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What are the advantages and disadvantages of companies being 100% employee-owned?

In some countries like the UK, company ownership has begun to trend towards employee-ownership (also called ESOPs). This allows essential employees to become shareholders in a given company. Despite the advantages this can afford founders, there are also some disadvantages that can entail with this approach to running a company.

Yes, there are advantages to making a company 100% employee-owned

Making companies employee-owned can lead to several distinct advantages, all of which propels the company forward.

ESOPs perform better than non-ESOP companies

ESOPs can perform better than companies that aren't ESOPs because they have an enhanced sense of trust in one another, propelling the company forward. Other factors that are enhanced by ESOPs include decision-making, worker well-being, and company participation.

ESOPs provide job security, which in turn stimulates increased productivity

As a result of the job security afforded members of an ESOP, this is reflected in the company's level of productivity, which sees a beneficial increase.

No, making a company 100% employee-owned can be disadvantageous

Putting the whole of a company in the employee's hands is more disadvantageous than it is advantageous.

Setting up an ESOP is both expensive and difficult

Due to how involved and complex ESOPs are, they tend to be very expensive to set up. An ESOP's complexity would also make it difficult to efficiently run the company.
This page was last edited on Thursday, 5 Nov 2020 at 06:31 UTC