Employee Co-ownership vs. Employee Ownership: The Differences
The concept of ownership within a company is evolving. Employee ownership has gained significant attention for its potential to attract a more equitable and participatory workplace. However, a new model called "Employee Co-ownership" has emerged, adding an extra layer of advantages to the traditional model.
But what are the differences?
Employee Ownership: A Brief Overview
Employee ownership is a model in which a company's employees hold shares or stock options in the business, making them partial owners. The goal of this approach is to create a sense of ownership and responsibility among employees, as they have a vested interest in the company's success.
Employee ownership is not a new concept and has been implemented in many companies across the world, promoting employee engagement and shared financial success. However, "Employee Co-ownership" brings a new dimension to this traditional concept.
Employee Co-ownership: The Valloop Model
The term "Employee Co-ownership" is associated with the Valloop model, a framework designed to facilitate the transition from traditional ownership structures to a co-ownership model. In this model, employees don't just own a percentage of the company; they own the business alongside Valloop.
Valloop's Role: Valloop, as a third party, provides the financial resources, systems and the support needed to transition the company towards employee co-ownership. This sets it apart from traditional employee ownership.
Employee Senior Leaders: In the Employee Co-ownership model, senior employee leaders play a crucial role in the transition. They work alongside Valloop to facilitate the process, ensuring a smooth and effective shift to co-ownership. In contrast, traditional employee ownership often lacks this direct involvement of senior employees in the decision-making process.
Valloop Exchange: Possibly the biggest difference. The Valloop Exchange moves the whole model online to expedite, scale and streamline the process.
Key Differences between Employee Co-ownership and Employee Ownership
Ownership Structure:
Employee Ownership: Employees hold shares or stock options, but the ownership structure may remain largely unchanged.
Employee Co-ownership: Employees and Valloop jointly own the business occasionally with the business owner involved too. The employees decide which structure suits them the best, which in turn creates a more collaborative and shared decision-making structure.
Transition Process:
Employee Ownership: The transition to employee ownership may involve gradual stock accumulation or specific stock plans.
Employee Co-ownership: The Valloop model offers a structured approach to transition, with the involvement of senior employees and external resources, streamlining the process. Plus, speed and accessibility with the Valloop Exchange managing all online.
Investment Source:
Employee Ownership: A lot of variable outcomes are employed that often create impaired results for employees.
Employee Co-ownership: Under guidance from the employees, Valloop provides the financial resources, systems and support required for the transition.
Decision-Making:
Employee Ownership: Employees might have a say in the company's direction but often have less influence on strategic decisions. It is not unusual for employees to have a complete loss of control and have no say in strategic decisions at all.
Employee Co-ownership: The collaborative nature of co-ownership encourages a more significant influence on strategic decisions. Employees provide direction to Valloop, and propose the best way to do things.
To recap: Benefits of Employee Co-ownership
Enhanced employee empowerment: Employees play a more active role in the company's direction and decision-making.
Financial access: Valloop brings a more accessible funding and resource capability to the employees.
Knowledge & expertise: Valloop has been working with SMEs to transition for many years and has a wealth of systems and resources.
Smooth and efficient transition: The involvement of the Valloop Exchange and Employee Senior Leaders streamlines the transition process, reducing the potential challenges associated with a change in ownership.
More shared responsibility: Co-ownership encourages a stronger sense of responsibility and commitment among employees, as they are directly invested in the company's success.
Employee ownership has proven to be a valuable tool in enhancing workplace engagement and financial well-being. The concept of Employee Co-ownership goes beyond this traditional model and takes employee ownership to a new level by involving partnership, systems, capital and external resources.
Understanding the differences between employee ownership and employee co-ownership can help organisations choose the right path for their specific needs and goals.