It was about a year ago that I described employee ownership of a company as a “partial emergent order”. An emergent order is a system that arises between the interactions of many independent components with no central control. Markets are emergent orders. Made orders are systems created with rules and central control. Companies are made orders. I have an abiding interest in this distinction because I’ve been heading Atomic down a path of significant employee ownership for the last four years.
2012 was a big year for Atomic Object on the ownership front:
- we declined an opportunity to sell the company to outsiders
- we broadened our employee ownership from 8 to 15 people
- we said goodbye to an owner for the first time
- I went from 83% ownership to 53% ownership
- Shawn and Mike laid the groundwork to launch an Employee Stock Purchase Plan
Atomic now has 15 employee owners with a 1% or greater stake in the company. Those 15 people represent about 40% of all employees, and everyone who has been with us for at least six years. Our advisory board has remained the same size (9 people) and composition, making more clear the distinction between ownership and governance.
Since I believe strongly that ownership should be sold, not given, I have a whopping tax bill (you get taxed on the entire sale in the year it occurs, even if, like me, you finance a portion of the sale and receive the money over time.) The financing plan we devised aligns the interests of buyer, seller, and the company, while keeping both the burden of bookkeeping and interest paid inside the company.
Starting in January, our new ESPP will allow everyone who has worked for us at least one year to purchase up to $500 of stock per quarter through payroll deduction. This offers the potential for a further broadening of ownership across the company. It will also require a lot more employee education on taxes and valuation, in addition to the usual “Economics of AO” training we offer periodically. How many people will participate? How will it make them feel about the company? Will it have an impact on their daily work? All great questions that we will only gradually learn the answers to.
The most common question I get about our ownership plan is whether or not ownership has changed people’s behavior. I’m happy to report that, by and large, Atoms behave the same way they always have. I attribute this to what I’ve always felt: Atomic Object had an ownership culture long before we had non-founder owners. I would say that I’ve seen changes in the intensity of those ownership feelings, and that’s been ok. But I don’t believe that any ownership plan would have created an ownership culture had it not already existed. I do believe that by bringing actual ownership into alignment with our de facto culture of ownership, I’m nurturing that culture and helping to protect it in the long run.
- Founder Transition – My Final Job at Atomic - September 9, 2020
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- Software Product Development in a Time of Pandemic - March 16, 2020
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- A framework to define and describe organizational culture - January 21, 2020