Ownership Matters
by Ted Howard
Yes! A Journal of Positive Futures, Spring 1999

Page 3 of 6
When workers own their jobs

Twenty years ago, the idea that workers would own productive capital at their workplaces was considered wildly impractical and even quasi-socialistic. Today, 11,000 companies have employee stock ownership plans. Nearly as many are enrolled in ESOPs, profit sharing and broad stock options and investment programs, as are members of all private and public sector unions (15.7 million versus 16.1 million). US workers now own over $664 billion in such ownership schemes. These plans now control over 8.3 percent of all corporate equity, a dramatic increase over just a decade ago; about 1,900 companies -- some of them among the largest in the nation -- are majority worker-owned.

For the workers at medium-sized firms like Krause Publications of Iola, Wisconsin (430 employees), Web Industries of Westborough, Massachusetts (250 employees) and the Reflexite Corporation of Avon, Connecticut (400 employees), employee ownership means that their jobs will be there tomorrow. After all, who among the worker/owners are going to vote to send their jobs abroad?

Consider Joseph Industries, Inc., a 100 percent employee-owned manufacturer of fork-lift parts headquartered in Streetsboro, Ohio. Founded as a very traditional, hierarchical corporation in the late 1960s by the Joseph Brothers, the company had grown into a $4-billion dollar enterprise by the mid-1980s. When the brothers began thinking about retiring and selling the business over a decade ago, employees realized that the sale could have dramatic and most likely negative consequences for their jobs.

Taking the initiative, the company's managers sought out an employee-owned firm, Fastener, to buy Joseph Industries and help them make the transition to worker ownership.

By 1987, Joseph Industries had been converted into an ESOP, and the company's culture shift was underway. Suddenly, a company with absolutely no history of non-management employees making decisions adopted a structure that encouraged employee input on governance issues and a management team that stressed open communications. Quarterly discussions about the budget are held in which employees go through company financial statements line by line and discuss causes of success and shortcomings. Any worker/owner of the company can run for the Board of Directors with a petition signed by 10 other employees.

Charles L. Carr, who began working at Joseph on the parts line shortly after returning home from Vietnam in 1972, now runs the company's warehouse.

The change in culture has been dramatic, he says. "We started with one guy making all the decisions. If he failed, he failed. Now, if we fail, we all fail." Since converting to an ESOP, sales per employee have increased 36 percent. Higher revenues have translated into more wealth for the company's employee/owners. Says Carr, "We have people here running machines who are now millionaires. I'll be here until I retire, and I hope to retire early ó as soon as I get $1 million in my own account."

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