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The job market may be strong, but the connection between workers and their jobs has become increasingly fragile. Trends such as "lazy girl jobs" and "quiet quitting" have gone viral in a post-pandemic world where young workers are searching for balance over ambition. Across the US, actors and writers are striking, and even UPS workers were on the brink of one before reaching an agreement. More than half of employees in a recent survey reported feeling burned out from their workload. Could greater economic alignment between employers and their employees – with employees having more "skin in the game" – make a difference?
Pete Stavros, co-head of global private equity at KKR, is a major proponent of establishing employee stock ownership programs within KKR's $19 billion Americas Fund portfolio. These are additional benefits that employees receive alongside their regular wages and benefits, placing them in a position to benefit from the success of the companies they work for.
"It's just a superior way to run a business," Stavros said. "It's better for investors, it's better for the company, it's better for employees, and in the end, it's better for the communities that they live in."
This week, RBmedia – a KKR-backed audio-books publisher that was sold to another investment firm – announced that all employees would receive a cash payout at the completion of the transaction, amounting to an average of 100% of their annual salary. KKR has exited nine of these deals thus far, returning anywhere from 3 to 10 times the capital that was initially invested. Over 60,000 non-management employees have been given billions of dollars in total equity value through these programs since 2011, according to the firm.
Stavros said that KKR's companies that utilized this program experienced decreased quit rates and increased engagement scores. However, he believes equity can't be offered without adequate support, such as financial literacy, tax advice and education.
In an attempt to extend such programs beyond their own portfolio, KKR and other private-equity firms are founding members of a non-profit called Ownership Works. Their ambition is to generate $20 billion of wealth for lower-income and diverse workers over the next decade.
Stavros hopes to see such programs become more widespread, believing that they would be an effective remedy for worker discontent.
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