Juno College is planning to move to a 100 per cent employee-ownership model.
The Toronto-based college, formerly known as Hacker U, was established by Heather Payne (pictured) nearly 10 years ago to transition workers into careers in the technology sector. Over the next decade, the school will focus on repaying the college’s investors and becoming a more sustainable organization, says the founder and chief executive officer. While Payne is aware she has the opportunity to turn the school into a family business for her children, she’d also like her team to purchase the company over time.
“In either of those cases, it seemed to make sense to bring the company back to myself and people who work at Juno. I think we’ll get a lot of long-term thinking and long-term commitment.”
Although the exact structure of the employee ownership has yet to be worked out, she’s leaning towards an employee-ownership trust structure, which isn’t currently available in Canada. However, in the 2021 federal budget, the Liberal Party of Canada pledged to consult with experts to remove barriers preventing employers from adopting the structure.
The trusts are a win-win for many stakeholders, says Jon Shell, managing director and partner of Canadian non-profit Social Capital Partners. He notes they’re a great succession option for owners; they’re great for the economy, as these companies are more resilient in recessions and perform better than their peers; and they’re good for employees because they enable them to build wealth through ownership, while keeping jobs in local communities.
Indeed, Social Capital Partners has funded many companies’ move to employee ownership, including partnering with the Healthcare of Ontario Pension Plan in 2020 to fund Taylor Guitars’ move to a 100 per cent employee-ownership model. Shell says he and his colleagues were excited to hear the federal government is finally seeing the value behind these arrangements, especially since 6,500 owners have chosen this path in the U.S. and almost 200 are on track in the U.K. for this year alone.
“Employee-ownership trusts have the potential to build billions of dollars of wealth for Canada’s workers, so moving forward on this is incredibly important,” says Shell. “Employee-ownership trusts are different from share purchase plans like WestJet [Airlines Ltd.] or worker co-ops in that they’re designed specifically to help transition the ownership [but not the management] of privately-owned businesses to their employees.”
According to Shell, the structure has created US$1.4 trillion of wealth for employees in the U.S. There are also already more than 500 employee-owned companies in the U.K. since legislation for employee-ownership trusts was introduced in 2014. “It’s a solution that scales quickly and delivers huge results.”
One benefit of the trusts that appeals to Payne is when employees become an owner of a company they remain an owner until they leave, at which point, the company would buy back the shares, which would keep Juno in the hands of its small group of employees. More importantly, she welcomes the opportunity to share wealth with her team and to do her part to help bridge the growing wealth gap in Canada and around the world. “We’re not going to change the world if 50 people become owners, but showing people that this is possible could really make a difference in Canada for thousands and eventually tens of thousands more in terms of long-term savings options.”
When employees benefit directly from a company’s success it creates alignment throughout an organization, says Payne. It also helps with both recruitment and retention, adds Shell, noting many privately-held Canadian businesses are currently owned by baby boomers, which means, as more boomers reach retirement age, more of Canada’s businesses will soon be for sale.
“It’s a once-in-a-lifetime opportunity for many of those businesses to be sold to employees, which will keep those businesses Canadian-owned, providing great jobs in local communities and building wealth for people who otherwise don’t have access to these kinds of assets.”