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ESOP Summer School 19: Project Equity's Hilary Abell

Welcome to our third annual EO/ESOP Podcast Summer School series. We've selected some of our favorite episodes over the past year to bring you all summer long. We're going to spend the summer catching our breath and recharging our batteries. We're also going to be wearing masks and practicing social distancing.

In this episode, we talked to Project Equity co-founder Hilary Abell. She describes Project Equity's work to mainstream EO as well as an important new white paper she authored, The Case for Employee Ownership.

The ESOP Podcast is licensed under a CC BY-NC-ND Creative Commons License. It is easy to receive your own copy of The Case for Employee Ownership. You can download an executive summary and sign up to be alerted when the full paper is released at Project Equity's website, here.

You can hear the original May 26, 2020 release of this episode in Episode 113: Project Equity's Hilary Abell.


Summer School 19 Transcript

Bret Keisling: Welcome to our third annual EO/ESOP Podcast Summer School. We've selected some of our favorite episodes over the past year to bring you all summer long. We're going to spend the summer catching our breath and recharging our batteries. We're also going to be wearing masks and practicing social distancing. I hope you will too. Join us for new content each Friday throughout the summer on the ESOP Mini-cast. You can support our work by subscribing or following us wherever you get your podcasts. Enjoy the episode.

Bitsy McCann: Welcome to The EO Podcast where we amplify and celebrate all forms of employee ownership.

Bret Keisling: Hello, my friends. Thank you for listening. My name is Bret Keisling and as it says on my business cards, I'm a passionate advocate for employee ownership. I'm pleased to bring you this conversation with Hilary Abell, who's a cofounder of Project Equity. Project Equity is a national nonprofit organization devoted to growing employee ownership. They work with governments, foundations, other nonprofits, and businesses looking to mainstream all forms of employee ownership.

Bret Keisling: Last week in Episode 112 of the podcast, I was joined by Alison Lingane, who is Hilary's cofounder of Project Equity. You can find Episode 112 as well as all of our archived episodes at In this episode, Hilary describes her path to becoming an EO advocate and practitioner and she'll share details of a new white paper she authored, which hopes to bring much of the empirical data that supports employee ownership into a single resource. At the end of the episode, I'll tell you how you can get a copy of the white paper. And now here's my conversation with Hilary Abell

Bret Keisling: Hilary, how are you today?

Hilary Abell: Very well. Thanks. Bret happy to be with you.

Bret Keisling: Well, thank you for coming on and you sharing your story and Project Equity with our listeners. We did in last week's podcast feature an interview with your cofounder Alison Lingane. It's a pleasure for me to now follow up and have a second conversation with you, Hilary, because you and Alison both have great stories. You went to some sort of guidance counselor in sixth grade and they said you were destined to be an employee ownership advocate? And your life has played out perfectly...

Hilary Abell: [Laughter.] Of course!

Bret Keisling: Why don't you tell us how'd you find yourself with Project Equity?

Hilary Abell: It has been a really interesting journey and has been the culmination of work I've done over many years, but I was not expecting to become an employee ownership advocate and practitioner. In fact, it was the experience of being an employee owner that turned me on to it. And that was, gosh, almost 30 years ago now. Not quite. But when I was in my early and mid twenties, I had the wonderful experience of being a worker owner at a company called Equal Exchange. And I landed there not because I was planning to go into business and to sell coffee, which was part of what I did there, but rather because I was really interested in human rights. I had done some work with issues in Latin America and was very fascinated by that reason. And Equal Exchange was selling fair trade coffee from small farmer cooperatives in Latin America.

Hilary Abell: So I ended up at Equal Exchange in my early twenties and had an incredible experience there, not only learning that business can be a tool for social change and business can make the world a better place and in fact without business doing that, there's no way we'll ever get to the society that I hope we can have. But I also was personally very empowered by the experience of being an employee owner. And part of that was getting elected to the board of directors by my peers and being able to help set business strategy even though I was someone who was new to the business world and was learning from my coworkers and leaders of the company as well as from outside board members who were not employee owners, but brought critical skill to the board.

Hilary Abell: And in fact one of them was an early leader of what we now call the impact investor movement. She's a nun from the Adrian Dominican sisters who are some of the first to invest in companies that could make the world better. And another was an early leader of the triple bottom line business movement, that's Stonyfield Yogurt. So needless to say, I learned a lot from both of them. I loved learning about governance and setting business strategy.

Hilary Abell: And then on the, on the sort of compensation and profit sharing side, you know, five years after being there, I moved on for personal reasons and had a nest egg from my, you know, my employee ownership stake in the company and it was paying off student debt and that kind of thing. So probably wouldn't have had that otherwise. So also experienced a little bit of that asset building and wealth building potential that is so important in employee ownership.

Hilary Abell: You know, another part of it was that part of my job was selling coffee and another part of my job was what we called producer relations. And I got to visit farmer cooperatives that were made up of very small scale farmers, independent family farmers in several countries, Peru, Colombia and El Salvador. And these farmers were organized into cooperatives. It was a shared ownership model for small farmers. And because they were part of a cooperative, they were able to gain more control over the whole value chain that their coffee was part of. So, rather than selling to a middleman, who sells to another middleman, who sells to another middleman, and there's profit going into all those layers, leaving very little for the farmer, which was pretty, pretty typical in international commodities. And even, you know, even in farming in the U S in many cases, these farmers were able to sell through their own cooperative, which was a business that they co owned. And then through the fair trade model, they were able to sell directly to an international buyer, equal exchange and then to others. And what did they do with that profit?

Hilary Abell: So I got to visit the farms, get to know some of the families and the leaders of these businesses. And what they were doing with that profit was, you know, number one, buying shoes and books for their kids so that their kids could be better educated. Number two, they were creating health clinics and other community development institutions. And number three, they were also improving their businesses. So they were doing things like building coffee processing plants. So not only could they export directly, but they could process their own coffee and get that part of the, of the value of their product as well.

Hilary Abell: So not only did I love being an employee owner myself, but I also got to see how shared ownership in a farmer cooperative and the link between companies that all share ownership with their stakeholders. So with Equal Exchange connecting to the farmer cooperatives that the wealth that was generated by the work we all did was shared more broadly and it meant better communities for everybody. So that's what's kept me passionate about this many, many years later. And eventually led to my prior role and then to Project Equity.

Bret Keisling: It's fascinating because it also could have led to a career -- and I'm not being smart -- but in coffee sales. You know, you could have stayed an mastered that, you know, there are so many different different paths that you could have taken.

Hilary Abell: Yes.

Bret Keisling: What I find very interesting, as you saw firsthand, when you talk about treating employees equitably through employee ownership or otherwise, and you talk about the farmers and the employees of the sellers being able to share in the wealth that is created, it is important that you've drawn the connection to and all of the good that comes with it as a result of it. So obviously it was a successful business model, you know, very broadly speaking, but it's a business model that has tangible good results, not just for the employees, not just for the farmers, but the communities as a whole. I mean that's wonderful.

Hilary Abell: That's right. Yeah. You really hit the nail on the head with that summary, Bret. Absolutely.

Bret Keisling: So at some point there was a MBA, that was minding her own business named Alison Lingane...

Hilary Abell: [Laughter.] Yes.

Bret Keisling: And she somehow connected with you and she has said that you turned her on to employee ownership. So I guess that would bring to the formation of Project Equity, but where were you and what led to Project Equity getting started?

Hilary Abell: When I met Alison, I was the executive director of another nonprofit that at the time was called WAGES - and that stands for Women's Action to Gain Economic Security. So we were working with low income women in the San Francisco Bay area, helping them form employee owned companies. And so that was when I met Alison. And what was so impactful to me about the work that we did at that organization during the eight years that I was there was that we, I knew the women we were working with pretty closely, it was a relatively small organization. So I saw the effect on them individually and on their families, really up close. So I saw, you know, women start to, in some cases become the primary breadwinners in their families, start to speak up more in their families and communities and have that sense of agency and empowerment that can come with an ownership stake.

Hilary Abell: And we also collected a lot of data about the economic impact on the individual women and also on their families. So we were able to really understand the impact of employee ownership on these women at a very granular level, financially speaking, and not only were their individual incomes doubling and tripling in many cases because they were working full time, these were home cleaning businesses, so they had more control over their schedules. They, the company was committed to giving everybody full time work, which they did. They also had health insurance for the first time and when we looked at the impact on their household income, the first year that we measured it, my first year at that organization, the household incomes increased 40% from before the women had joined these cooperatives to one or two years later. So I was pretty blown away by that. You know, I don't know if you've ever had the experience of your family income increasing by 40% but I think few of us have, and if we have, it's been pretty, pretty exciting. Even better than that.

Bret Keisling: Sure, absolutely.

Hilary Abell: Yeah. Yeah. And even even better than that, we kept measuring it year after year and about eight or nine years later, that average increase in family income was actually up to 80%. So that was even more exciting.

Hilary Abell: And so back to meeting Alison and starting Project Equity for me, the Hilary part of that, was that knowing that the impact was both personally, professionally and financially very powerful for these women. I was very interested in scaling up that impact not only for the, the Latino women we were working with in the San Francisco Bay area, but for other, other kinds of low and middle wage workers locally and around the country. And so I knew that powerful impact was possible, but I didn't know very much about how to scale it. You know, we worked on a strategic plan and we did all kinds of things and we did grow the organization. But one of the things that I loved when I met Alison was the shared sense of mission and what we were both hoping to see in the world in terms of how our economy could better serve everyone who's part of it, but also that she had worked for larger scale and really scale oriented mission driven companies.

Hilary Abell: When part of the light bulb that went off, when we decided to start Project Equity was that we realized that I was bringing a lot of in the trenches work really hands on work of developing employee owned companies, the ones we did in my prior organization were actually startups, and Alison was bringing this amazing experience with taking organizations to scale. So that combination, you know, sort of being two sides of the coin, if you will, or two parts of a yin and a yang or however you want to think of it, was part of the inspiration for us to try to do something together.

Bret Keisling: Am I right Projects Equity was started in 2006?

Hilary Abell: Actually, no. We launched in 2014 officially, so we're six years old now and Alison and I were sort of scheming and you know, working, working without pay before that for a couple of years.

Bret Keisling: In Alison's podcast she talked a little bit about working with the local governments and working out with businesses. What role do you see Project Equity doing the most good, doing the most help to promote employee ownership?

Hilary Abell: We see ourselves as both practitioners of employee ownership and experts in helping companies understand the opportunity that employee ownership presents and also taking them from the assessment stage all the way through to the execution of an employee ownership transition and even post-transition support. So we have a client services team that supports companies for two years after the transition happens so that they can practice open book management, that they can practice - build - an ownership culture, that they can have healthy democratic governance in the cooperative businesses we work with and in the ESOPs where they may have employees participating on the board or cast or voting for certain issues, making sure that those things are done really well and that employee owners are understanding the finances of their company and what it means to be an employee owner.

Hilary Abell: So on the one hand we are practitioners would be the word that I use because we believe that we need more employee ownership in this country in order for it to become more normal, more common and easier to do. So part of our organization is doing it, actually helping companies transition. And then the other part of our organization is, is creating demand and helping to build a field, a broader field of employee ownership where many kinds of stakeholders will support the work and working with government partners at the local level. We're starting more now in the context of COVID-19 and the need to have resilient business models like employee ownership really featured strongly in the recovery and in the economy that comes next. We're starting to do more more talking to policymakers and engage in government at the state level and national level along with others in the employee ownership movement.

Hilary Abell: So yes, we see ourselves engaging stakeholders across the spectrum to create a world, a country I should say, where economic development happens in part through employee ownership and where models that create more good for employees, for businesses, and for society are really held up by those who share that goal.

Bret Keisling: I understand you also put a lot of your attention on foundations and funding sources. Is that educational? How do you work with them to support what you're trying to do?

Hilary Abell: It is educational and it's also a fundamental part of Project Equity's revenue stream. So we are a nonprofit and we do get fees and revenue from the companies that we work with. Yet much of our budget actually is funded by foundations because our work matches so nicely with priorities that they have around things like inclusive economies, family economic success, racial equity, asset building, things like that. Being a nonprofit enables us to do things that we hope foundations will do with many other nonprofits around the country, which is to support the mainstreaming of employee ownership, to change the narrative about who workers are and what they can do and how they can share in ownership to create demand for employee ownership. And then also to support the transition of successful companies that employ low and middle wage workers, which is where Project Equity focuses. Many of those are able to fully pay for the transition themselves because they're strong companies. Some have lower margins and may need need some help with say the post-transaction support or just enabling organizations like Project Equity to build up the programs that can then help companies succeed.

Hilary Abell: And there's also long term capacity building for the field and for employee owners, especially those that are lower income. And finally, there are startup employee owned companies that, if they're based on proven success factors, they generally you know, could really benefit from philanthropic support. So we're working with foundations, major donors, and corporate funders as well to create more of a, it's also risk capital would be a good way to say it, you know, to create more risk capital and to create more of that R&D capital for the employee ownership movement as we work to scale it.

Bret Keisling: One of the things that it seems to me that you're doing that I haven't heard before and your emphasis on employee ownership is spot on. The potential businesses that you'll work with. Again, you know, a lot of baby boomers retiring and that sort of thing and that's spot on. But I love the interplay between the foundations and drawing that connection between employee ownership, again, being at least a partial solution for what the foundations are looking for. And it seems to me that will help you with kind of the grassroots, putting employee ownership on the foundation's radar is in many ways as important as a successful transaction.

Hilary Abell: I really agree with that. Bret. The reason we have focused Project Equity both on, on working on transactions and on engaging stakeholders like government, like foundations, like business, the business support ecosystem that is not yet engaged in employee ownership is that we see both as very necessary.

Hilary Abell: So our on the ground practice with converting companies is really critical for our ability to promote the right approaches, to do the education with other stakeholders. And then our ability to work with those stakeholders is -- without that we couldn't, couldn't scale this work. And Project Equity's origins, as you know, has always been grounded in the knowledge that employee ownership is powerful for low and middle age workers, as both a quality job and a wealth building strategy and that therefore we want to scale it and we can't scale it without partners of all kinds all over the country.

Bret Keisling: And the funny thing is, is obviously the focus for very understandable reasons is on wages, but there is so much else that goes along with it. I was a CEO for two and a half years of a 100% ESOP. And one of the first things I did, and this goes back 10 or 11 years, one of the first things that I had done when I joined the company, and it was right after it became an ESOP, was reviewed and revised the time off policies of the company.

Bret Keisling: In the past, the company had specific sick days and personal days and that kind of thing. And we moved really quickly to just paid time off. And I remember thinking at the time, and I still very strongly believe it, that if a service technicians, fourth grade child had a chorus concert, I wanted the service technician to go to the chorus concert and not have to make up some excuse at work. You know, so the policies that come in in other words, kind of what my approach has been coming to employee ownership from kind of the corporate and transactional side is I've been fortunate enough to have positions in my career that afforded me certain benefits and things that I could do -- like to going to my kid's concert concerts and that sort of thing -- I just wanted all of the employees to have it.

Bret Keisling: So that ties into the culture and, and the policies that you work with the companies to make sure that they're functioning well. And the other point that has driven home to me, Hilary, if I may, and I say this with a little bit of humility, when my kids were in junior high and high school and they're both in their twenties now I go to open houses at schools and I would take notice of the fact of how many parents weren't at open houses to meet the teachers and orientation and that kind of thing. And now I happen to be at a point in my life where I've spent much of the five years traveling extensively as part of my job. And as a result, my friends are often in the service industry and I've come to understand that if you work in a restaurant and you're not given your schedule until a Monday, you don't have any chance to go to your kid's thing cause there's, there's no provision for it.

Bret Keisling: So are these kind of the broader life quality things that are important to you?

Hilary Abell: Absolutely. Absolutely. I love your story about, about PTO and the company you ran as CEO. One of the things that I call out in this white paper we'll be publishing soon, called "The Case for Employee Ownership" is that flexible scheduling, you know, the quality of jobs and flexible scheduling is such a critical job quality component. I love your restaurant example and I'll tell a story of one of the employee owners I've worked with closely at Project Equity. Her name is Sarah Vegas and she worked in the restaurant industry for many years. She had gone to culinary school, she was very serious about her career in the restaurant industry and just loved it. But she has some horror stories like showing up to work one day and the restaurant actually just being closed with a note on the door saying, " Sorry, we're out of business. See you later." So no notice. No, you know, no severance pay, nothing. And also she, Sarah is a single mom, so working kind of late hours and the variable hours in a restaurant was really challenging. We met her when she was an employee at Niles Pie Company, which is a bakery and they weren't yet employee owned. We helped them through their transition. But Sarah had sought out Niles Pie because of being a single mother and wanting more stable hours. And she became a leader in the transition to employee ownership. She's now on the board of directors. And in addition to being the kitchen manager, she was one of the employee owner leaders. And she tells the story of getting profit sharing for the first time, and in a cooperative it is called patronage, and when she received those, that profit, it was the first time she'd received a check of, you know, many thousands of dollars.

Hilary Abell: And she said, wow, now I have a nest egg. And she talked to her son about it and she said, you had to sacrifice too for me to become a business owner, together with the other employee owners in my company, and I'm going to give you a little piece of this and you can decide what to do with it. And then we're going to put the rest away as our first family nest egg. So that's an example of the security that, that Sarah being in the food service industry has gotten through the cooperative. And you mentioned service industries more broadly. I certainly saw it in the home cleaning businesses that I worked with in my, in my prior role where to run a good business you're able to, you have to find that balance of you know, doing right by the employees and making the business work as a business. Because without that, it doesn't work for anybody, including in employee on companies of course. But I think employee on companies do a really good job of balancing those needs.

Hilary Abell: So what we did in these home cleaning businesses was in conversation with the worker owners and they helped to define these policies. We would require a certain number of hours a day for each employee to be available for us to schedule their jobs with clients. We also scheduled every other Thursday morning we didn't have client jobs out in the field because we wanted the employee owners to be together for training and for whatever input they were giving to board level decisions. And, but once we had set the basic parameters of people's broad availability, there was a choice they could make between how early they wanted to start. So that if they wanted to drop their kids off at school, they could take the 9:00 AM start time. Or if they wanted to, they had someone else that could do that and they wanted to start at seven so they could be home by three thirty or four, whatever that time was, they can make that choice.

Hilary Abell: So we've seen that in many, many employee owned companies, and I think that's a very powerful, powerful benefit.

Bret Keisling: There are a lot of good social policy reasons to treat your employees well or your employee owners. But in my experience, it's also really good business. It is not, you know, how do we treat the employees well and we're going to run out of money. It's a function of -- Sarah, who you referenced with Niles -- boy, I imagine she goes to work each day with a little more spring in her step, a little happier than a colleague who isn't an employee owner because she's part of something. It's what you want. What I want. Turns out everybody wants the same thing and this is a great path forward. One of the things that I'm curious about, and it's because I came from ESOP world where next to impossible to have a startup ESOP as you know, it just would be very difficult for a trustee to approve something that's too speculative with all of the ESOP oversight.

Hilary Abell: Mm hm.

Bret Keisling: So I don't have a whole lot of firsthand experience about somebody who would look to start a coop or collective, you know, a smaller business. You mentioned it can be done if it's built on criteria. I imagine co-op's you know, restaurants you've talked about or food processors, that sort of thing. Can you talk a little bit about somebody who might want to start a business and want to look at it being employee owned from the beginning?

Hilary Abell: Sure. We have certainly seen a lot of entrepreneurs come together with other entrepreneurs and start something in an employee owned model. Namasté Solar is a wonderful example of that. They later became what they call an employee owned cooperative, but they started as a solar company - design, installation. They were started by several engineers who had worked for another company, or companies, and wanted to do it differently. They wanted to create a better culture. And so they kind of knew about stock options and that kind of thing. But they didn't know about cooperatives. I don't know whether they knew about ESOPs but it wouldn't have fit anyway because it was a startup. So they started with kind of a self-made format and then they later found out about the cooperative format and migrated over to that. So they're a great example. And essentially their origin story was people who wanted to do something different and wanted to do it together.

Hilary Abell: Then there's folks who -- you can also have an entrepreneur who starts a company, gets it going and just includes people in decision making and in profit sharing but is still sort of the entrepreneurial leader of the company. And there are people who are able to balance the shared ownership together with that kind of sole entrepreneur talent and persona that a lot of people who start businesses have. The other model that I'm most familiar with that we did in my prior nonprofit was for a nonprofit to start a worker cooperative or could be done with another approach to employee ownership as well, employee ownership trusts are another interesting model when you have sort of a mission orientation to the business.

Hilary Abell: And the way that we did it was the nonprofit work kind of took the role of the entrepreneur, if you will. So we did the business plan, we knew the industry we were working in and we provided management. It's not entirely dissimilar from a venture capitalist model to be honest. Or a private equity model where another entity is running the company for a period of time. So we called it an incubation model and the nonprofit provided management that we knew we could support and that would be able to do the management function. And if they couldn't, we would figure out what to do about that. We also had a training program for the worker owners, not only in their frontline jobs but also in what it meant to be a worker owner, how to serve on the board of directors, all of that. And we played a role in governance. So I chaired the board for example, of two of the companies we started for the first year or two and then transitioned in another board chair.

Hilary Abell: So it's really the best practice that we see, especially for those who are wanting to create better jobs and sustainable employee owned company for folks who have a lot of barriers or haven't had that opportunity before. Some of the best practices we put in place were to make a long term commitment to that development, not just to train people and then expect it to all run smoothly from there. And also to support participatory management that could work with worker owners and their voice and their role on the board, which is not a typical startup situation for most for most entrepreneurs.

Bret Keisling: Sure.

Hilary Abell: And then also to mentor the governance. And we did the outside direct role and actually had control of the board for the first couple of years until the board and the company were really doing well.

Bret Keisling: That is really cool. That's a very cool approach and it's one of the advantages that someone like Project Equity can do and you're set up that a traditional business advisor wouldn't necessarily cover that breadth of stuff. That's a very all inclusive approach. That's great.

Hilary Abell: That's right. And it does carry over to the transition work that Project Equity does. We don't actually work on startups at Project Equity except for a rare, a rare project here and there. But that model of holistic long term support is very much core to our transition services and what we call our thrive program, which is the post-transition support for the companies we work with.

Bret Keisling: This might be a little bit out of left field, but one of the realities of the pandemic is that there is going to be, reshuffling of the business world in ways that I think all we understand is we really don't understand what's coming next and how this is going to play out. And I'm not pleased when I hear of any business or business structure facing challenges or that sort of thing. As we're going through this in real time, I think we're kind of all in this together.

Bret Keisling: But one of the things that I think is really interesting is the gig economy. And obviously there are challenges with Uber, Lyft where people are not moving around so much. Airbnb is in trouble for a lot of different ways and even companies that are doing well, Grubhub, UberEATS are not without a huge slew of controversy. I'm comfortable with the gig economy, but Uber and Lyft and Grubhub and whatnot seems to me would so benefit under an employee ownership model. Would there be a good opportunity to find a way to get employee ownership to have a stronger role in the gig economy? Too early to tell or -- and it maybe outside of your realm?

Hilary Abell: Yeah, it is outside of my realm but I'm happy to share some thoughts on it. And I do think it's too early to tell and I'm grateful for the folks who are working on it. I just just received something in my inbox this morning about a course that's being offered through The New School for Social Research together with Mondragon University in Spain, which you may know Mondragon is the largest worker cooperative conglomerate in the world and I imagine one of the largest employee owned companies in the world as well, working on gig economy and what they call platform platform cooperatives. And I know there's a number of folks who've been both talking about this and working on some kind of early business models to get, get some gig economy cooperatives going. I agree with you. It is a growing part of the economy. I think that we sometimes, because it is growing so much and it gets so much attention, we sometimes think it's a bigger part of the economy than it actually is. It's still, you know, the vast majority of workers are still employees of companies.

Hilary Abell: At the same time, it's only going to keep growing. And I do believe that solutions to it are really important. One thing I'll mention is that the whole staffing industry is kind of, overlaps a lot with the gig economy. You know, when I was a teenager, I remember being a Kelly girl and going to temp in an office. And so I understood staffing to be temporary work, but it actually no longer is. A huge portion of some of the big name tech companies, for example, in our daily lives, like Google are actually sourced by, through staffing companies and by gig workers not by regular employees, even at those large corporations and the staffing world intersects with all industries, as I understand it.

Hilary Abell: There are a couple of interesting companies. There's one called Turning Basin Labs and another one called Oberon which started in the staffing industry and have or are in the staffing industry and have kind of cooperative ownership models within that. And those are very early stage and I think they will be developing some important lessons for us all to learn from.

Hilary Abell: The other thing I'll say about it is that part of what is so inspiring and beneficial about employee ownership to me is that it balances the interest of stakeholders. So you still have management and management has it's responsibility and authority and you have in employee owners and they have their responsibility and their roles well defined and you have, you can also have outside investors. I think part of where our economy has gotten so thrown off and where the wealth gap you know, between the set of folks at the top and the folks at the bottom of the economic spectrum and the diminishing middle class as well as the racial wealth gap, which is a real problem for everybody no matter what race you are. That has been driven by a lot by the outsized emphasis on the financial investors, I think in these companies. And then the priorities have gotten out of balance. So I think that that's one of the challenges in the platform economy or in the gig economy is that these big companies have, you know, they're very heavy on capital and I don't know anything about the roles of the investors. I'm not speaking to that specifically. I'm just saying they're very, very capital intensive. So I think that'll be one of the challenges for the gig economy as it looks to employee ownership and potentially to cooperative models as well. But I think those are challenges we can solve. And I think there's a lot of interest in the investor world and supporting better business models and having maybe fewer of their bets or fewer of their bets fail and more of their bet pay off, and I think that's part of what employee ownership can bring.

Bret Keisling: I think one of the challenges just in my view is that the investor world, and you had mentioned private equity earlier, they need to understand that for employee ownership to be successful it's not how much money can be driven out of the company to the investor, but rather how much money stays in the company. And so for me, the, you know, what we hear about is the you know, old school Wall Street financiers who go in and strip and sell off and that sort of thing. Until a lot of that attitude changes, it's just not conducive to what employee ownership is. So that's a challenge. You know, obviously the time will tell and see how it plays out.

Bret Keisling: You had mentioned the white paper and then I had actually switched this back. I know you've been working on it for quite a bit. But can you share the highlights? What do you hope people get out of the white paper? What you hope to do with it or what you will.

Hilary Abell: The title of the paper is "The Case for Employee Ownership: Why philanthropy and government should invest in this powerful business model." So my hope is that it will be a resource and a really powerful tool for employee ownership advocates or even people just curious about it to learn about it and to engage, especially philanthropy and government and advancing employee ownership. Because we feel that those are two sectors that if they really get get on board or I'll say when they get really get on board, I think we can build this movement so much faster and better. And one of the things that's unique about this paper, there's so many good research publications that have been done in organizations like the National Center for Employee Ownership who are doing an amazing job of kind of curating that research coming out of the ESOP sector. There's also really great anecdotal evidence and some very good studies coming out of the cooperative sector as well. But nobody that I know of has put together the evidence base from both the worker cooperative field and the ESOP sector into one place. And to us, we believe in broad based employee ownership, regardless of what format it takes. We know it has incredible benefits. So what I wanted to do here was put it all in one place. I really wanted to answer the question of that some of our funders were asking us around along the lines of, you know, are these isolated cases? We can see that this is powerful for some businesses and some workers, but are these isolated cases? Does the conversion strategy really work? Why should we invest in this?

Hilary Abell: And what I thought I was going to find was that we needed more data. And what I actually found is that there's plenty of data both from the ESOP space and from the worker cooperative fields. So what I wanted to do was get that question of whether it works out of the way and have one place that anyone talking to someone who could make a difference for employee ownership, who is asking these questions about how it works - meaning, what kind of impact does it have for individual employees, for businesses and for communities. Folks wanting to understand the answer to that question could really go to one place instead of having to, you know, it takes a special kind of person to really go and read all the studies and go to 20 different websites and some people do that, but there's so many more of us who I think if we can have one, one thing we can read that can answer that question, then we can really focus on creating more of it.

Hilary Abell: So that's the goal of the paper, to make it clear that there's plenty of evidence that it works. And then to get us all moving to a conversation about how we can grow employee ownership faster.

Bret Keisling: That is so important and very sincerely. Thank you. And I say that as somebody who tries to stay up to speed on employee ownership as best I can, it really is all that I do. And one of the things that frustrates me on occasion is we all hear the anecdotes but sometimes the actual data shifts a little bit. And there are certain things that for me are been a little bit tough to quantify or understand, and it ties in broadly with why isn't employee ownership more broadly adopted. But for example, when Louis Kelso wrote one of his seminal books on employee ownership and ESOPs in 1996 he referenced there are, there were 6,800 ESOPs at that time in '96. An The ESOP Association their data in the fall said 6,200.

Bret Keisling: And so I have conversations with people like you and all the time about, wow, this really is the good stuff. You know, employee ownership just is really solid on lots of reasons, but we've dropped 10%, you know, in 25 years. So it's overcoming that battle and I think having a concise resource and putting the argument together will be an important resource for all of us in employee ownership. I really appreciate your having that. I think it's going to be important.

Hilary Abell: I hope so. I hope so. And let me just add Bret, that there's, there's also an organization called the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers School of Management and Labor Relations and they have a hundred plus research fellows at this point. So I think there will be more good research coming out all the time. My paper won't capture it all, but I do hope it will be that tool that you're speaking to. and other organizations like NCEO and the Democracy at Work Institute are building up their research programs so we can just keep proving the case and then keep getting that information out there.

Bret Keisling: You mentioned directing the white paper hoping to put it in front of philanthropies and I find that very interesting and I just, what is the goal of the philanthropies? Would they fund education? Would they fund transactions? Would it be everything? But in terms of the philanthropic organizations you hope to educate or attract, what's the goal with that?

Hilary Abell: The goal is to get more of them engaged with employee ownership to support, as you say, education is the part that's really hard to fund. So because for example, in the transition and employee ownership transitions, most of the companies that we and others work with can afford to pay for the services and the professionals who are getting them through these transitions. I think there is a need for R&D around making the transition less expensive and faster or easier in some ways. And foundations can help to fund kind of the new product and service development by folks who work on those deals. But the hardest part to fund is really the education of business owners, of the trusted advisors that business owners, of capital providers. Really what we in the nonprofit space sometimes call field building, but in the business it will be, would say the building of demand. And then the other part would be to get foundations and corporate funders more involved in supporting the success of these models of employee ownership with low and middle wage workers especially. And sometimes that does really benefit from a deeper level of capacity building that not all companies will be able to provide for their employee owners. So that's the other place that we'd like to see more philanthropic capital engaged.

Bret Keisling: I love throughout this conversation, Hilary, you've talked about some things that again are not necessarily new, I've heard them talked about, I've talked about them myself, but you're connecting the dots in a way that I hadn't heard discussed before. And that gives you a lot of credit, because a lot of us are trying to get the word out and you've actually you know, I started doing a podcast to get the word out. You've come with very specific approaches that I think are going to do just a great job. So, so that's very exciting.

Hilary Abell: Thank you. I hope so. And that's really, really good to hear. I think there's so much, so much interest in employee ownership, especially since the Great Recession. I've certainly seen, I've been involved in this work going back to my twenties when I was originally an employee owner. But it really, really is my full time focus since 2003 and definitely seen an uptick since the Great Recession. And our hope is really that this time is a time when we can build it in, in a much more mainstream way into the recovery and into building an economy that's more resilient. And I'd love to actually just share a couple of final data points that are really relevant to today.

Bret Keisling: Sure.

Hilary Abell: Looking back at the Great Recession a couple of studies were done, one by Doug Kruse and his colleagues, that have indicated that during the Great Recession employee owned companies did much better and employee owners did much better than non-owners who were not in employee owned companies. So the two data points I wanted to share with that, in 2010, at the height of the Great Recession, non-owner employees were almost five times as likely to be laid off as employee owners, almost five times as likely. So employee owners were more likely to keep their jobs.

Hilary Abell: And in addition, it's really interesting to look at research that Corey Rosen did from the National Center for Employee Ownership. And I'll just use one data point from 2010 he showed that the implied federal savings of federal money that didn't have to go to supporting laid off workers was $23 billion for the recession year 2010. So if governments can save billions of dollars, because employee owned companies are not laying off workers or are creating more wealth and more, more sustainability for those workers, I think that this is something that government and and others in our community should get behind.

Bret Keisling: That governments - federal, state, local - will save money. The employee owners will do better. Jobs will stay in the community. I haven't come across a down side specifically to employee ownership outside of the normal business challenges. You know, we always say that employee ownership won't make a bad business a good business, but it can make a good business a great business. But I've never come across, you know, once you get past the, are ESOP transactions too expensive? Depends who you ask or you know how it is. Once you get past stuff like that, employee ownership when it's operating, there just hasn't been a downside to it. You know, at least not one that can't be overcome. Hilary, you're doing very important work and you just seem to be approaching it with compassion and wisdom. I appreciate all of that. Is there anything, by way of closing up, you wish I had asked that I hadn't?

Hilary Abell: We have covered so much! I really appreciate your curiosity and your passion for this and as I've told you, I love the ESOP Podcast and it's so great that you've added it to all the ways that we're reaching out to educate people about employee ownership. So I can't think of anything else and I thank you so much.

Bret Keisling: I appreciate Hilary coming on the podcast. I look forward to sharing more about the great work of Project Equity in the future. If you'd like to get a copy of the white paper, "The Case for Employee Ownership," you can find it at Project Equity's website, which is project hyphen equity dot org backslash white paper. Thank you so much to Hilary Abell and Alison Lingane both for the work they're doing and for coming on the podcast and allowing us to share their stories. If you're doing something interesting and employee ownership or you know someone or some organization that is, please let us know because we'd love to share their stories as well and if I may ask a favor. If you like the work we're doing on the podcast, please subscribe or follow us wherever you get your podcasts and if you're kind enough to retweet or repost when a new episode comes out, I'll be very grateful. Thank you so much for joining me today. My thoughts are with you as we all continue to navigate the unprecedented times brought on by the pandemic, but one thing I'm sure of, we will get through this together. This is Bret Keisling. Have a good day.

Bitsy McCann: We'd love to hear from you! To contact us, find us on Facebook at KEISOP, LLC and on Twitter @ESOPPodcast. To reach Bret, with one "T", email, on LinkedIn at Bret Keisling, and most actively on Twitter at @EO_Bret. Again, that's one "T". This podcast has been produced by The KEISOP Group, technical assistance provided by Third Circle, Inc. and BitsyPlus Design. Original music composed by Max Keisling, archival podcast material edited and produced by Brian Keisling.

Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field and the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement, but if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.

A note on the transcript: This transcript was produced by Temi, an automated transcription service. While it has been reviewed by The ESOP Podcast, we can not guarantee the accuracy of the transcription. Please refer to the original audio when citing sources.


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