25 Nov Episode 127: Should Employees be Company Owners?
If everything is on the table when it comes to the future of work, should we be talking about having workers own the company – or at least own a bit of it? To talk about that, Linda Nazareth is joined on this episode by Elspeth Murray, Director of the Centre for Innovation and Social Impact and CIBC Faculty Fellow in Entrepreneurship at the Smith School of Business at Queen’s University. They discuss why the benefits from employee ownership can go far beyond money and why this work model might be a good thing for workers and organizations and maybe for society as well.
Guest:
Elspeth Murray
Director of the Centre for Innovation and Social Impact and CIBC Faculty Fellow in Entrepreneurship at the Smith School of Business at Queen’s University
Elspeth Murray has served as the Associate Dean – MBA and Master’s Programs from 2012-2022 and has been a professor of Strategy and Entrepreneurship at Smith School of Business since 1996. She also holds the CIBC Fellowship in Entrepreneurship, and founded Smith’s Centre for Business Venturing. She is the Director of the Centre for Entrepreneurship, Innovation & Social Impact.
Prior to joining Smith, she worked in industry for 7 years for several firms including IBM, and Canadian Tire. As an integral part of her work in the strategy and new venture fields, Dr. Murray specializes in the management of change.
In 2002, she co-authored a best-selling book, Fast Forward: Organizational Change in 100 Days, Oxford University Press, with Dr. Peter Richardson. She has recently co-developed (with Dr. David Saunders) the Analytics Climate Assessment Tool (ACAT), which is used to assess organizations technological capacity, skill sets, and analytics culture. Current research is focused on best practices in leading and managing change to create an analytics culture.
Dr. Murray teaches on many MBA and Executive Education programs, and consults widely with a diversity of firms including BMW, Detour Gold, Wawanesa Insurance, Versacold Logistics and the Auditor General for Canada.
She serves as a Director for several firms and is an advisor to several start-ups and CEO’s. Dr. Murray received an undergraduate degree in computer science and mathematics, and an MBA, both from Queen’s University. Her doctorate in Strategy and Management Information Systems was completed at the Richard Ivey School of Business.
Links:
https://smith.queensu.ca/faculty_and_research/faculty_list/murray-elspeth.php
Transcript:
about different forms of work, and one of them is old -fashioned employment, being a
full -time employee of a company, not a freelancer, not a contractor, but just
working for that company. But should we maybe go further than that? If everything is
on the table when it comes to the future of work, should we talking about having
workers own the company or at least own a bit of it?
Elspeth has research written a lot about employee ownership and she sees benefits that go beyond monetary ones. She thinks that if this is done right, both workers and organizations will benefit and maybe society will as well. I had a great conversation with Elspeth. Please stay with us to hear it.
changed and I went back to school again and did my PhD in strategy and I was lucky enough to get a job at Queens and that’s what my day job is at the moment And so part of my interest in the whole topic of employee ownership is really rooted in my Canadian tire experience where the stores are independently owned by individuals.
right? How would you define it? Or what are the different definitions of it? So there are many different ways in which employees can own a stake in a company. Many people will be familiar with stock options or stock plans in the startup world. This happens all the time, but there’s been a recent addition into the mix, which is something called an employee ownership trust, which is a different way of having a stake in a business and is relatively new in Canada, but it has been well -entrenched in the U .S. and in the U .K. for many years. So it’s just another way instead of owning stock outright and participating as a shareholder, you now participate more as an owner. So what happens with this legislation, again, borrowed from the US and the UK, is that there is a separate entity called a trust, which is set up, and employees actually own a piece of the business through the trust. Unlike owning shares directly in the company, you own shares in the trust, and the trust essentially runs the
company.
It’s one of the most successful grocery retailers. There are tons of stories about how employees have benefited from that ownership. And it’s interesting, a student in one of my classes, I was using this example of Publix and he works in the US and he said, “You know what? We look to set up our businesses close to a Publix because it’s such a great company from a brand perspective, but more fundamentally, when employees own a business, the business tends to do a lot better.
It has to be more than just giving people stock, right?
business is being run. So I think if you go back to kind of the Walmart example, yes, you have input, yes, they work on creating a culture, but at the end of the day, you don’t really own anything. Whereas if you have that ownership piece and you sort of see, yeah, I’m going to do something today, but I will benefit in the future. I will benefit not only today, but I will benefit in the future. that’s a much more compelling value proposition than trying to just have a great culture. I think the other thing, and you know this much better than I would, is this next generation, they want purpose, they want to feel they’re part of something. It’s not just about doing a thing and collecting a paycheck. So this notion of employee ownership just creates more purpose and meaning for people and you’re working
really hard.
about purpose. When we hear about purpose in younger people, we tend to think they
want to see environmental attitudes that are in sync with what they believe, but
also actions, right? Plans and things like that. I don’t hear about this very much,
maybe because don’t think of people working at companies long -term anymore, especially
younger people. They tend to be on contracts or they come and go. This is clearly
a model that goes with traditional employment, right? Being there for some period of
time.
you know, really enjoy what you’re doing, you build expertise, and, you know, to go back to your comment about the power of purpose. I mean, it’s really a purpose beyond profits.
So in Canada, the way in which, and more generally, the way in which an employee
ownership trust works is that trust must own at least 51 % of the company. So that’s the majority ownership. So as the company does well, the profits get distributed, and the big chunk of them will get distributed by thoseowners and whoever other chunk, you know, the profits will get distributed there.
So that’s how you build wealth over time is, you know, the stock or the company does well, your ownership becomes more and more valuable. So that’s the wealth distribution end of things. And another thing that I think is really compelling in this day and age is sharing that wealth. I mean, the people who are really building the business, the lighting customers, keeping the shelves stocked in the public’s example, why shouldn’t they actually share in the wealth that they create?
to ask those questions. Like, where’s my opportunity? I’m doing, I’m working hard.
So how come it’s a small group of people kind of at the top who are getting paid
a lot.
there’s there’s definitely legislation in the UK, in the US, and in Canada. So my best advice is always talk to an accountant and /or a lawyer, because they will be up -to -date. In particular, the accounts will be up -to -date on the legislation, so which businesses can qualify? And then there are a couple of steps. They’re sort of the, well, can I do this? Then there’s the, okay, yes, I want to do it, so how do I set it up? How do I think about enacting the whole thing, the not some bolts of setting that trust up.
And then there’s a last piece, which is how does the transition work? So you asked a great question about, well, you know, what does this mean for employees? So it’s like, well, how will employees have a voice? You know, what will the cadence be of sharing information, so on and so forth. You know, there’s one other thing that I meant to mention before too, one of the, I think the most awesome aspects of these employee trust is it’s another succession vehicle for business owners as they retire. And in North America, there’s a huge percentage of small business owners, small, medium -sized business owners who are going to be retiring in the next 10 years. The greatest generational transfer of wealth anywhere. So these employee ownership trust provide a different way for business owners to actually transition the business. Which means you don’t have to sell your business to a competitor or to a private equity firm or just shut it down, period. You can sell it to your employees. Your employees stay in the community in which you build the business. Ownership stays in the country in which you live. Those are huge considerations for people who want to set up these trusts. You have these business owners who now have another option. I think this is what’s exciting to me about talking about this topic. You’re going to retire and sell your business in 10 years. This is option number three for
creating legacy for seeing your business continue to thrive. It’s pretty cool.
make this work.
there’s a great organization called Social Capital Partners that lobbied long and hard
for this sort of legislation. So that’s a terrific resource. But as I said,
I always suggest starting with, starting with an account.
Impact at the Smith School of Business at Queens University.
notes. You’ll find some links there. If you’d like to connect with on Twitter or X
at @RelentlessEco. And I’m also on Instagram. You can find me @LindaNazarethKeynoteSpeaker.
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