Why the U.S. Needs More Worker-Owned Companies

Harvard Business

On their own merits, worker-owned businesses can show policy makers, investors, managers, and advisers that companies with democratic ownership values and structures are operated with the same profit motivation as other companies. Some businesses with employee stock ownership plans (ESOPs) are converting into structures that more closely resemble worker co-ops. ESOPs typically allocate shares to employees in proportion to their pay. Klaus Meinhardt/Getty Images.

ESOP 44

Huawei: A Case Study of When Profit Sharing Works

Harvard Business Review

At Huawei’s inception, Zhengfei designed the Employee Stock Ownership Plan (ESOP). The structure of the ESOP is based on two important premises. Huawei’s ESOP can satisfy both human needs. The ESOP emphasizes the idea that Huawei belongs to everyone in the company and that Zhengfei expects all employees to act like owners, with dedication and committment. The gaps between what CEOs earn and what workers do are startlingly large around the world.

ESOP 12

Treat Employees Like Business Owners

Harvard Business Review

And companies — except for the very smallest — can implement an employee stock ownership plan (ESOP), often funded through borrowing. Then, last summer, they launched an initiative to reduce COGS, cutting food waste, reconfiguring some dishes, and coming up with ways to operate more efficiently. Operating profit rose by more than 10 percentage points in just four months and has stayed in the 18% to 20% range, compared with a restaurant-industry average of less than 4%.

ESOP 12