This mechanism could help solve the financial woes many working Tennesseans face.
Op-ed originally appeared in the The Tennessean here—subscribe to read more.
By Shannon Litton, CEO, 3LS Professional Services
According to recent surveys, almost half of Americans have no retirement savings at all. The National Center for Employee Ownership (NCEO) cited that the median savings balance for Americans is just $4,000. We have a crisis. But we also have a solution—a very powerful solution—that politicians across the aisle can actually agree on. Unfortunately, it’s under the radar and often misunderstood: employee ownership.
In Tennessee, the need for employee ownership is as urgent as ever. Over 44,000 business owners in Tennessee are over 55 years old, and will transition ownership in the next few decades. These businesses represent 610,000 jobs and $116B in revenue—economic opportunity at risk should these businesses close or transfer ownership out of state. Employee ownership presents the opportunity to anchor employment and wealth in our local communities, not outside interests.
Last year, I became President of the Tennessee Center for Employee Ownership (TNCEO). I’m honored to lead the charge in creating more awareness for employee ownership across the state, helping guide business owners through succession planning and working to shape policy so that employee ownership flourishes in Tennessee. At TNCEO, we have a huge task in front of us: Out of hundreds of thousands of businesses in Tennessee, fewer than 200 are employee-owned.
For most of us, exposure to employee ownership is limited. We see “employee-owned” bumper stickers on semis driving down I-65 or a small sign on a retail door, and while the phrase feels straightforward—this company is owned by its employees—we don’t know what that means practically, or what it empowers. I know, because I was that person.
In my 25-plus-year career as an entrepreneur and leader in driving growth for changemakers, I’ve encountered a variety of business models. But it wasn’t until a few years ago, after a meeting with a client that mentioned they were employee-owned, that I went from a bumper-sticker awareness of employee ownership to an understanding that this model could unlock life-changing opportunities for owners, employees and their communities at large. In an era where financial security and wealth-building feel increasingly out of reach for many Tennesseans, employee ownership offers an optimistic path forward.
Consider our team at 3LS, a family of 18 employee-owned companies, with employees ranging from frontline social workers and foster care caseworkers to marketing professionals and software developers. These individuals dedicate their lives not because of the money, but because they want to do good in the world. Within ESOP companies like ours, we’ve seen this dedication translated into real ownership, with team members benefiting from the value their exceptional work helps create—often in ways that are life changing.
Employee ownership stories like 3LS’ are not isolated incidents in Tennessee. From community banks in Athens and cabinetry companies in Knoxville to speakers’ bureaus in Franklin and trucking companies in Shelbyville —“employee-owned” isn’t just a bumper sticker with a nice thought. It’s the mechanism for building generational wealth, strengthening communities, and ensuring that hard work translates into a secure future for all.
In a time where working hard and making good choices don’t guarantee a secure retirement, employee ownership stands out as an incredibly promising, bipartisan opportunity. In offering fair market value and competitive terms, it justly rewards the risk taken by founding owners while simultaneously providing ongoing benefits to employees, both today and into the future.
I believe there is no other model that so effectively addresses wealth disparity and the retirement crisis in a way that garners broad support.
Additionally, employee ownership offers a safeguard against the potential loss of jobs, control and revenue when businesses are sold to private equity firms or to out-of-state and international entities. It creates an ongoing mechanism for jobs, local ownership and the proliferation of wealth to remain within our community, fostering economic health and stability.
October is Employee Ownership Month and it’s more than just a celebration. It’s a call to action for every Tennessee business owner to seriously consider employee ownership as a transition strategy and solution to the crisis in front of us.
Big or small, there is a way to incorporate a form of employee ownership into every ownership transition. It’s time for this exit strategy to enter the mainstream. Because it’s not just about business; it’s about building a more equitable, secure and prosperous future for Tennesseans—and our entire nation.
Shannon Litton is the CEO of 3LS Professional Services, Founder of 5by5 Agency and the President of the Tennessee Center for Employee Ownership.