A New Era of Employee Ownership: Businesses Transitioning to Staff Control

In a notable shift within the business landscape, employee ownership is gaining traction, with more companies transitioning to staff control. This change is driven by retiring owners looking for sustainable futures for their businesses and employees eager to take on more responsibility.

• Softstar Shoes in Oregon is now owned by its employees, sparking enthusiasm for innovation and growth.
• Tricia Salcido, the former owner, decided to sell her business to ensure local jobs and artisan practices continue.
• The trend reflects a larger movement, with an estimated 600 U.S. firms transitioning to employee ownership annually.
• Business experts point to a growing interest in employee ownership models as a solution for retiring entrepreneurs.
• Employee-owned firms have shown higher productivity, better job security, and increased wages for their workers.

In January, Softstar Shoes, a shoemaker based in Oregon, became an employee-owned business, marking a significant milestone in the realm of small enterprises. This transition was initiated by Tricia Salcido, the former sole owner and chief executive, who, at the age of 56, is beginning to consider her retirement. By selling the company to her 30 employees, Salcido aimed to preserve local jobs and protect the artisan shoemaking craft from the potential fate that often befalls businesses sold to larger corporate entities.

The decision has already led to a surge of enthusiasm among the staff, who are now actively contributing ideas and suggestions that were previously unheard. Salcido noted that she receives emails from employees proposing new strategies and improvements, a stark contrast to the silence that characterized her tenure as the sole decision-maker. This newfound engagement among workers highlights a key benefit of employee ownership: when people have a stake in the outcome, they are more likely to invest their time and creativity into the business.

Softstar Shoes is part of a broader trend in the U.S. where a growing number of businesses are being transferred to their employees rather than being sold to external buyers. According to a 2025 study, approximately 600 U.S. companies are sold to their workers each year, supported by a significant increase in investment funds aimed at facilitating these transitions. In 2024, funding for employee ownership transactions surged to $865 million, a remarkable rise from $500 million the previous year.

This shift comes at a crucial time, as many baby boomer business owners are nearing retirement. Reports indicate that around six million small and medium-sized business owners in the United States are expected to retire by 2035. This wave of retirements has been referred to as a "silver tsunami," suggesting that a massive transition of business ownership is imminent. As these owners consider their options, many are discovering that selling to their employees can be a viable solution, especially for those who wish to ensure their legacy and the well-being of their staff.

Ethan Rouen, an associate professor at Harvard Business School, emphasizes that discussions about selling businesses are frequent among retiring owners. Many of these entrepreneurs find that their adult children are often uninterested in taking over the family business. This leaves them searching for alternatives that would secure the future of their companies while also supporting their employees.

Research suggests that employee-owned companies tend to be more productive and are less likely to lay off workers. Additionally, employees in these firms often enjoy higher wages, creating a favorable working environment that benefits everyone involved. Salcido's decision reflects a broader sentiment among entrepreneurs who care deeply about their employees and want to avoid the consequences of a sale to a larger corporation or private equity firm.

William Stockwell, the owner of Stockwell Elastomerics in Philadelphia, faced a similar dilemma. After witnessing the fate of other companies that fell into the hands of outside buyers, he decided to transfer ownership to his employees. Stockwell expressed concern about the potential disruptions that could arise from new ownership, such as relocation or drastic operational changes. By selling to his staff, he aims to prevent such outcomes and ensure job security for his employees.

Various methods exist for transferring ownership to employees, with Softstar Shoes opting for an Employee Ownership Trust (EOT). In this model, a trust is established to take ownership of the business on behalf of the employees, thereby alleviating the need for them to purchase the company outright. The trust then pays the seller in installments, based on future profits, which introduces an element of risk for the former owner. Salcido acknowledges this risk, recognizing that her financial return is contingent upon the business's continued success.

Conversely, Stockwell chose to implement an Employee Stock Ownership Plan (ESOP), a method that also places the business under trust ownership. However, in this case, employees receive shares rather than profit distributions, allowing them to cash in their shares only upon leaving the company. Stockwell noted that while this method requires accepting payments over a decade, it provides a structured approach to ownership transition.

Statistical data underscores the growing prevalence of employee ownership in the U.S. In 2023, there were 6,609 companies operating under ESOPs, employing approximately 10.9 million individuals and holding combined assets exceeding $2 trillion. The increasing interest in employee ownership is not limited to older business owners; younger workers, disillusioned by conventional corporate structures, are drawn to this model as a means of democratizing wealth and fostering a sense of collective responsibility.

Despite the advantages of employee ownership, the complexity of establishing EOTs and ESOPs may deter some business owners. The lengthy process and the delayed financial returns can be significant drawbacks. Additionally, many owners remain unaware of these ownership transition options, as Salcido pointed out. This lack of awareness can hinder the growth of employee-owned businesses.

In Pennsylvania, Paul Silvis is currently in the process of selling his manufacturing business, SilkoTek Corporation, to his employees. At 71 years old, Silvis is preparing for retirement and expressed confidence in his decision to transition ownership to his workforce. He believes that this approach will ensure the business remains in capable hands and continues to thrive.

Experts suggest that retiring business owners should begin planning their transitions well in advance. Stockwell warns that this process can take years, and waiting until the last minute can complicate matters significantly. Fortunately, there is a growing political will in Washington to simplify the employee ownership process. The U.S. Department of Labor has launched an Employee Ownership Initiative aimed at promoting this model and providing resources for interested business owners. Additionally, there appears to be bipartisan support in Congress for making the transition to employee ownership a more accessible option.

As the trend of employee ownership gains momentum, it is likely that more businesses will successfully navigate this transition in the coming years, fostering a new era of collaboration and shared responsibility among workers and owners alike.

In summary, the rise of employee ownership represents a transformative shift in how businesses are structured and operated, with significant implications for the future of work. The success stories emerging from companies like Softstar Shoes and Stockwell Elastomerics highlight the potential for employee ownership to create a more engaged workforce, enhance job security, and preserve the legacy of businesses in an era marked by rapid change and uncertainty. As more entrepreneurs consider this model, the landscape of American business may continue to evolve, prioritizing the well-being of employees alongside profitability and growth.