Newsletter Article
December 2020

Looking back—looking forward: The NCEO at 40 Years

NCEO founder and senior staff member

In November of 1980, I went down to a 10 x 10 room with a typewriter and desk (there were no PCs then) and said “this is the National Center for Employee Ownership.” Earlier that month, I lost my job on the Senate Small Business Committee staff because the committee chair lost his election and his party lost control of the Senate. Almost all the professional staff was replaced.

I had been planning to start the National Center for Employee Ownership some time in 1981, but that schedule now got pushed forward. Fortune smiled on me, and a few days after the election, I was offered a part-time consulting job with the Control Data Corporation’s government affairs office. That paid the bills for the next three years as I worked to get the NCEO off the ground. Karen Young, another Senate staffer, joined the effort, and we soon added interns and then a succession of interns and eventually some paid employees.

I had been involved in ESOPs on the Hill for three years at that point, drafting legislation that directed the SBA to make ESOP loans, requiring an ESOP as part of the Chrysler bailout, and what would eventually become Section 1042 of the Code, the law that allows sellers to an ESOP to defer tax on the sale to an ESOP. Joseph Blasi, now at Rutgers, was also doing work on the Hill at the time, and we worked together.

I first learned about the idea from testimony from William Foote Whyte, one of the most important sociologists of his time. Here was an idea, I thought, that could create greater economic security for millions of Americans, but do it in a way that used the incentives of the marketplace and tax code, not large new (and politically infeasible) government programs. It also seemed to me that employee-owned companies would treat their employees with more dignity and respect, including getting their ideas about how to run their companies better. Everyone would win.

Starting with Research

As appealing as this idea seemed to me, it was largely unknown. (One person I called early on told me she did not know you could still own employees; another said their firm did something similar—they leased employees). And while I thought it would make companies perform better and employees wealthier, these was almost no research on that. Nor was there any research on what would make one employee ownership company better than another. I had been an academic before coming to the Hill, so research like that intrigued me.

So I decided I would start the NCEO. I had the great honor to get to know and work with Bill Whyte, a gem of a human being and an exceptional mentor who taught me the concept of “action research,” research that didn’t just crunch numbers to meet the standard of some academic journal read by a few colleagues, but methodologically objective, reliable work whose results would lead to constructive change in the real world. That standard has guided the NCEO’s work ever since.

Our vision was to create an organization that could help business owners, employees, the press, opinion leaders, and politicians understand how employee ownership works. We would insist on reporting what we found, good or bad. We would conduct an active outreach program to people outside the employee ownership community. We would link people to qualified providers and develop readable, practical material on all aspects of employee ownership. Our meetings would be a place to network and learn—and would not just be for service providers and executives, but employees too. While we would not turn down contributions and grants, we would fund ourselves primarily through the work that we do. Finally, we would work as a consensual, collaborative staff where everyone had a say.

Building the NCEO

The early years were tough—one of our board members encouragingly told me the first 20 years were the hardest. Money was scarce and pay was low. But we attracted some exceptional people, like Katherine Klein (now an esteemed academic), who worked for three years on groundbreaking research on what makes employee ownership work—research that guided all future thinking on this topic. Michael Quarrey, who now heads ESOP-owned Web Industries’ booming medical division (they are becoming one of the leading makers of COVID test strips), worked for us early on to further develop that research to show how well it worked economically. Over the ensuing years, we have had an exceptional staff, now at 13 people, and are blessed with virtually no voluntary turnover, unheard of for nonprofits.

For the last almost 10 years, I have been a close-to-full-time, mostly volunteer employee of the NCEO because this is my joy and passion. I am truly blessed to be able to do this. I believe the NCEO makes a real difference in the lives of millions of people. Many companies know about employee ownership because of us. The concept of high-involvement culture that is now the paradigm in ESOP companies stemmed in large part from our work (what we found was viewed skeptically at first). We have helped companies find the best ways to structure and communicate their plans, and our research has influenced legislation not just here but in countries around the world.

But there is so much more to do. Employee ownership should be far more common than it is. It should be the gold standard for how to do business and how to treat people.
I know we will work very hard to make that happen.