A Pro-Worker Experiment in Private Equity

Private equity has a well-earned reputation for job cuts, product degradation, and worsening inequality. But one executive at the giant firm KKR has spent 15 years running a real-world experiment to see if giving workers ownership stakes in their own companies can produce better outcomes for everyone—workers, firms, and investors alike. This episode of Planet Money, hosted by Mary Childs and Wailin Wong, follows the story of Pete Stavros, his father's union activism, and the messy, iterative process of trying to align worker incentives with corporate profits inside the often ruthless machinery of private equity.

5:36The Dinner Table Origin Story

The experiment began not in a boardroom but at a kitchen table in Chicago. Pete Stavros grew up listening to his father Harry, a road grader operator who worked for a construction company for over 40 years. Harry was so skilled that municipal contracts sometimes specified "Harry Stavros must do the road grading" because improper grading would cause drainage problems, freezing, and cracking in winter. Harry was also a union leader, and Pete absorbed the structural tension between labor and management from an early age.

The conflict came to a head when the company told workers they would no longer be paid for lunchtime—an unpaid hour. Harry organized not just the workers but also the truck drivers who delivered raw materials for paving. At noon, when lunch would normally be, Harry had the material delivered. Instead of unloading, he looked at his watch and said, "What a shame we don't work the lunch hour anymore," and sent the truck away. The work site shut down, the company paid late fees to its client, and then had to pay overtime to catch up. Harry came home disgusted by the absurdity: "Can you believe this is what we're doing? We're all adults and this is how we're behaving, as opposed to having the same incentives and all wanting to work together."

Harry's question became Pete's lifelong project: why not have profit sharing or ownership so workers and management are on the same side? Give workers a chance to get ahead financially, and give the company a reason to start listening to them. That dinner table frustration was the seed of everything that followed.

8:09Private Equity's Standard Playbook and Its Costs

The hosts explain the standard private equity model: firms buy companies, often borrowing heavily to do so, then try to make them more profitable so they can sell at a profit. Academic research shows that private equity ownership can bring better management practices and increase productivity. But it also leads to product quality degradation—especially visible in healthcare and nursing homes—and results in fewer jobs overall. Workers who lose those jobs often earn less in their next position or never find another one, creating significant social costs.

As private equity has grown over the past two decades, buying companies that touch everyday life—from toy stores to vet clinics to nursing homes—mainstream cultural distaste has grown alongside it. By the time Pete Stavros reached private equity, he was still thinking about his father's ideas. He had even done some research on worker ownership in business school. Now in charge of a team at KKR, with freedom to choose what companies to buy and what to do with them, he saw an opportunity: "It's almost like a laboratory." He decided to try his father's approach, giving workers part ownership in their own companies.

10:22The First Test: Cindy Cordes and the Invisible Equity

Cindy Cordes worked at Capital Safety, a company that made safety harnesses for window washers and oil rig workers. She had been there since the early 1990s, worked her way up to manufacturing lead overseeing 40 people, and took pride in "sending out quality equipment and knowing that it's going to save people's lives." In 2011, she heard the company was being sold to KKR. Her reaction was mixed: "One big fear is, are they going to take it overseas, close the company here?"

Management told workers the plant in Red Wing, Minnesota, would stay open and no jobs would be cut. Cindy was skeptical: "Okay, but for how long? A year? Ten years?" If the jobs disappeared, she thought some people would find work at other local manufacturers, but "I don't think there would have been enough for everybody."

Meanwhile, KKR was quietly working on its first test of worker ownership—and immediately ran into problems. The first was trust. Workers at Capital Safety had already been through three private equity acquisitions. Pete worried that if they gave workers equity immediately, no one would believe it. So they decided to improve safety and culture first, then introduce employee ownership in good faith.

The second problem was technical. Structuring and implementing worker ownership across a multinational company was far more complicated than it sounded. In Western Europe, workers who received equity grants faced "dry income"—they had to pay taxes on the grant even though they received no cash. In the United States, there were limits on how many shareholders a private company could have. Figuring out the "how" was a major challenge.

Eventually they rolled out an ownership program, but Pete admits it was "haphazard" and "not in a way that I would characterize as being well done." They were so worried about overpromising and underdelivering that they simply gave workers the equity and never told them. "The corporate equivalent of sliding an envelope across the table," the hosts call it—an invisible envelope.

Cindy had no idea. "None of that was brought to our attention until they sold the company to 3M" in 2015. At a cafeteria meeting packed with over 100 coworkers, management announced a "big incentive bonus" from the sale. Everyone expected a few hundred dollars, maybe a thousand. Cindy's check was five digits—$10,000 or more. She used it to pay off credit cards and help her kids still living at home. It wasn't life-changing, but it was a nice surprise.

But Cindy also saw the missed opportunity: "I think if we would have known it when they would have bought our company, I think people would have probably stuck a little more effort into it and making the company grow maybe a little bit more." Pete agrees: "I would say the communication was like an F." If workers had known they were owners, they might have been more engaged, productivity might have been higher, and Cindy's check might have had another zero. The lesson was clear: you have to tell people when they become owners.

18:28Iteration and Refinement: The GSI Case

Pete did not give up. He tested his theory at about half a dozen manufacturing companies, each time learning from what went wrong and tweaking his approach. In 2018, he landed on a version that seemed to really work. KKR bought GSI Geostabilization International, a company that does emergency landslide repairs and rockfall mitigation.

Mike Pavelko started at GSI in 2018. His first job was showing up to a work site where a landslide had caused an emergency. Even as a senior superintendent, he says, "I have a shovel and I dig. That's just the way that GSI is." The work can be intense: after Hurricane Helene in North Carolina, Mike was sent to I-40 to help clear the way for first responders. "The mountain was still moving," he recalls. They drilled micropiles from a safe area and grouted them up, and "it held one, like, perfectly." The hosts ask: "You put nails and glue into a falling mountain and it stopped it?" Mike confirms: "Yeah, it's just Portland cement."

From the beginning, KKR gave all GSI workers equity—and this time, they remembered to tell them. Mike definitely got the memo. "It feels awesome," he says. "I think it gives everybody here, when they go to work every day, it gives them a little edge." The equity does not come with voting rights in how the company is managed, and it does not necessarily go with you if you leave. But for Mike, it changed his relationship with work: "It definitely brings a lot of pride factor to here. We know what things could damage the shareholder, we all know, and keep that in our mind."

Over the years, Mike attended quarterly owners calls where he and coworkers heard about the company's growth and what their shares were worth. He got promoted to management. Then in October 2024, KKR announced it was selling GSI. Management flew Mike to Denver for a big internal meeting. "They were going through the numbers and I was just like, no way," he remembers. "People are cheering and I'm just in shock." The payout was life-changing: an initial $195,000, plus $25,000 for each of the next two years he stays—roughly a quarter of a million dollars. Mike bought his first home in Tennessee: three bedrooms, two and a half baths, a garage. "I never thought that would be a situation I'd ever come upon in my life," he says. "To purchase a brand new home that was just built."

23:37The Business Case and the Limits of the Model

When the hosts ask Pete whether he is trying to fix private equity's reputation, he pushes back: "I really hope I'm not seen as someone trying to rewrite the reputation of private equity. That's certainly not my focus and why I'm doing this." He does it because he has seen the results: workers who are more engaged and less likely to quit.

To date, Pete has implemented his ownership model at 85 companies. These are not distressed companies in dire straits; they are generally growing, healthy businesses. More than 190,000 workers now have a stake in their companies who probably would not have otherwise. At GSI, the results were dramatic. When KKR bought the company, half the workforce was quitting every year. "We're hiring like hundreds and hundreds of people every year and losing them," Pete says. "What a waste for the company of having to re-recruit and retrain and re-onboard all of these folks. And the newest folks are the least productive, least efficient, and most likely to get hurt." Over five years, the quit rate dropped to around 15 percent.

But the results are not uniform. In some companies, engagement scores soar and quit rates plummet. In others, nothing happens. Pete and KKR are spending a lot of time trying to understand why. The answer they keep coming back to is leadership. "If you have the wrong leader at the top, they're not going to get the most out of this program," Pete says. His current theory focuses on empathy. Leaders who do this because they genuinely want to help their people—"what an honor as a leader to be able to do this for, in some cases, thousands of people who have never had a shot economically"—tend to get phenomenal results. Leaders who approach it transactionally—"if I do this, how much productivity can I get? What exactly is in it for me?"—do not.

At GSI, the empathetic leadership was visible. Mike recalls the company's CEO, Colby Barrett, coming out to a job site and changing drill steel alongside the workers. "That's something that I bought into pretty hardcore," Mike says. It is the same challenge Pete had been thinking about since Cindy's company: building trust, actually listening to workers, just like his father wanted.

27:24The Broader Implications and Industry Traction

Pete will tell you that worker ownership is not a cheat code. It is really hard to do, and it does not always work. But the case he is making to his peers and competitors is becoming more compelling for a simple reason: private equity is not generating the big returns it used to, especially relative to the regular stock market. If Pete has found a new way to improve company performance and boost PE returns, the idea might actually spread.

There is evidence it is already happening. Other major private equity firms, including Blackstone, Ares, and TPG, are rolling out similar programs. The experiment that started with a union activist's frustration in Chicago, that stumbled through a silent equity grant at Capital Safety, that was refined through half a dozen manufacturing companies, and that finally produced a life-changing payout for a worker like Mike Pavelko—that experiment is now being replicated across the industry.

Conclusion

What stays with the listener is the sheer difficulty of aligning incentives in a system built on extracting value. Pete Stavros is not a philanthropist or a reformer; he is a private equity executive trying to make more money. But his father's question—why can't workers and management want the same thing?—has led him to a model that, when done well, genuinely improves lives. The episode matters because it shows that even inside the "big bad world of private equity," there is room for experimentation, for learning from failure, and for the possibility that treating workers as partners rather than costs can be good for business. It is not a solution to all of private equity's ills, but it is a real, large-scale test of a different way of doing things—and it is spreading.

Key takeaways

• Pete Stavros, a partner at KKR, has spent 15 years testing whether giving workers equity in their companies can improve business outcomes, inspired by his father's union activism.
• The standard private equity model increases productivity but also leads to job cuts, product degradation, and social costs; worker ownership is an attempt to align incentives differently.
• The first test at Capital Safety failed on communication: workers received equity but were never told, so they could not change their behavior or feel ownership.
• At GSI Geostabilization International, a later test succeeded: workers knew they were owners, quit rates dropped from 50% to 15%, and one worker received a $250,000 payout that allowed him to buy his first home.
• The model works best with empathetic leaders who genuinely want to help workers, not those who treat it as a transactional productivity tool.
• Pete has implemented the model at 85 companies, giving more than 190,000 workers ownership stakes they would not otherwise have.
• Other major private equity firms including Blackstone, Ares, and TPG are now rolling out similar programs, suggesting the idea is gaining industry traction.