Harvard Business Review on Employee Ownership

An August 8 article, Why the U.S. Needs More Worker-Owned Companies, in the Harvard Business Review, explores the current status of employee ownership in the United States by looking at cooperatives, ESOPs, and a hybrid model called the "ESOP-erative" which uses an ESOP structure with more egalitarian allocation of shares.

The authors write, "Within the next decade, we expect worker- and employee-owned companies to grow in popularity thanks to three mutually reinforcing trends: First, renewed interest in ensuring the economic viability of local communities suggests that Baby Boomer owners about to retire are increasingly likely to want to sell to workers. Second, evidence is mounting that worker- and employee-owned enterprises outperform their competitors, especially during economic downturns; a recent Rutgers study found that converting to worker and employee ownership boosts profits by as much as 14%. Third, as a result of strong performances by worker- and employee-owned companies, it is becoming easier for workers to overcome arguably the biggest hurdle to worker buyouts: financing."