At the end of 2022, it was announced that French investment house Ardian was to become the very first European-rooted firm to sign up to Ownership Works, a US nonprofit set up to encourage profit sharing and employee ownership. A seasoned veteran in the practice of profit-sharing, Ardian is a prime example of the benefits of turning employees into active stakeholders in a firm’s economic success.

Ownership Works is a nonprofit organization that has decided to further explore and promote the idea that success in business can be vastly improved if each employee has a financial stake in his or her company’s economic growth. This smarter approach can, according to the organization’s website, “create meaningful wealth-building opportunities for employees, uplift families, reinvigorate corporate cultures, and improve business performance.” Quick to sign up was French investment house Ardian, an expert in the profit-sharing model.

“We are very proud to partner with Ownership Works and to implement shared ownership schemes in our portfolio. At Ardian, we believe that everyone who has contributed to a successful investment should be rewarded for their contribution. From Ardian’s perspective as a private investment house, we see our commitment to reward employees of portfolio companies as an important element of our license to operate. We are convinced Ownership Works will soon become a major movement in the private equity industry and we are proud to be its first European partner,” said Thibault Basquin, Deputy Head of Buyout, Ardian

Ardian: rewarding employee loyalty

Ardian, a private equity firm that has grown to become an international powerhouse in the investment sector, has been practicing profit-sharing for over 15 years. The firm organized its first distribution back in 2008, when it exited Photonis, a designer and manufacturer of electro‑optical components and high-precision sensors. Since then, the firm has expanded its employee ownership initiatives to make sure everyone is involved in the growth of portfolio companies, personally invested in the improvement of companies’ performance and capacity to grow. Over 31,000 employees across 40 exited portfolio companies have already benefitted from profit-share bonuses.

“We want everyone who works at the companies we own to be rewarded for their contribution to making them more successful. Sharing profits with them when we exit shows employees that they are valued and that their efforts have been recognized,” said April Tissier, Sustainability Senior Manager at Ardian.

The core idea behind profit-sharing is generating a culture of inclusion and belonging within a company’s workforce, ensuring that each individual is fully invested in the project both professionally and personally.

Ardian formalised this approach in Ardian’s Profit-Sharing Charter, which was originally drawn up in 2008, but has been revised since on several occasion. Today, the scheme is open to companies in the firm’s Buyout, Expansion, Infrastructure, Co-Investment and Growth portfolios. For companies where Ardian has a majority shareholding, redistributions at exit are triggered when fund performance targets are met.

Rethinking business for the collective good

Creating conditions for successful business practices and profit-sharing schemes is a long-term commitment for companies that wish to do so. Ardian has long advocated for such schemes, including incentive initiatives and employee-shareholding schemes, which, according to their 2021 activity sustainability report, have now been introduced in more than 80% of the companies in Ardian’s Buyout, Expansion and Infrastructure portfolios, compared with a third in 2019. “Maybe it is because of our French origin; profit sharing was the first sustainability initiative we introduced at Ardian,” said Philippe Poletti, who chairs the French firm’s sustainability committee, is CEO of Ardian France and head of the firm’s buyout strategy. “We started with social on the ESG agenda; that was the first element we pushed.”

Profit-sharing has therefore been part of Ardian’s wider efforts to deliver their sustainability commitments for over a decade, and it has been structuring this strategy since CEO Dominique Senequier introduced profit-sharing in 2008. Senequier has never shied away from the firm’s far-reaching social commitments and belief in social mobility. “As a private investment house, we are convinced that the most sustainable companies will have the greatest long-term value to all stakeholders. It is essential,” she said.

For Ardian, sustainability is a key driver of long-term value, and profit sharing is a crucial part of this approach. Ardian’s pioneering profit-sharing schemes have proven the success of such a strategy, and the firm is a testament to the value of creating collective working environments where all employees become stakeholders.

Furthermore, it can be a real driver of societal change and social mobility. Ownership Works has understood the potential of such an approach and hopes to create $20 billion of wealth in 10 years. “At scale, employee ownership can help low- and moderate- income households and people of color access the single largest source of wealth in America: stock ownership,” the organization says on its website.

Categories: HR & Organization