How Ownership Works Founding Partner LGP is “Doing Well by Doing Good” Through Shared Ownership

Leonard Green & Partners, L.P. (“LGP”) joined Ownership Works in 2021 as part of the nonprofit’s initial cohort of Founding Partners. But even before joining the O.W. consortium, employee ownership was an important aspect of the firm’s philosophy, says John Danhakl, Managing Partner of LGP.

In fact, the firm has been widening employee ownership within its portfolio for many years now. Joining Ownership Works has allowed LGP to create more broad-based programs within its portfolio in which all employees share in the successes and value they help create. “What we have found is that our companies with broader employee ownership tend to perform better,” Danhakl explains.

Ownership Works spoke with Danhakl to learn how employee ownership has benefited companies within LGP’s portfolio—and how doing well for both investors and society by sharing ownership with a broad base of employees is a “home run” for the firm.

Q. Why did LGP decide to join Ownership Works and share ownership more broadly among its portfolio companies?

Danhakl: Our strategy is basically to buy the best companies. The best companies have the best employees. If those employees own stock, typically they’re more engaged. Their turnover is lower, engagement is higher, employee net promoter scores are higher, and, generally speaking, financial performance is superior.

Q. What is it about shared ownership, in particular, that has the potential to drive business results?

Danhakl: Again, more engaged employees. First off, you will attract, in general, a more interested, more engaged, and more committed employee. There are many, many stories where an employee who has stock ownership is continually engaged in helping a company evolve. If you talk to Kathy Bolhous at Charter Next Generation, for example, she talks about how she’ll hear employees ask why somebody ran a forklift into three skids today, knowing those skids cost $50 each. Perhaps no one paid attention before, but they don’t do that anymore because employees realize, “That’s silly. We shouldn’t be spending money that way.” So, employees start thinking like owners. Employee satisfaction is up, and employee turnover is down.

"If we can do well by our investors and we can do our part to make society more equitable and more just, that would be a home run. Then we'll have been doing a good job for all."

Q. Going beyond the business case for shared ownership, why is shared ownership important for society and our economy?

Danhakl: As the last decades have unfolded, the gap in wealth between different strata has become magnified. And that’s ultimately, at a minimum, corrosive and even destructive to a society. So, by giving a broad set of employees ownership and an ability to share—so when one does well, all do well—it makes a more harmonious society and a more cohesive society.

Q. What has Leonard Green observed and learned in the process of implementing shared ownership in its portfolio?

Danhakl: What we’ve observed is these programs, when implemented well, tend to enhance company performance and our investment returns. That’s the observation. What we’ve learned is, it’s a more complex proposition than simply handing out stock.

Teaching employees the value of ownership tends to be somewhat theoretical for many employees who don’t have stock ownership. So, the messaging around it is important, what it is, what you might expect it to become, how important it is for you, how important it is to invest and save. These are all sorts of next-level requirements to have a successful program.

Q. What are you personally hopeful for when it comes to the shared ownership movement? What do you think this movement can help achieve?

Danhakl: We want to do well by doing good. We want to do a great job for our limited partners in terms of the returns we provide them. We’re helping to provide retirement for the folks who educate your kids, for the people who protect you and take care of your communities. And that’s important work. At the same time, we want to make the world a better, more equitable place. Having broader equity ownership really helps that.

So, if we can do well by our investors and we can do our part to make society more equitable and more just, that would be a home run. Then we'll have been doing a good job for all.

This interview has been lightly edited and condensed.

This is the launch of Ownership Works’ new Partner Spotlight Series. Nominate an Ownership Works partner you would like to see in an upcoming Partner Profile Series feature by commenting below or emailing [email protected].