Lately, I’ve been working on a second round offering in what I call the Atomic Plan. My goal is broadening ownership in Atomic Object. The first round offering was made in May 2009. That sale of equity brought in seven new owners and started us down a very interesting path of succession planning, leadership and experiments with governance. It hasn’t all been smooth, but we’ve made some interesting discoveries and some significant progress.
As part of this second round, I decided to look again and see what the literature on employee ownership had to say. I had previously familiarized myself with the technical body of knowledge around employee stock ownership plans (ESOPs). My search this time has turned up more interesting sources. So far the best book on the subject that I’ve found is Equity: Why Employee Ownership is Good for Business by Corey Rosen, John Case, and Martin Staubus.
More than just an employee ownership plan, the “Equity Model” the authors describe is an approach to both management and ownership. The three essential components of the Equity Model which they have identified through their research are:
- equity at levels that affect people’s lives,
- a culture that helps people think, feel and act like owners, and
- employee training and understanding of their role in the company’s success.
The authors found a company can get some benefit from each element in isolation, but real value comes from the synergy of all three implemented together. The case studies and the research they cite hail from a very wide variety of companies differing in size, location, age, industry, and types of employee.
The book also has a chapter on the interesting history of the man behind the ESOP program that’s written into Federal tax law, as well as an appendix on the many possible formal mechanisms for creating employee ownership.
I wish I’d found this book several years ago and highly recommend it to company owners looking to either increase the performance of their company, or founders looking to set their companies on a path to outlive their active involvement.
- Atomic Ownership, Part 3: Valuation - January 2, 2019
- Atomic’s purpose: to be a company where work matters - November 5, 2018
- Elevating & distributing “glue work” flows out of our core principles - October 18, 2018
- Atomic Ownership, Part 2: How the Atomic Plan & our ESPP work - July 16, 2018
- Atomic Ownership, Part 1: Context, motivations, and accomplishments to date - May 17, 2018
Anonymous
November 2, 2011Thanks for posting about this book. When TroopTrack is (finally!) successful, I plan to make it employee owned. I’ll be hitting you up for advice when I get to that bridge…
Carl Erickson
November 2, 2011And I’ll be more than happy to give it, Dave. I hope it’s going well with TroopTrack.
pkananen
August 29, 2013Carl, this is a really interesting topic. Does AO use an ESOP as part of its financial structure?
Carl Erickson
August 30, 2013Interesting, complex, and multi-dimensional. I investigated an ESOP but decided it didn’t serve our purposes. Our plan consists of two components: an Employee Share Purchase Plan (ESPP), and Individual Sales. Everyone can participate in the ESPP after working for a year. After 4-5 years you may get an offer to purchase a more significant number of shares.
There’s some more written about our approach here:
http://greatnotbig.com/2012/12/adventures-in-ownership/
and here:
http://spin.atomicobject.com/2013/07/22/employee-ownership-espp/