Management: We're All the Boss

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When a machine operator left W.L. Gore last year, the human-resources department naturally began looking for a replacement. Then before anyone got as far as posting a want ad, the man's former team members met and figured out how they could make do with one less body. They would have to work harder without more pay, but they wanted to do what was best for the enterprise. "That doesn't happen at other companies," says human-resources associate Sonia Dunbar, 43. "It's the beauty of Gore."

The cooperative spirit at this company--maker of the Gore-Tex waterproof fabric found in all sorts of outdoor clothing--arises from a unique structure with no fixed hierarchy, few titles and no formal job descriptions. Any "associate" (the company doesn't use the word employee) can speak directly to any other without going through a chain of command. And together the 6,000 associates own the company. Sound like pie in the sky? The system has worked superbly for 44 years. Despite the recession last year, sales at Gore, based in Newark, Del., reached $1.4 billion, up from $1.3 billion in 2000.

After extending their reach from only a few thousand Americans 30 years ago to about 20 million today, employee-ownership plans have fallen in public esteem. The allure of stock options has faded along with the dotcoms that made them sexy. Enron's collapse has shown the danger of workers' betting their retirement savings on their employer's stock. And tension between unions and management at struggling United Airlines has called into question what anyone gained when workers bought a majority of shares in the company eight years ago. Worried, Congress is weighing bills that would limit how companies can give their workers stock.

But the people at successful employee-owned companies want the world to know there are many ways to make workers into owners--and knowing which ways work is crucial. "We're very concerned that people understand the whole story," says Bill Roper, 55, chief financial officer of SAIC, a worker-owned engineering company in San Diego that just posted its 33rd consecutive year of growing sales.

The theory behind employee-ownership programs is that they will transform workers from clock punchers to partners who will be motivated to better serve customers and make things run more efficiently. At the most successful worker-owned firms, the theory is pretty close to the reality. "Nobody's afraid to jump in," says Louise Brown, 46, a 25-year Gore veteran who handles customer complaints. "Whatever you need to get the job done, people are always ready to do it."

On average, worker-owned companies survive longer, lose fewer workers, enjoy bigger profits and are more productive than their non-employee-owned competitors, says Rutgers University economist Douglas Kruse, who compiled data from more than 30 studies of worker-owned firms. Employees at these firms earn higher wages and better benefits. And they get a crack at big money if the stock takes off.

What goes up can also crash, of course, but the best worker-owned companies have already taken that into consideration. At W.L. Gore, the 401(k) contains no Gore stock. The workers hold those shares through a separate plan.