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Mares: Employee Ownership

10/20/11 5:55PM By Bill Mares
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(Host) After watching the demonstrations concerning Wall Street, Commentator Bill Mares joins us today with some thoughts about a better way for companies to distribute their profits.

(Mares) Being at rally in downtown Burlington against Wall Street excess and the nation's gross disparity in wealth, got me thinking about another model of corporate behavior and practice, that of employee ownership.

For ten years the Vermont Employee Ownership Center has helped about fourteen Vermont companies with a total of almost five hundred workers, to convert to various forms of employee-ownership.
Some of these companies have familiar names like King Arthur Flour, Merchants Bank, Gardeners' Supply, Carris Reels, and Dubois & King. Others, like Diggers Mirth and Vermont Aerospace are less-well known.

I began following developments in this field 30 years ago while co-writing a book on workplace democracy. We found that opportunities for employee buy-outs or start-ups could arise from both hot desperation and cool research. They could be an exit strategy for founders willing to sell the company to their employees, or a chance for employees to keep a departing company local.

Perhaps the most famous Vermont employee ownership success (and failure) was the short-lived Vermont Asbestos Group. In the 1970's employees desperate to protect their jobs, joined with some community members to buy the Lowell company, only to see it fall apart a few years later. One cause of failure was confusion about which job hats they wore at work - owner, manager, board member, worker or union member.

The truth is that employee owners must take the long view and learn to wear different hats as needed. They must understand (as does any business owner) the impact of the company's health on their own financial well-being. Employee ownership is both empowering, and scary. Making a transition to employee ownership is both a psychological and a legal process. The former can take several years while the latter can be completed in months. Then, you can no longer sing along with Johnny Paycheck, "Take this job and shove it!" The good news is that the company is yours; and the bad news is that the company is yours.

Examples of ownership range from complete equality of share ownership and voting power to some distribution of shares of stock while maintaining the traditional organizational boundary between workers and managers. At one end is the Employee Stock Ownership Plan which is a defined benefit plan in which employees are paid and given stock as part of a retirement contribution. The management style or control may or may not change under this system.

More radical is the worker collective, in which a one employee/one vote system in which employees/owners collectively decide on major issues of investment, direction and hiring.

My fellow fly-fisherman and beekeeper Jeff Hamelman is the head baker at King Arthur Flour. He says that as employee-owners, they all row the boat in the same direction, and even when they hit a rough patch, their shared values help them overcome challenges. He says, "Our most important company decisions are made by consensus, which is a lengthier process than in a traditional company, but in the long run it generates the best results because more perspectives make it to the table."
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