Co-authored with the team at Ownership Works, a nonprofit organization that partners with companies and investors to provide all employees with the opportunity to build wealth at work.
To thrive in a highly disrupted world, private equity (PE) portfolio companies (portcos) need meaningful employee engagement more than ever. The environment has rarely been so demanding, and businesses need people at all levels of a company to contribute to value creation and problem-solving in new, highly coordinated ways.
Portcos face an increasingly high-pressure operating environment in which costs, including interest rates, are high, while consumers and business customers are minding their wallets and pushing back against price increases. Pricing levers are becoming harder to pull after waves of cost actions have taken place in the face of recent inflation. Companies in every industry must invest in artificial intelligence (AI), manage its costs, and learn how to use it to transform business models. Together, these forces are driving dramatic shifts in workflows and organizational structures and raising concerns about the future of employment at all levels of the organization. This calls for a new mindset on how management and the workforce need to partner to achieve outcomes positive for all.
The inevitable result is that business leaders will focus on costs and productivity to maintain margins and increase EBITDA (earnings before interest, taxes, depreciation, and amortization). At the same time, because exits remain elusive, portcos must sustain value-creation momentum for indefinitely longer periods, adding even more strain on retention and culture.
To respond to this challenging context, leaders need more than the usual tools of top-down cost management, rollups, restructuring, and financial engineering. Companies will need to secure genuine employee engagement, innovation, flexibility, and versatility across all levels.
In these circumstances, employee ownership is a powerful yet underutilized tool.
Driving business performance through employee ownership
The PE industry knows that the usual kinds of business transformation, such as reorganizations and restructurings, work best when senior management has a stake in the outcome. For deeper organizational and performance change—change that happens at the level of individual contributors—all employees need paths to meaningful rewards.
This type of change cannot be imposed from above; it must be worked out person to person, team to team, task to task, and function to function—the kinds of participation that come from psychological safety and aligned incentives.
This story is consistent with data in the AlixPartners Disruption Index, our annual survey of 3,200 executives, about a third of whom work at companies with significant PE investment. The survey responses show that companies that thrive in the face of disruption place premiums on executive agility and on having employees who are not set in their ways. Such companies are also more likely to say their company culture is a competitive advantage. Too many examples of change initiatives were doomed by passive resistance; the Disruption Index data show that the opposite is true, too: employees who roll up their sleeves make change happen.
Employee ownership can help create this type of culture.
AlixPartners is a partner of Ownership Works (O.W.), a nonprofit that helps public and private companies evaluate, develop, and implement holistic, broad-based employee ownership programs that give all employees the opportunity to participate in the success they help create, while driving better business outcomes.
Although there are many ways for companies to share ownership with employees, the O.W. model builds on a long tradition of granting equity to senior executives—typically through instruments such as stock options—and extends equity participation to all employees, including frontline workers who have historically had limited access to ownership. This model has proven effective and scalable in the PE industry. Ownership Works now partners with over 45 PE firms. Among these firms, employee ownership programs have been deployed at over 190 companies across 15 industries. Early data shows that a majority of companies see improved turnover after launching a shared ownership program, as well as significant improvements in safety and employee engagement. This translates to financial outcomes, with the vast majority of companies with shared ownership seeing exits above the median internal rate of return (IRR) for comparable deals.
The model's influence is expanding beyond individual deals and into how institutional capital thinks about ownership itself. Ownership Works now convenes an 18-person Limited Partner Leadership Council with representation from leading pension funds and major endowments that support shared ownership as a leading investment strategy to generate both strong returns and meaningful wealth building for workers.
Ownership in practice: insights from the field
O.W. Case Studies
Value creation at today’s portfolio companies requires every employee to feel and act like an owner to inform coordinated execution.
At a PE-owned materials manufacturer with more than 2,500 employees globally, company leaders paired a shared ownership program with regular employee engagement surveys and joint action planning to identify root causes and solve problems on the floor, which resulted in a more-than-30% drop in total recordable incident rate and a 5.7% increase in EBITDA margin.
In a market saturated with similar plays, execution is a key differentiator. Employee ownership facilitates that execution by building a workplace at which everyone has both line of sight into company goals and the ability to make improvements.
A director of operations at a PE-backed insurance company that implemented a shared ownership program in 2021 and exited in 2025 at a 2.5x multiple on invested capital (MOIC) credits the company’s employee ownership program, saying “[Company] Ownership Behaviors guide our culture and how we do our business. I identify with all of them. In my job, I need to be agile. Try fast, learn fast, fail fast, and think big. I pursue excellence every day.”
Employee ownership is a way for portcos to drive transformation by enhancing the culture and employee engagement, rather than breaking the culture or provoking passive resistance. At a PE-backed company in the information-technology hardware and services industry with more than 4,000 global employees, clearer value linkage empowered employees to own client outcomes and connect their improvements in customer satisfaction with better customer retention and high-margin renewals, which supported a 14% EBITDA compound annual growth rate. Ideas submitted by employee-owners were projected to save more than 2,500 hours and reduce maintenance backlogs by 20%. One mainframe systems programmer said, “It’s a barrier that has been lifted between the shareholder and the associates. And I feel that I have a word to say and that we are actively being listened to, and our input is being taken into consideration.”
Leaders need to tap into the data that sits across the company in the collective knowledge of employees to drive innovation, both moonshot ideas and incremental innovations.
Align human and financial capital to go farther, faster
Ownership offers a positive answer to the question, “What’s in it for me?” It gives people a reason to stick with the company through longer hold periods. It gives them a reason to contribute their thinking as well as their time, and it could give them a reason to identify—and champion the implementation of—areas where AI solutions could deliver true operational efficiencies on the front line. When all levels of the company focus on a common path that creates value for themselves, the need for onerous top-down tracking and micromanagement gives way to a lean, efficient shared vision.
The most successful programs pair ownership programs with concrete practices that build ownership cultures, strengthen transparency, communication, and employee engagement, and provide near-term financial wellbeing support. Those resources range from hardship funds to financial coaching, giving workers the security they need to feel like owners today and to drive value for the business tomorrow.
Finally, broad-based ownership also puts constructive pressure on executives to make plans that can endure the scrutiny and earn the support of an engaged workforce by increasing value, not just cutting costs; by managing for tomorrow as well as for today; and by making plans that are underwritable by the people who provide human capital as well as by those who provide needed financing. Bringing such plans to an engaged, committed, and invested group of executives, managers, and team members can get companies moving faster and more surely, and can also prime them for exit readiness. The steady drumbeat of value creation is heard in shared incentives—and more and more owners are getting on board.
AlixPartners is a proud supporter and partner of Ownership Works. To learn more about Ownership Works and the power of shared ownership, visit Ownership Works’ website, hear from investors and workers directly, or follow Ownership Works on LinkedIn.