Promotion and use of Certified Employee-owned could be a unique marketing strategy to grow sales and premium pricing as well as a new method to attract new employees.
Using the strength of employee-owned branding, customer perceptions of what employee-owned is likely to create in terms of culture, performance, quality, and service to drive business and stakeholder value.
Employee ownership is when employees have an ownership stake in their company. Employee ownership includes employees holding shares, share options, restricted share units (RSUs), performance rights, or anything else that gives them a legal claim on residual profits and assets of the underlying business.
Nearly every business has some level of employee ownership – that is to say, there is at least one employee that has some ownership stake in the business.
Employee ownership can vary dramatically across companies. Sometimes a small number of employees have a large ownership stake – this would include a founder/CEO who owns 100% of the business or a group of executives who have lucrative share options.
Alternatively, every employee could have some ownership, but all together employees could own just a small piece of the business – such as employees of a large public company who receive employee shares as a part of their remuneration package.
While nearly every company has some employee ownership, very few companies can truly be called “employee-owned.” That’s because there is more to being an employee-owned company than having just some employee ownership.
Certified Employee-Owned says a company is employee-owned when its employees own a significant and broad-based ownership stake. Significant means that employees own at least 20% of the business. Broad-based means that meaningful access to ownership is open to most employees ( subject to some qualification rules ) and that concentration of ownership is limited.
Companies can be employee-owned in a number of ways. They can use an employee share ownership plan, an ESOP trust (our Peak Performance Trust for example), direct share ownership, or become a worker cooperative.
This is just the start…
One of the founders of certified EO, Thomas Dudley, has published two research papers on employee-owned:
Consumer interest in shopping employee-owned concludes that 35-40% of respondents are more likely to buy a product from an employee-owned business and that 48% of consumers are willing to pay a premium price.
The data predicts an increase in sales of 10% and price premiums of between 9-23% under the certified EO label. This is consistent with research into the effect of Fair Trade certified products, certified organic and ‘great place to work’ branding supports growing consumer social awareness and influence on buying behaviour.
Job Seeker Interest in Employee Ownership examines the “attractiveness” of employed owned to potential employees and finds that 31% are more likely to apply when they learn the company is “employee-owned”. Employee-owned was seen to be more attractive than ESOP and certification was important to employees.
To find out more about certified employee-owned we are interviewing Thomas Dudley, US-based founder of Certified EO, in a webinar.
Date: Thursday 28th November
Time: 11 am (AEST time)
Succession Plus’s Webinar Series
Register below to be notified on its release.