Factory Direct: What does it mean?

[Mendocino101]

So, if the factory is owned by the employees, that means they are shareholders. And as the company gets bigger, there are more shareholders. Those shareholders want the company to be profitable.

So how is that different than other corporations?

not answering to Wall street for starters...

[Brewman]

 I work at a company which was once employee owned.  
The theory we operated under was that those who share in the success of the company will do more to contribute to that success.  

It's amazing the difference in how you approach your job when you have a vested interest in the company (other than your paycheck and benefits package).

In our case it worked extremely well.  Some time ago we were purchased by a large publicly traded corporation and are no longer employee owned.  

[Mendocino101]

I work at a company which was once employee owned.  
 The theory we operated under was that those who share in the success of the company will do more to contribute to that success.  
 
 It's amazing the difference in how you approach your job when you have a vested interest in the company (other than your paycheck and benefits package).

In our case it worked extremely well.  Some time ago we were purchased by a large publicly traded corporation and are no longer employee owned.  

That's exactly it...You care more because you do have a vested interest...

[Chas]

OK, so it gives the employees more reason to work.

Every company I have ever worked for has done that - by simply reminding me that my paycheck was on the line. Based on how well I performed, I got rasies, or got fired.

At the management level, do the people running the operation make different decisions because they have to answer to shareholders, as opposed to, well, shareholders?

Who is "Wall Street?" I am. I own stock in various companies, so I darn well expect them to perform, or I'll dump the stock. As an employee, do I have that option?

Just some thoughts. I hear a lot of 'employee owned' stories, and I guess I just don't get how it makes the company automatically better or worse.

[drewstar]

OK, so it gives the employees more reason to work.

Every company I have ever worked for has done that - by simply reminding me that my paycheck was on the line. Based on how well I performed, I got rasies, or got fired.

At the management level, do the people running the operation make different decisions because they have to answer to shareholders, as opposed to, well, shareholders?

Who is "Wall Street?" I am. I own stock in various companies, so I darn well expect them to perform, or I'll dump the stock. As an employee, do I have that option?

Just some thoughts. I hear a lot of 'employee owned' stories, and I guess I just don't get how it makes the company automatically better or worse.

I t doens't make it automaticly better or worse, but  many employee owned companies have seen some success when compared to other non employee owend companies in the same industry.

Profit sharing is another great tool.

When someone referes to "Wall Street"  yes, it's a metaphor for the investors.  Sure,  I'd say most of us all are investors via our retirement plans, 401Ks, and other such investment tools.

Publically held companies are legally  respsonsible to act in the best interests of  thier Stock Holders and are controlled by majority share holders that sit on the board of directors.


The main point being:

Many  times,  a stock holders best interests are not  inline with what might be best for the consumer or the employee.

Not always, but sometimes.

[Mendocino101]

Chas

Do you really believe that each and everyone of your employees who are not in family cares about your business in the same way you do....as a small busniess I am sure they care much more so than do most but how many have worked for you and you have shook your head at some of the things they have done that you yourself would never do.....and yes I know memebrs of our family can do the same thing...

Whose Wall street......a small little place in New York.....but they are the reason that some companies have to find a way to save penny here and nickle there....even if it means that by doing so you are shaving down some of the little things that really made your product but hopefully it is things no one will really notice ...like the type of screws used or getting away from braided lines....

[Brewman]

As Drewstar said, it's doesn't automatically do anything (employee ownership).  But what do you think, from a bigger picture perspective, motivates people more-
The potential sharing of the wealth of a successful company, or the threat of termination if you don't succeed.  
If all you get out of a job is a paycheck (and maybe a few benefits) you can get that by just doing enough to get by.  But you may go above and beyond the call (something many employees don't get extra recognition for) if there is some type of reward for your extra efforts.

Now that we're not employee owned anymore, we have instead an incentive compensation plan in place that rewards employees for the same type of work- but we get an annual bonus instead of stock.  
If the company reaches certain benchmarks, laid out to all employees early in the year, a certain amount of money is put into a bonus pool.  This is the base.  As we exceed our benchmarks, more money is added to the pool, and the rate of increase is greater the more we exceed the goals.  
Then the pool is split among the employees and paid out just before the end of the calendar year.  
In order to recieve the pool money, you have to be performing- you just can't "get by".  
This program has been in place since about 1999, and the annual payout for me has never been less than about one months extra pay (on the lowest.)
So far the best has been about 4 months pay.  
Typically it's around 2-3 months pay.  


The founder of our company has written a couple books on the subject of employee ownership and similar concepts, and he tells it WAY better than I can.  

In order for it to work, the leadership of the company has got to believe in it, and so do the employees.