October 29, 2020

New Research on Employee Ownership and the Pandemic

The pandemic is a critically important time to conduct research exploring how businesses and their employees have fared, and what are successful ways to reduce the negative impacts from this crisis. Employee ownership is a key factor to be explored in this context. The challenge has always been collecting comparison data on companies without employee ownership. With funding from the Employee Ownership Foundation, scholars at Rutgers University’s Institute for the Study of Employee Ownership and Profit Sharing recently took on this challenge working with the national survey firm, SSRS.  

Employee-Owned Firms In The Covid-19 Pandemic concludes that “Employees were retained at significantly higher rates by employee owned companies during the pandemic.” Most notably, even when comparing just businesses deemed essential in each of the two groups, the authors report, “ESOPs laid off staff at only one-fourth the rate of non-ESOP companies. Put another way, for every person who lost a job at an ESOP company, four people lost their jobs at other companies.”

The study reports on a survey of two groups: 247 companies that are majority or 100% owned by their employees through an ESOP (drawn from ESOP Association membership) compared to 500 companies without employee ownership (drawn from a SSRS business panel). The panel is designed to be representative of U.S. companies with 50 or more employees. You can read more details on the methodology, findings, and conclusions on the Employee Ownership Foundation website.

Ambitious studies that seek to parse out the effects on employee ownership as a business model within tough and uncertain times make a critical contribution to the discussion of policy remedies when the next crisis arises.