A nonprofit backed by large private equity firms and several HR Policy members is seeking to generate $20 billion of wealth for workers by 2023 through employee stock ownership programs, paired with financial literacy training and employee engagement efforts.
Ownership Works launched this week featuring over 60 partnerships with large pension funds, investors, labor advocates, financial services companies, and public companies, including several HR Policy Association members.
The effort is framed as a way to drive equity, particularly by extending ownership opportunities beyond senior management, which historically lacks diversity. Other noted benefits include reinvigorating corporate cultures to improve employee engagement and voice, increasing financial literacy among employees, and addressing the lack of stock ownership among low- and moderate-income households.
Former Obama-era NLRB Chair Wilma Liebman, who will serve on the board of Ownership Works, said, “What I’m really taken with is the sincerity of the effort to address these problems and to have a dialogue between business and labor.”
However: Without concurrent increases in cash compensation, could providing stock-based compensation backfire as inflation—and prices—rise to their highest level in 40 years? In 2015, several companies offered stock as an employee retention strategy in a tight labor market, to some backlash. "It's a little bit like paying your employees...in lottery tickets," Dirk Jenter, a professor of finance at the London School of Economics told the Wall Street Journal at the time. "Most people prefer cash."
Looking ahead: The groups aims to establish shared ownership as a “leading ESG strategy.” Meanwhile, HR Policy members have historically been broadly supportive of the idea as a way to address income inequality. In 2000, the Association backed legislation to better facilitate stock ownership among non-executive employees. In the coming weeks, we will host a webinar exploring this current effort.