

Employee ownership is overrated - cwan
http://www.economist.com/node/21543161

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chrismealy
Typical Economist waffle. At least they admit the real problem, the boss says
no:

"At base, it is unrealistic to expect many bastions of capitalism to turn
their shares over to their workforce"

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dmlorenzetti
A friend of mine helps employee-owned companies get set up and running. When I
first met him, this was my big question-- how do you get a business owner to
just hand things over? Apparently a common model is that somebody builds up a
business, and, on deciding to retire, sells the company. The current employees
can be the purchasers, and they can, of course, compete with other potential
purchasers.

This can also happen at larger companies that run into troubles. For example,
United Airlines (<http://en.wikipedia.org/wiki/United_Airlines>): "The
aftermath of the Gulf War and increased competition from low-cost carriers led
to losses in 1991 and 1992. In 1994, United's pilots, machinists, bag handlers
and non-contract employees agreed to an Employee Stock Ownership Plan (ESOP),
acquiring 55% of company stock in exchange for 15% to 25% salary concessions,
making the carrier the largest employee-owned corporation in the world."

As you might expect, it is _not_ the model that a group of workers agitate to
have the company just handed over to them, and it is _not_ the model that the
"bastions of capitalism" just turn over shares for nothing.

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draggnar
They make a good point about how if there is too much employee ownership it
could hurt growth because the capital base is not flexible enough and also
employees might be less mobile. This does not assert their theory of not
giving stock to employees.

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neilk
What a worthless article. One study cited, with patronizing language like
"cuddly". Then a torrent of anecdotes and speculation to rubbish the idea.

We learn that it's not the solution to everything (what is?); that some firms
that use this model have failed (as opposed to traditional firms, which last
forever?), and then it degenerates into mere speculation, raising the spectre
of Bolshevism.

Maybe the Economist has forgotten this, but incentives matter. Anyone who
wants to argue against the principle of employee ownership is also arguing
against executive bonuses and stock options. Who's the Bolshevik now?

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bradleyland
Please do not editorialize the title.

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salem
There are actually special tax codes for these kinds of organizations in the
UK, which helps them minimizes taxes when they share profits with
employees/owners. Metaswitch is one such prominent software company organized
this way.

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johngalt
Equity is only useful when combined with some measure of control, and you
can't run a successful company by employee consensus.

~~~
neilk
"Can't" is rather absolute. So you are saying there are no successful
businesses that work this way?

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jsavimbi
Ah, the bolshies must be making noise in Great Britain again this week.

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maeon3
Hands off my hen that laid the golden egg or ill shoot you.

No you cant have decision rights on the hen, you don't know what is best, now
get back to work servicing the hen for minimum wage.

The powerful do what they can and the powerless suffer what they must.
Propaganda on fairness, equality, merit and rank are just ruses. Power is the
key, and those in power prevent others from getting more. The long winded
justification on why this is good or evil is irrelevant.

