Why Ownership Structure Matters in Technology Partnerships

Why Ownership Structure Matters in Technology Partnerships: The Benefits of Working with an Employee-Owned Company

Author: Gail Bradburn

‍Title: Vice President of Human Resources

‍Organization: Karmak, Inc.

Over the past several years, the technology landscape serving the commercial transportation industry has continued to evolve. New investments, acquisitions, and ownership changes are becoming more common across enterprise software companies.

As technology companies grow and ownership structures across the industry evolve, many businesses are taking a closer look at how those structures influence long-term partnerships.

While product features and capabilities often receive the most attention, the structure behind a company can shape how decisions are made, how employees approach their work, and how relationships with customers develop over time.

At Karmak, employee ownership has long been part of the company’s foundation. The company established its ESOP in 2001, and employees began purchasing shares in 2003, creating a meaningful ownership stake in the business. That journey reached an important milestone in February 2022 when Karmak became 100 percent employee-owned.

To understand why that matters, it helps to start with a simple analogy.

Who Should Fix Your Front Door?

Chances are you remember that first apartment you rented. You probably didn’t worry that the front door sagged, or that the living room wall got scuffed a bit too often. After all, it wasn’t yours to fix.

Fast forward to the first condo, house, vehicle, or business that was truly yours. You owned it. And ownership likely changed the way you behaved, or how much you cared, or both.

Today, over 15 million people in all fifty U.S. states are employee owners. They are found in nearly all industries, in both private and publicly held companies. The highest concentration of employee-owned companies includes the technical services, an industry represented in nearly every American business.

The benefits to employees in an ownership environment are many. But what is the benefit for you, the customer, in doing business with an employee-owned technology company?

1. Staying Power

The pandemic reminded us that life can throw curveballs. Even the most successful businesses can be surprised.

Research by the National Center for Employee Ownership (NCEO) shows that employee-owned companies often demonstrate stronger resilience during difficult economic periods. When at least 30 percent of a company’s shares are owned by a broad base of employees, studies show that businesses are less likely to cut jobs and outsource talent and more likely to maintain stability for the people who depend on them.

In the most recent study conducted by the NCEO, turnover at employee-owned companies was 10.8 percent compared to 27.1 percent at non-employee-owned companies*.

In your business, long-term relationships matter. Partner knowledge and experience provide a huge benefit, especially in the ever-changing field of technology. Consistency in the people you depend on is critical.

2. Innovation

If you own that sagging front door, you’re going to find a way to fix it… even if you have to get creative.

Employee-owned companies often see greater performance advantages because their employees think and act like owners. Ideas flourish in a “we’re all in this together” environment, and these ideas often translate into tools and improvements that help customers operate more effectively.

Victor Aspengren, a consultant to the ESOP community and board member of several employee-owned companies, notes that when leadership believes in ownership and culture supports it, the results can be powerful.

3. Enhanced Commitment to Teamwork

You celebrate when your customers thrive. Likewise, your business partners, including your technology providers, grow when their customers succeed.

Employee owners share in both the satisfaction of delivering strong results and the long-term value created by the company they help build. This creates another layer of motivation and accountability.

Bill Keen, a Forbes Council member and author of Keen on Retirement, has observed that employee-owners are often more committed to the client experience than traditional employees. That commitment can translate into stronger outcomes for the businesses they support.

4. Accountability

The home page for TMC trucking company, headquartered in Des Moines, Iowa and employee-owned since 2013, says it this way: “Employees tend to work harder when they’ve got some 'skin in the game.'”

Being an owner means the buck stops with you, and employee owners take that responsibility seriously.

Working with an employee-owned company means your partners have a heightened sense of accountability to both the company and the customers they serve.

Why Ownership Structure Matters in Long-Term Technology Partnerships

Business systems that support service operations, parts inventory, sales, leasing, and accounting are rarely short-term decisions. These platforms often support daily operations for years, and sometimes decades.

Because of that, the priorities of the company behind the technology matter.

Ownership structure can influence how organizations approach product investment, customer support, and long-term planning. When employees themselves are owners, the people building and supporting the technology share directly in the success of the company they serve.

In industries where technology platforms support daily operations for many years, ownership structure can quietly shape the priorities of the company behind the software. Organizations built around long-term ownership often focus on steady product investment, customer relationships, and continuity of expertise.

Going Forward

Staying power. Innovation. Teamwork. Accountability.

All qualities that are essential when partnering with a company whose technology plays an important role in your operation.

As you evaluate business partners, you will likely consider their product, their people, and their commitment to your industry.

You might also consider their ownership.

Because sometimes the difference between renting and owning is the difference between ignoring a sagging front door and fixing it with a new set of exceptionally shiny strong hinges.

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Interested in learning more about how Karmak approaches long-term technology partnerships? Reach out to your Karmak Account Executive or Client Success Manager, or talk to an expert to start the conversation.

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References

• *NCEO study from 2014-2017, the latest on record
• Website of TMC: https://www.tmctrans.com/our-company/employee-ownership-esop/