I Transformed My Company With Employee Ownership — Here's Why You Should Too As a business leader who recently decided to transition to an employee-owned business model, I'm sharing insights into the vast benefits for both the business and employees based on first-hand experience.
By Sarah Parks Edited by Micah Zimmerman
Key Takeaways
- Employee ownership fosters engagement, productivity, and long-term business resilience.
- Inclusive decision-making strengthens collaboration and builds a unified company culture.
- Equity-sharing improves retention, supports mental health, and enhances employee satisfaction.
Opinions expressed by Entrepreneur contributors are their own.
As CEO and founder, I recently decided to turn ZenToes into an employee-owned business. I am already seeing the incredible benefits for my team and the company as a whole.
In this model, all employees hold a share of the company's equity, aligning the interests of employees with the overall goals and success of the business. At ZenToes, we felt it essential to foster a sense of ownership and shared purpose to ultimately drive innovation, enhance employee well-being and satisfaction, and contribute to a distribution of company success.
In this article, I'll elaborate on the benefits of adopting an employee-owned business model, which I've personally experienced over recent months since making the transition at ZenToes. I'll demonstrate how it can lead to more engaged employees, improved company performance and a stronger, more resilient organizational culture.
Related: When Workers Own the Company
1. Employee engagement
Ultimately, I've found that there's no downside to employees knowing they own part of their success. Giving your employees shares in the business provides an additional incentive and layer of security that helps promote overall engagement and drive performance.
Employees know that they are truly essential to our company's success and that ZenToes' success is something they directly reap the rewards of.
2. Collaborative work culture
When everyone is invested in the company's success — directly benefiting when the business does well — collaboration comes naturally. At ZenToes, the employee-owned model has supported the evolution of an incredibly collaborative work culture, where employees feel supported in their work and personal endeavors.
Competition among employees is replaced by collaboration and a deep respect for each individual's role in the business's success.
Related: How This Type of Business Model Could Spur Purpose and Growth For Small Businesses
3. Retention rates
Employee retention is often key to businesses achieving milestones in target timeframes. While multiple factors, such as workplace culture, employee happiness, etc., influence retention rates, it's clear that giving employees equity and ownership reinforces the employee's commitment to the organization and its goals and leads to higher long-term retention rates.
With an employee-owned model, everyone begins to see the importance of strategically working towards long-term goals. Instead of simply focusing on immediate results, they see each project and task as a stepping stone towards a larger collective objective. In short, they become invested in their future at the company, and their performance largely benefits from this.
4. Productivity
Employees who own the business have a vested interest in their own output and success. They pay close attention to their work, think creatively and work hard to achieve results efficiently. Ultimately, when everyone is committed to their own productivity and working together, the entire business wins.
Related: These Rookie Mistakes Almost Ruined My Business — Here's What I Wish I Knew Before Starting
5. Resilience and continuity
All businesses experience highs and lows, but true resilience and business continuity often come down to your team and your team's dedication to staying the course. The bond and shared commitment to company goals that come with the employee-owned model inherently work to support your business's ability to adapt and thrive long-term.
6. Mental health
Giving employees a sense of ownership, responsibility, and reward in their work lives directly supports their overall happiness and mental health. It's very difficult to stay content in a workspace that makes you feel unappreciated. The employee-owned model ensures that an appreciation for employees' work and dedication is built in.
7. Community initiatives
When all employees share in ownership, there's also something incredible that tends to happen: your team and organization unite around shared values and vision. Identifying your company's values will help you to work as a team to support causes through community initiatives that speak to those values, support team building, and enhance your brand.
With ZenToes, we've come together as a team to build out long-term CSR initiatives that support our mission to make foot care and active living accessible to all. As such, our team is partnering with various organizations to offer sponsorships and scholarships for local running and walking events.
Related: 10 Simple Ways to Build a Collaborative and Efficient Team at Work
8. Inclusive and democratic decision making
Employee shareholders have a voice in company decision-making. This democratic and inclusive process is ideal for supporting the development of a company culture where everyone feels heard, included and vested in the direction of the business as a whole.
Ownership feels good, and it is good for business employees. The employee-owned model is worth considering for business owners looking for a model that supports employee retention, drives team unity and propels business growth.
Make sure you hire the right legal team to ensure the model is set up to benefit both employees and the business – for instance, employee shares can qualify for QSBS (Qualified Small Business Stock). They could potentially be free from requiring employees to pay capital gains tax if the legislation still exists when their payout occurs. Your employees and business will thank you.
