Bringing Stakeholder Governance to Life Through Employee Ownership: Insights from Tim Garbinsky of NCEO

​When Tim Garbinsky took a job as a store clerk in Madison, Wisconsin, he didn’t expect it to shape the course of his career. It was a modest role in a local pharmacy, but what stood out was that the business was employee-owned. “It wasn’t like working at your average Walgreens,” he recalls. “There was a real sense of buy-in. Clerks, stockers, and pharmacists were on a more even playing field.” That sense of shared dignity and accountability struck him immediately—not as a written policy, but as a lived culture that shaped daily interactions. It convinced him of the power of ownership to change lives.

Now Communications Director at the National Center for Employee Ownership (NCEO), Tim emphasizes that ownership isn’t just about economics, but about the foundations of community and social stability. “I’ve come to believe that one of the big missing pieces to prosperity and social cohesion is broader ownership: home ownership, community ownership, business ownership, and employee ownership,” he says. “It’s a crucial part of the puzzle, and it has cascading effects across society. It feels shortsighted to talk about issues like violence or crime without recognizing the root cause: people need something they don’t have. Ownership isn’t the only solution, but it’s an essential part of whatever the solution looks like.”

B Lab’s new Purpose & Stakeholder Governance (PSG) Impact Topic addresses the same underlying challenge Tim describes: how to build companies where prosperity is shared and stakeholder voices have real influence. Employee ownership offers one of the clearest ways to put those standards into practice. Models such as worker cooperatives, employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and direct share ownership provide not only mechanisms for distributing wealth but also frameworks for embedding dignity, accountability, and employee voice directly into governance.

The Link Between PSG Standards and Employee Ownership

The Purpose & Stakeholder Governance standards were created to shift business away from shareholder primacy (the idea that a company exists only to maximize profit for its owners) and toward a model in which long-term purpose and accountability to all stakeholders guide decision-making. Rather than asking companies to sign on to lofty values, the standards set out a concrete governance framework that makes stakeholder voice part of how a company actually operates.

The six requirements cover the essentials of responsible governance:

• PSG1. Purpose: Every company must define a positive purpose that extends beyond financial returns and anchors its strategy
• PSG2. Stakeholder Input: Companies need clear processes to consider the perspectives of workers, customers, communities, and the environment in key decisions
• PSG3. Grievance Mechanisms: Stakeholders must have safe and accessible ways to raise concerns, and companies must take responsibility for addressing them
• PSG4. Responsible Communication: Companies are expected to be truthful and balanced in how they talk about their social and environmental impact
• PSG5. Oversight: Leadership must integrate purpose and stakeholder governance into board agendas and executive accountability
• PSG6. Transparency: Companies must regularly share their impact performance publicly, with stronger expectations for larger or more complex organizations

The framework adapts to context: a 15-person startup won’t be expected to meet the same governance bar as a global corporation. Smaller companies might fulfill the standards with simple feedback loops or a basic grievance process, while larger businesses are expected to demonstrate board-level oversight, executive accountability, and robust public reporting.

What makes the PSG standards distinctive is that they don’t prescribe a single way of governing. Instead, they open space for companies to choose structures that fit their size, culture, and sector while still ensuring that purpose and stakeholder accountability are non-negotiable.

This is where employee ownership comes in. By giving workers both a financial stake and a voice in governance, ownership structures like cooperatives, ESOPs, trusts, and direct share programs provide built-in mechanisms for inclusive decision-making, transparency, and long-term accountability. In practice, they give companies a ready-made pathway to fulfill many of the expectations embedded in the PSG framework.

WinCo Foods, a Boise-based grocery chain, ranks near the top of NCEO’s “Employee Ownership 100” list.
Photo: Zoshua Colah

Forms of Employee Ownership (and How They Advance Stakeholder Governance)

Employee ownership isn’t one-size-fits-all. As Tim puts it, “I think of employee ownership as a toolkit. Worker cooperatives, ESOPs, EOTs, direct share programs—each brings different strengths to the table. No single model is perfect, but across them you can usually find the right fit for almost any business.” While each model takes a different approach to distributing ownership and voice, what they all share is a capacity to move stakeholder governance from paper policies into lived culture.

Employee Stock Ownership Plans (ESOPs)

ESOPs are the most common form of employee ownership in the U.S., with around 6,500 companies structured this way. Instead of giving each employee a direct vote, ESOPs create a trust that holds company shares on behalf of workers. Shares are allocated to individual accounts, which grow in value over time as the business succeeds—and employees don’t pay for them out of pocket. “In my ten years, I’ve never met an employee who had to buy in personally,” Tim notes. “It’s truly a benefit earned through labor over time.”

That structure makes ESOPs powerful retirement vehicles. Tim recalls interviewing an electrical manufacturing worker who retired two years early because of his ESOP balance. “You hear stories of 45-year-old grocery clerks with million-dollar retirement accounts. In a country where pensions have disappeared and 401ks depend on employees contributing their own paychecks, ESOPs fill a gap. They make sure people don’t have to keep working into their eighties.”

From a governance perspective, ESOPs connect most directly to PSG5 (oversight) and PSG6 (transparency). Under ERISA law, the trustee is legally bound to act in the best interest of employee-owners, and that duty is enforceable by the Department of Labor, which can investigate violations, sue, and award settlements to employee participants. In practice, this means accountability is not only cultural, but legal. “In a conventional business, an owner might sell if the price feels right. In an ESOP, the trustee has to ask: is selling now truly in employees’ long-term interests?” Tim explains.

Transparency is also built into the structure. By law, ESOP companies must communicate plan details, annual share valuations, and other disclosures employees would never receive in a conventional company. Employees themselves often get to vote on big-picture issues like a potential sale, ensuring their voice is present at defining moments.

The strength of ESOPs lies not only in the wealth they build, but in the guardrails that hold companies accountable. ESOP companies generate more jobs, default less on loans, and are significantly more likely to survive economic downturns than their conventionally owned peers. Together, that makes them both a wealth-building tool and a resilient governance model.

Worker Cooperatives

Worker cooperatives are the oldest and most intuitive form of employee ownership. They follow the principle of “one share, one vote,” giving each worker equal voice in major decisions. For many people, this is the clearest expression of democratic governance.

In the U.S., co-ops are often associated with small, community-based businesses—groceries, cafés, bookstores—but Tim pushes back on the idea that they can’t scale: “One of the largest employee-owned companies in the world, Mondragon in Spain, is a federation of worker-owned businesses with tens of thousands—maybe close to a hundred thousand—people involved. That shows co-ops aren’t just mom-and-pop shops. They can be large, complex enterprises.”

NCEO’s research verifies more than 750 worker co-ops in the U.S., across industries from food service and health care to manufacturing, technology, and design. Structurally, each worker purchases a single share, which grants both ownership and a vote in electing the board of directors. That board oversees strategy and hires professional managers or delegates day-to-day operations, so governance remains democratic without becoming unwieldy.

Because co-ops embed worker and community benefit into their purpose, they resonate with PSG1 (purpose), which requires companies to define a positive mission beyond financial returns. They also connect most directly to PSG2 (stakeholder input). “The business has to look out for what the workers want, because they actually control it,” Tim explains. Day-to-day management is handled by elected boards or professional managers, but strategic direction rests with worker-owners. Tim is quick to add that co-ops aren’t chaotic: “People sometimes think, ‘Oh, everyone makes every decision,’ or ‘I can fire my coworker.’ That’s not how it works. Worker co-ops operate with rules and well-established best practices.”

Unlike ESOPs, co-op shares aren’t designed as retirement assets: workers may still have 401ks, but their share represents voice and accountability more than long-term wealth.

Employee Ownership Trusts (EOTs)

EOTs are relatively new in the U.S. but are the dominant form of employee ownership in the U.K. In this model, the business is owned by a trust that is legally obligated to benefit employees. Unlike co-ops or ESOPs, shares aren’t allocated individually; instead, the trust itself owns the business, and employees typically benefit through profit-sharing and retirement plans.

Because the trust’s governing documents can be written with employee wellbeing at the center, EOTs often have the strongest tie to PSG1 (purpose) and PSG5 (oversight). “The idea is that if you want to say no to a sale, you can,” Tim explains. “The trust can decide to keep the company rooted in the community and jobs in place, because the purpose isn’t just maximizing shareholder value; it’s looking out for employees.”

EOTs don’t fall under ERISA like ESOPs, which means they lack the same regulatory framework but also avoid some of the rigidity. That flexibility makes them attractive to smaller companies seeking affordable ways to embed stakeholder priorities in governance. While there are only around 60 EOTs in the U.S. today, their popularity is growing as more founders look for succession plans that enshrine long-term stewardship rather than short-term exit value.

Direct Share Ownership

The simplest model is direct share ownership, in which employees buy stock directly—sometimes at a discount or over time. This approach is highly flexible: some companies combine it with profit-sharing pools or match employee purchases with stock grants. In some cases, sellers make ownership possible by offering lower prices, seller-financed loans, or allowing employees to use bonuses to buy shares.

Because it relies on employees’ ability and willingness to invest, direct ownership often works best in smaller firms or as part of a gradual succession plan. It can also take the form of equity compensation—such as stock options, purchase plans, or restricted stock—which rarely transfer majority ownership but can build engagement and reward tenure.

Direct ownership can advance PSG2 (stakeholder voice) and PSG6 (transparency), but its effectiveness depends heavily on how widely shares are distributed and whether governance rights are attached. Without those elements, it risks becoming symbolic rather than structural.

As Tim emphasizes, no single model fulfills every PSG requirement on its own. Worker co-ops excel in democratic governance, ESOPs in wealth-building and accountability, EOTs in purpose and stewardship, and direct share programs in flexibility. “There isn’t a silver bullet,” he explains. “But each model fulfills at least some of the standards, and often several, in significant ways.”

The result is a toolkit that companies of any size or sector can draw from. And unlike policies that can be rewritten or values statements that can fade, these structures embed stakeholder governance into the bones of a business, making it durable, cultural, and lived every day.

For Tim, that’s the heart of it: “If you looked at the PSG standards and asked which form of employee ownership fulfills them all, the answer is none. But together they prove a larger point: we can structure our economy to work for the majority.”

Cultural Dimensions of Employee Ownership

Structures like co-ops, ESOPs, and trusts define how ownership is distributed, but the Purpose & Stakeholder Governance Impact Topic reminds us that governance is as much about culture as it is about mechanics. The most successful employee-owned companies don’t stop at formal structures; they create environments in which transparency, accountability, and respect are everyday practices.

As Tim explains, even in ESOPs, which tend to be more traditionally hierarchical, culture shifts the dynamic: “There’s recognition that a C-suite executive doesn’t know how to run a lathing machine better than the operator does. So the question becomes: how can leadership support employees to do their jobs more effectively, enjoy them more, and ultimately build retirement value?”

That spirit shows up in practices like open-book management. SRC Manufacturing, for instance, is famous for its “huddles,” where employees gather in small groups to review financial performance, understand what drives the numbers, and identify ways to improve. “The point isn’t to assign blame,” Tim explains. “It’s to ask: what’s my role in improving this? How does my team contribute?” These conversations transform financial literacy into shared responsibility, building the kind of engagement the PSG standards call for.

Other companies take a similar approach by forming culture committees or cross-functional working groups that give employees a say in how the organization operates day-to-day. As Tim puts it: “The best companies don’t just comply with what the law requires. They go above and beyond to show employees they’re being listened to—and when the answer is no, they explain why. We’re talking real feedback loops, with leadership closing the loop so employees understand how their voices factored into the decision. That builds trust.”

For Tim, these examples underline a broader truth: equity and agency are inherent to employee ownership. Ownership structures may begin with legal frameworks, but they only come to life when paired with practices that make every employee feel like their voice matters.

Choosing the Right Path

Employee ownership isn’t about finding a perfect model; it’s about finding the right fit. Each of the four options carries distinct governance structures, costs, and cultural implications. The question is less “which is best?” and more “which aligns with our company’s size, sector, and long-term goals?”

Tim often begins with fundamentals. “When I sit down with a company that isn’t yet employee-owned, my first step is to understand who they are. What’s their profile? What motivates the owner? Are they seeking a quick sale, or are they looking to create a lasting benefit for employees and the community?” A retiring founder who wants to preserve jobs might lean toward a trust, while a mid-sized manufacturer aiming to build retirement security could be a strong fit for an ESOP. By contrast, an ESOP may not make sense for a small community bookstore, which lacks the margins and scale to support the structure. And while a worker co-op might thrive in that context, it likely wouldn’t suit a 500-person industrial manufacturer.

That’s where the NCEO’s comparison work comes in: spelling out tradeoffs across employee ownership models. Each model has its strengths—co-ops emphasize voice, ESOPs wealth, trusts stewardship, and direct share programs flexibility—but the point isn’t to rank them. It’s to show that there’s always a viable path to embedding stakeholder governance.

Learn more about B Lab’s updated Purpose & Stakeholder Governance Standard by visiting our PSG Impact Topic overview page.

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