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OPINION - Employee owned

by Chris Conley

NEWS BLOG (WSAU) In the 1990s United Airlines was owned by its employees. As part of a contract settlement workers got larger and larger chunks of United stock. Eventually they had a majority share. That should be a worker utopia, right? Not exactly. United soon had the highest operating costs in the airline industry. (Why would you put in automated computer-kiosks for boarding passes if that costs a worker a job?)  In an industry with relentless pressure to cut costs, that doesn’t work.

Avis Rental Car was also employee owned. They were also undercut on costs by their rivals, and had to merge with Budget or go out of business.

There are a handful of radio broadcasts groups that are owned by their employees. If you’ve worked there for a few years and are considered a ‘keeper’ employee, you’re invited to buy-into the company. This is good and bad. Those workers have very solid job security. But what happens when Jim-the-morning-guy’s ratings start to slip? It’s not so easy to get rid an owner. Suppose one of these stations has an opportunity to become an affiliate of the next-hot syndicated talk show host, but airing the show means firing a local host?

I thought of the employee-owned dilemma when news of The Lusty Lady came across the news wires today. It’s a topless club in San Francisco that’s run as a worker cooperative – the dancers own the place. Is that good thing? While it isn’t the kind of endeavor I’d be associated with, you don’t need a lot of imagination to figure out the business model. The club that has the youngest, sexiest, hottest, most revealing girls will get the most customers. Job security – for those who become older, fatter, unruly or unreliable – is a bad thing. So what do you do when your dancers are thirty-somethings instead of twenty-somethings? Or what’s supposed to lift now sags? They’re owners… so they can’t just be moved aside. The club says dancers are ‘evaluated’ by their peers every six months. Other employees have complained that too many of the dancers are fatter and older, and that hurts income for everyone working there.

The sad but true conclusion is this: most of us need a boss, someone to make sure we’re up to the job and to manage and control costs. Employee owned companies usually can’t make the tough decisions needed to survive.

Chris Conley
8.21.13