For all the positive attributes to employee ownership, there are some obvious and often unconsidered drawbacks
Employee ownership plans can attract and retain talent, increase engagement, and incentivize productivity. However, drawbacks include potential cash flow issues due to share repurchasing obligations and difficulties in dismissing employee shareholders due to high dismissal costs. Clear shareholder agreements are crucial to avoid significant wrongful dismissal damages. Some companies are structuring ownership plans to mitigate these risks, such as linking benefits to shareholder status rather than employee status.
