We're building a shared understanding.

In our experience, the extent to which employees understand and value equity is highly dependent on a company’s leadership team. Effectively deploying shared ownership requires education, training, communication, and, above all else, time and effort. When the leadership team is fully committed, broad-based ownership can underpin a powerful employee engagement program.

A shared ownership program should not be used to replace or as a trade-off for wages or other benefits. Rather, when paired with fair wages and benefits, it is a unique opportunity for workers to participate in the multiplier effect of equity and build the wealth that underpins economic resiliency and upward mobility.

For lower-income workers, it is difficult if not impossible to build wealth on wages alone. Equity allows employees to participate in the growth of the enterprise (as a multiplier of earnings growth) as a path to real wealth creation. Equity also offers the opportunity to compound value over time on a tax-deferred basis, effectively creating a type of savings or retirement account.

From the company’s perspective, equity is attractive because it aligns the interests of its employees, gives all colleagues a reason to care about corporate goals, serves as a retention tool, and is, in effect, a variable cost as the payout depends on the financial performance of the company.

We believe business is a team sport. No business can succeed without the collective efforts of an entire workforce. Everyone contributes to a company’s success, and everyone deserves to participate in the value they help create.

We think it is critical that, below a certain level of earnings (we recommend $100,000 and below), employees do not purchase their equity. So, for many, equity will be exclusively a free benefit. This minimizes the downside risk for those who might not have investment dollars they can afford to lose. As noted above, the equity should not be granted in exchange for lower wages or for lesser benefits.

There is still the question of the impact on morale if colleagues are excited about the upside and, at least for a period of time, it fails to materialize. Of course, this same risk exists for senior executives. One way to guard against this risk is to build a strong culture of ownership that engages the entire workforce in developing innovative responses to challenging economic conditions and improving their company’s performance.

It is certainly simpler to maintain the status quo and keep equity in the hands of a few. However, we’ve developed a number of structuring ideas, tools, and third-party partnerships that make a broad-based equity plan simpler to implement, communicate, and administer. At this point, we've deployed this model dozens of times without undue cost or complexity.