Employee-Led Or Employee-Owned: What’s The Difference? 

Employee-owned businesses tend to perform better than non-employee-owned businesses. But, shifting an entire business model toward an employee-owned model may not be feasible. 

In this article, we’ll look at how even without employee ownership, businesses today can create employee-led solutions that make their employees feel a sense of ownership in the company. This, in turn, will lead to a lot of benefits enjoyed by those in employee-owned businesses. 

You’ll also discover the importance of creating organic, employee-generated solutions as opposed to crafting inorganic solutions based on what management thinks employees want.

Employee-Led vs Employee-Owned

Employee-owned organisations are those that give employees an ownership interest in the company that employs them. 

For example, Publix Super Markets is a well-known employee-owned company that employs over 200,000 workers. Each employee earns Publix stock after working for the company for at least 12 months. 

This business model motivates employees to take more accountability for their work. It improves their performance since they have a stake in the company.

Employee-led companies are those that aren’t necessarily owned by the employees but run on employee-led solutions that give workers a sense of ownership in the company. 

These types of businesses are happier and healthier than the majority of their counterparts. Such businesses enjoy many of the benefits you’ll find in employee-owned companies, including:

  • Higher Level of Care: When you are part of an employee-owned company, you’re surrounded by a team of people who think as owners which leads to a higher amount of care from all workers. Even without ownership, employees in employee-led companies feel just as much empowered and in control compared to regular workers who have no stake whatsoever in their business.
  • Greater Sense of Job Security: Employees in an employee-owned or employee-led organisation have been shown to feel a greater sense of job security compared to other workers. 
  • Enhanced Sense of Achievement: They also have a greater sense of achievement from their jobs and will happily recommend their organisation to others as a great place to work.

The image below shows that 80% of employee-owners have a high sense of achievement from their jobs: 

Of course, depending on the type of organisation, there may be tons of other benefits of being an employee leader that are the same ones experienced by employee-owners, including things such as financial transparency, additional retirement, connection to personal finances, and much more.

3 Ways to Create Employee-Generated Solutions for Your Business

So, to recap, with employee-owned businesses, employees have a meaningful stake in the business whereas employees of an employee-led business don’t have a financial stake in the company (e.g. owning shares). They only have a say in how the business is run.

And now, let’s take a quick look at how you can create organic, employee-generated solutions according to what employees want.

Employee-Led Culture

If you want employees to have a say in how your business is run, you need to find the most suitable way to engage them according to the way your business is set up. 

For example, you might create a consultation group such as an employees’ council to ensure that any changes you make going forward are things that your employees want and not what management assumes they want. 

You can also install employee directors on the board and give them the same responsibilities as other directors. 

Furthermore, you might amend the constitution to define the organisation’s values, its relationship with employees, and other important factors that play a determining role in employee engagement. 

Allow employees to have a role in the public-facing side of the company by giving employees some control over marketing content created and shared by the brand. 

For example, use a website builder that allow multiple participants to suggest and make changes to the design before bringing your business site to life, let employees create memes or infographics for social media, or even start new brand channels like a podcast, blog, or series of online courses at the request and under the leadership of employees.

When you give employees leadership in the company, you may find that the people with the best ideas aren’t actually the owners, directors, CEOs, or others at the top; on the contrary, it’s probably the people working on the ground floor who might have the real knowledge, skills, and experience needed for a business to succeed and grow.

In fact, many businesses may fail simply because they refuse to listen to employees or open up leadership opportunities for the general working folk.

But when employees are heard and their leadership is respected and sought after, you’ll ensure that employees are involved in every aspect of how the business is run and feel a stronger sense of ownership in the company which, in turn, will allow you to start enjoying the same benefits as employee-owned companies.

Employee-Led Innovation

In addition to building a workplace culture that drives employee-led innovation, you can also let employees take the reins in your company’s innovation. 

Your employees will benefit from participating in the process, and it will instill empowerment when they know that they have an active role in creating their own wellbeing, engagement, and recognition in the company.

Allowing workers to have an active part in innovation also comes with additional benefits, including: 

  • A boost in employee morale
  • Stimulation of their creativity and intellect
  • Encouraging initiative 
  • Fostering a strong sense of belonging

When employees feel the positive impact of their participation in the company, and when they can see their ideas coming to fruition, it helps give them a greater sense of purpose and increase job satisfaction. All of this leads to a stronger bond with the organisation.


Thalita Ferraz, the creator of the popular beauty website HerBones.com explains, “As I’ve begun selling ecommerce products, I’ve noticed that two of my employees, primarily on my content team (who I consider rockstars), have been suggesting products we can sell for ecommerce as well.  Of the eight employees I have, these two are the most engaged and I firmly believe that letting them in on the creative process is the reason for this.”

Another thing to consider is allowing employees the ability to speak their mind, offer opinions, ask questions, or otherwise participate in adminstrative, marketing, or other business operations before a major decision is made.

For example, if the company has decided to host a podcast, it’s very likely at least one of the employees has some experience and would be able to refer the business to the best podcast hosting platform or even host, write scripts, or find guests.

Employee-Led Approach to Learning

Allow your workers to stray from the beaten path and give them the power and responsibilities to direct their own growth as a way to engage and upscale. 

This is a powerful and highly effective tactic that lets employees take charge of their professional development. 

This hands-off approach will lead to more agility in the workplace, particularly with the benefit of having on-demand information and quick adaptation that allows learners to keep pace with change in a way that’s more personalised. 

After all, employees are almost always in the best position to know exactly what they acquire to perform at their best and address their customers’ needs.


The bottom line is that employees in employee-led companies show a high level of well-being and satisfaction, with studies showing that they are generally happier and healthier compared to their counterparts. 

The best part is that you don’t have to change your entire business model to an employee-owned model to enjoy these benefits. 

Simply use the tips outlined here to help you create organic employee-generated solutions based on exactly what your employees want.

Author: Ron Stefanski – Entrepreneur and College Professor, OneHourProfessor.com.

Photo credit: Yan Krukov on Pexels

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