Powerful New Approaches to Scaling Employee Ownership

New Economy Coalition Conference Embraces Employee Ownership

by Sarah Stranahan

The importance of taking employee ownership to scale was front and center at the June CommonBound conference in St. Louis, Missouri. More than 700 people attended this biannual event of the New Economy Coalition, including activists, thinkers and leaders from across the world, working for a more equitable and sustainable economy. Interestingly, at this event, employee ownership had shifted from a marginal concern a few years ago to having become a major theme, featured in a variety of sessions.

Fifty by Fifty organized and chaired a session, featuring panelists discussing three key strategies for scaling employee ownership:

Andrea Armeni from Transform Finance spoke about his new research on the role of capital in taking employee ownership to scale, which focuses on designing a private equity-type fund — an intermediary equity vehicle — to acquire companies and shepherd them toward employee ownership. His proposed fund on the front end would look like any other when buying a new business, he said. But during the investment, it would convert the business exit in a non-extractive manner to employee owners. This approach provides liquidity to the owner, looks familiar to the investor, and turns private equity on its head, he explained. Target companies would be those that are at risk of closure or that employ low-income or otherwise marginalized workers.

Melissa Hoover of Democracy at Work Institute spoke about working in a focused way at the city level to create support systems for converting small businesses owned by retiring baby boomers to employee ownership. She described how her organization, along with the National League of Cities and Citi Community Development, is launching a fellowship program for city leaders from Miami, Atlanta, Durham, and Philadelphia, and bringing them tools and strategies to integrate employee ownership into economic development. The Shared Equity in Economic Development (SEED) fellowship program began in June with an opening retreat in Boston. Its focus is creating pathways to democratic business ownership for communities most affected by social and economic inequality — particularly low-wage workers, immigrants and communities of color.

Jennie Msall of ICA Group spoke about how her organization is focusing on expanding employee ownership in two key industries — childcare and home health care — where they believe employee ownership provides competitive advantage. ICA’s strategy is not simply to create stand-alone employee-owned companies, but to transform industries — for example, disrupting the childcare industry with a pro-worker model, and doing it with viable business models that bring to this work the rigor of sophisticated business development. In childcare and home care, ICA believes that one day employer-owned firms could dominate the industries.

ICA Group has been a leader in supporting employee ownership as a powerful tool to achieve social justice. Their view is that unless and until democratic firms control a significant portion of the market in particular industries, employee ownership will not succeed in influencing employment practices or public policy on a broad scale.

There were six other sessions on employee ownership at CommonBound. They included a range of topics, including a full day’s training on starting worker co-ops; workshops focused on expanding employee ownership in immigrant and minority populations; a workshop on broadening participation in employee ownership public policy development; and a panel highlighting the role that progressive city governments are playing in support of a more democratic local economy.

Commonbound is an ecumenical space for healthy debate about the next economy, but the emerging consensus is that employee ownership will be an essential part of a new economy that works for people and the planet.

Sarah Stranahan is Senior Editorial Associate at The Democracy Collaborative, and a leading member of its Fifty by Fifty employee ownership team.