Just a few days ago, two events occurred that were seemingly unrelated. In fact the juxtaposition holds a deep lesson for American business. One was the appalling saga of David Dao, the passenger who was forcibly removed from a United Airlines flight from Chicago to Louisville. That one went viral around the globe.
The other was a largely unremarked gathering in Denver of some 1,700 people, attendees at the National Center for Employee Ownership’s annual conference. Most came from companies that are partly or wholly owned by the people who work there.
The connection? United was once a poster child for this kind of employee ownership, at least in the eyes of the media. When the experiment failed and the airline went bankrupt, it became a convenient reference for some people’s belief that employee ownership “can’t work.”
United’s employee stock ownership plan, or ESOP, began in 1995 with a grand bargain. The airline’s pilots and machinists gave up nearly $5 billion in prospective wages and benefits. In return they got 55% of the company’s shares. That year, the stock outperformed the S&P 500 index by 67%. Shareholder value increased by more than $4 billion.
Some of the outstanding performance could be traced to a new attitude among employees. Grievances fell 74%, sick time 17%. “Everyone from gate agents to mechanics gained new authority to address customer complaints without consulting their supervisors,” the Chicago Tribune reported in a comprehensive retrospective published in 2003.
Read more: United’s Troubles Could Have Been Avoided