Understanding Impact Business Models: Worker Ownership

Modified on Thu, 15 May at 1:22 PM

What is the intent of the Impact Business Model?

How do I assess my company’s eligibility for this Impact Business Model?

What are some examples of companies that have this impact?

My company may be eligible for this IBM. How do I open this IBM in the B Impact Assessment?

What is the intent of the Impact Business Model?

A worker-owned business model is an alternative structure that empowers workers and dignifies their labor by providing a significant ownership stake. This model promotes a more equitable distribution of wealth by awarding equity to the employees who help generate it, leading to greater job satisfaction, increased productivity, and a stronger sense of community. Beyond these benefits, worker-owned businesses often foster improved employee well-being, contribute to local economic development, and promote more sustainable and just labor practices.

The Worker-Owned Impact Business Model (IBM), found in the Workers Impact Area of the B Impact Assessment, captures the intentional actions of companies to distribute wealth generated from their business and decision-making rights by setting up formal worker governance structures. This IBM looks at the percentage of the company owned by workers and democratic governance of the company.

For companies on the zero-worker track that don’t have the Workers Impact Area, this impact business model is not available.

How do I assess my company’s eligibility for this Impact Business Model?

Companies with the following characteristics or practices may be able to capture their impact in the Worker-Owned IBM:

All employees are eligible to participate in the ownership structure of the company;
More than 40% of company equity is owned by employees, excluding executives and founders.
All tenured employees participate in the employee ownership plan.

What are some examples of companies that have this impact?

The following practices are common examples captured in the Worker-Owned IBM. This is an illustrative, non-exhaustive list of types of impact that can be captured in this IBM:

A worker cooperative that is structured not just to give ownership to employees, but to be democratically governed.
An enterprise that gives all employees the right to buy stock in the company in certain intervals and at specific fixed prices, and 50% of the company's shares are owned by non-executive employees.
A company with an ESOP, or Employee Stock Ownership Plan.

My company may be eligible for this IBM. How do I open this IBM in the B Impact Assessment?

If you are considering opting into this IBM, you will have to answer specific questions about the impact of your business model that will determine which Impact Business Models you see in your BIA. These questions, called gating questions, ensure that you see the content that is most relevant to your company in your assessment.

To open the gating questions for the Worker-Owned IBM, navigate to the Workers Impact Area and search for the questions titled, “Workers Impact Business Model Introduction” which must have the following answer option selected.

If answer option 1 applies, the response “Yes” must be selected for the following questions: “Ownership Eligibility” and “Comprehensive Employee Ownership Plan” (not pictured) to open the Worker-Owned IBM. Any deviation from this will prevent the Worker-Owned IBM from becoming visible in your BIA.

My company may be eligible for this IBM. What supporting information do we need to provide?

Employee ownership plan and related policies.
Sample of membership or ownership agreements.
Documentation, such as an overview of the governance structure, illustrating how employees are enabled to participate in substantive decisions that impact the direction of the company. A company can provide proof that this governance structure operates as designed with meeting minutes, or other documentation of workers' input and decision-making coming to fruition.
A comprehensive list of non-executive company owners (can be anonymized), their role title, the amount and the type of shares owned by each, and the total number of company shares.

Concepts in the B Impact Assessment

Cooperative (Co-op) - Cooperatives are independent enterprises, promoted, owned, and democratically governed by a group of members who have freely joined together to address a specific need or problem, and, in some cases, contribute assets towards addressing that need or problem. Adapted from DFID, 2008.

ESOP - An Employee Stock Ownership Plan (ESOP) enables employees to own stock in the company that employs them. ESOPs are often used as a corporate finance strategy and can be used to align the interests of the employees with the interests of the shareholders. Please note that the term ESOP in the USA is a very clearly defined retirement plan, compatible with the Worker-Owned IBM.

Tenured Worker - An employee who has worked at least one year with the company or, if part-time, worked at least 1000 hours.