In 2018, Anna-Lisa Miller was working with agricultural cooperatives in Hawaii, aiding them in reinvesting in their communities through shared ownership. Despite planning to do civil rights litigation after law school, Ms. Miller loved the idea of workers participating in their employer’s financial success. The following year, she joined Project Equity, a nonprofit helping small businesses transition to worker ownership. However, progress was slow, with every transaction requiring customized assistance.
Then, she stumbled upon an investor presentation from KKR, one of the world’s largest private equity firms. In it, an executive named Pete Stavros discussed a model he had developed to provide employees with an equity stake in the companies it purchased. This model meant that workers would benefit if KKR sold the company for a profit. In this scenario, KKR wouldn’t lose a penny of profit since motivated workers would boost the company’s bottom line. In 2021, Ms. Miller and Mr. Stavros met to discuss the idea. At this point, Mr. Stavros had already decided to start an organization to promote his model more broadly to reach the 12 million people who work for private equity-owned companies. Ms. Miller saw this as a way to move much faster. Later, she was appointed as the founding executive director of the new organization, Ownership Works. The organization now has 25 employees working in a New York office and has received support from a few dozen private equity firms.
Private equity models are designed to offer workers the potential to create significant wealth, but they have been criticized for various reasons. Employee stock ownership has long been seen as a way to align workers’ incentives with management. However, recent regulatory changes and access to equity shares have become more limited, leading to a decrease in the number of workers who own stock in their employer. People have been working to create more durable forms of employee ownership, and Ownership Works aims to address this issue.
Despite this, some experts have doubted the effectiveness of private equity models, citing concerns related to job cuts and wage reductions by private equity firms. Ownership Works has plans to address these issues and looks to include all employees in employee-ownership initiatives to address income inequality. Regardless, Ownership Works has been collecting data on what happens when plans are instituted, with success stories but still uncertainties as adoption grows.