Experts Marjorie Kelly, Corey Rosen, and Pete Stavros discuss the growing employee ownership movement and its impact. They explore the benefits of Employee Stock Ownership Plans, challenges of implementation, emotional and financial impacts on employees, and contrast with private equity models. Criticisms and calls for a more democratic economy are highlighted.
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Quick takeaways
Private equity firm KKR's introduction of partial employee ownership is a positive step towards profit-sharing with employees.
Critics highlight concerns that KKR's ownership model may not truly empower employees like traditional ESOPs.
Deep dives
Evolution of Colberg-Kraviss Roberts to KKR
Colberg-Kraviss Roberts (KKR) has transitioned from being portrayed as 'barbarians' during their leveraged buyout of RJ Nabisco to becoming the world's second largest private equity firm after Blackstone, now with over 250 firms in their investment portfolio and nearly a million employees.
Employee Ownership in Private Equity
KKR has introduced partial employee ownership in some acquired firms, providing employees a stake in the company. This ownership model, part of a nonprofit venture called Ownership Works, aims to share profits with employees, as seen in the example of employees receiving significant payouts after CHI Overhead Doors' sale to Newcore.
Challenges and Criticisms of Employee Ownership
While KKR's efforts to offer ownership stakes are seen as a positive step, critics like Marjorie Kelly suggest that this model is still limited, more like a one-time cash bonus than authentic employee ownership. There are concerns that such initiatives may overshadow genuine employee ownership methods like ESOPs.
The Need for Broad Economic Reform
Advocates stress the importance of broader economic changes beyond individual initiatives like employee ownership. Discussions point towards the need for systemic reforms, including tax policy adjustments to promote fairer wealth distribution and long-term impactful changes in the economic landscape.
The employee ownership movement is growing, and one of its biggest champions is also a private equity heavyweight. Is this meaningful change, or just window dressing?
SOURCES:
Marjorie Kelly, distinguished senior fellow at The Democracy Collaborative.
Corey Rosen, founder and senior staff member of the National Center for Employee Ownership.
Pete Stavros, co-head of Global Private Equity at KKR.