It’s been said that if you want your employees to give you their best, make them part owners; however, only a minority of US companies today do this. But in the fashion industry, Eileen Fisher and her namesake company have joined a few other forward-looking US companies who share equity with their workers, and the results have been great.
According to the National Center for Employee Ownership (NCEO), there are still only 6,500 or so US companies that have employee stock ownership programs, or ESOPs. And as of 2014, “19.5% of all employees working in the private sector reported owning stock or stock options in their companies, while 7.2% specifically held stock options” (https://www.nceo.org/articles/employee-ownership-by-the-numbers).
Additionally, the number of businesses offering ESOPs has fallen slightly since 2010 (while the total number of employees working at such companies has risen a little), making clear that there is ample room for more companies to adopt this practice. Whether more businesses will is unknown, but Fisher represents a one-woman business owner who has decided to share equity and profits with her employees, and her example should inspire other entrepreneurs, especially women entrepreneurs, to follow her lead.
In a podcast on CNN, Fisher said, “Once we started having extra profit, the first thought was to share it with the employees. They do all the work, it’s only fair to share, which I think all companies should have to do. I really do.”
Sharing with, caring about, and giving credit to one’s employees aren’t behaviors typically associated with successful entrepreneurs, but in 2006, Fisher began her equity-sharing program, making it open to all of her employees, most of whom are female. Now, Fisher pays her workers an annual profit-sharing bonus, and when employees leave the company, whether via retirement or otherwise, they can receive cash for their shares.
As a result of her program, Eileen Fisher’s privately-held company is now 40% employee-owned, with Fisher holding the other 60%. Again, according to Fisher, “I think even 10% of the profits is good for morale and for people feeling like they’re really a part of this company. People speak up more when they see things that don’t feel right or if people are wasting money over there.”
In other words, vested employees make better employees as they become inspired to better guide and watchdog over the company in which they now have a stake.
Started in 1984 with just $350, Eileen Fisher (the company) is currently worth $400 million with more than 60 stores across the US, Canada, and the UK. Early on, Fisher spoke with investors who wanted to help her take her company public, but she decided to keep her company private, which she says has positively influenced her company’s growth and culture as well as her own leadership style.
“I listen to everybody. I love to hear what people are feeling and thinking and that influences where we turn the company and what we do,” she told CNN.
Fisher’s story is a great template for other women business owners and entrepreneurs to emulate. And as more do, both the profitability and the work environment of the US workplace can’t help but improve.