Worker Owned Companies

IntroductionOrganisation FeaturesPros and ConsWhere it works

AGENDA

Employee ownership is where most or all employees at a business, including those who are not managers or executives, have an ownership stake in the company.

At employee-owned companies, employees have an additional benefit, equity or profit sharing, which allows them to share in the wealth and assets that their work is helping to create.

Definition

EOB

Democratic

Participatory

OWNERSHIP

Direct Share Ownership

Indirect Trust

Ownership

Hybrid Ownership

Individual Share Ownership

• Capital growth important• Low staff turnover• Smaller employee numbers• Employees likely to consider

personal share ownership more real than trust ownership

• Low attrition rate• Make it more attractive and

affordable

Ownership Types

Indirect (trust) ownership• Larger employee numbers• Long term investment/ownership is important

• Desire to prevent (or make difficult) a takeover

• Employees may have difficulty funding share acquisition

• Limited funds to buy back employees’ shares

• If bonuses/performance based rewards are important, the company is happy for these to be cash-based rather than involving shares. Where the terms and level of the trust’s ownership allow it, the ability to pay bonuses free of income tax may be an added attraction.

Hybrid ownership

• Trust ownership is preferred but you want some individual share ownership to provide:

• a modest degree of capital growth• a direct feeling of ownership

Information Sharing

Knowledge developme

nt and training

Rewards and

recognition systems

Power Sharing

Four Dimensions

of Participation

Organization and work design• teams, enriched jobs, flat lean structure, product/service/

customer-based activities; task forces, diagonal slice policy groups

Physical layout and design• egalitarian space, layout that accommodates a changing

team structure, meeting areas, co-location of business units

Information systems• two-way communication, local ownership, performance

orientation, human system orientation

Managerial role, style, and processes • leadership, vision, empowerment, enabling, participation

Reward System• individualized rewards, performance based rewards,

growth-oriented rewards, open and participative administration

Organizational Features

Training and development• lifetime learning, economic literacy, teamwork, personal

growth, understanding of the business

Staffing• careful selection, mutual commitment, support of the

culture, personal growth

Personnel policies

Culture and values

• participative design and administration, individual choices, encouragement of social interaction, development of orientation, support of the family

• empowerment, personal accountability, open access to information, focus on the customer, commitment to continuous improvement, teamwork

Advantages

High employee morale

Ownership towards the organisation

oHigh commitment and feeling of belongingness to work and company.

Lean organisation – reduced overheads

oReduction in staff and supervision

Better communication between management and workers

oMore effective resolution of conflict and reduced number of grievances

due to better communication

Increased levels of agility and innovativeness

oBunch of entrepreneurs working

oMulti skilled employees

Varied inputs and decision-making processes improve the

quality of decisions

Transparency in policy and action

Increased job satisfaction

oInvolvement in decision making and profit sharing

Advantages

Difficult to apply in functions where specialisation is required

*Complex technology and specific skills

Extreme levels of financial and technological transparency can hurt

*Trade secrets might be compromised

Profit sharing limits the capability for further investment or expansion

*Earned profits diluted due to sharing

Additional expenditure on cross training of employees

*Extra time and money required

Disadvantages

Slow decision making

*Too many parties involved

Resistance of middle management

*Power sharing not acceptable

Disadvantages

Service: Indian Coffee House, Arizmendi Bakery, San

Francisco.

Manufacturing: Semco, (Brazil), Irizer, Mondragon

corporation, (Spain), W L Gore ,USA.

Information Tech. : HCL, Google

*video

Is the Structure applicable ??

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