struggling urban and regional communities. These searches lead to a focus on approaches that involve broad-based ownership models as key tools for creating community wealth – especially ESOPs and the like. The NCEO has estimated that ESOPs distributed $110 billion to participants in local communities across the nation during 2015.
For a discussion on the data above, please see the presentation by Corey Rosen of the NCEO in EOA’s webinar Ownership: Reinventing Capitalism, Companies, and Who Owns What in September 2022.
For similar evidence in the UK, see the research report PEOPLE POWERED GROWTH 2023 – The rapid and impactful rise of employee and worker ownership in the UK (October 2023).
