In working for an employee-owned company, I am often asked, “What’s so great about being an employee-owner?” There are various types of broad-based company ownership programs, including employee stock ownership plans (ESOPs), equity compensation plans and worker cooperatives. There are several ownership program types that require employees to purchase stock or the stock to be granted to employees based on a criteria or performance. The difference in an ESOP is it is available to all full-time employees and the ownership comes at no cost to its employees.
According to the National Center for Employee Ownership (NCEO), there are more than 9,000 ESOPs and approximately 30-40 percent of them are 100-percent employee owned. The NCEO, along with many others, conducted multiple studies leading to the conclusion that “when ownership and participative management are combined, substantial gains result.” There are several benefits of working for an ESOP company, and in the industrial market, owner/operators can reap the benefits of hiring an ESOP contractor.
Working for an ESOP
Have you ever wondered what it would be like to go to work every day for a company you own with the autonomy to make the decisions that are best for your company, its people and its customers, and to work alongside people who have the same drive for success you do? You can when you work for an ESOP company. When you choose to build a career with an ESOP company, you are choosing a long-lasting, fulfilling career with many benefits, including:
• Job satisfaction.
• Higher total compensation.
• Strong company culture.
• Company sustainability.
• Employment security.
When a company disperses its ownership to 100 percent of its people, it creates a mutual interest in all career levels. This mutual interest, along with an involved management team, creates a culture of company pride and ownership. This pride radiates throughout the work the company does and is reflected in the company’s financial performance.
There is greater employment security in working for an ESOP company. According to studies conducted by the NCEO, “ESOP and broad-based equity plan companies are also less likely to lay people off.”
Working with an ESOP contractor
The owners/operators of the industrial industry often experience working with contractors that continuously experience management issues, high turnover rates and poor safety performance, with an interest in their own success instead of their customers’.
When you choose to work with an ESOP contractor, especially when it is 100-percent employee-owned, you have peace of mind knowing the people building or maintaining your project have a vested interest in your success. Douglas Krus and Joseph Blasi with Rutgers University conducted a study on pre-ESOP and post-ESOP performance that showed companies performed better after establishing an ESOP. In other studies, they also found ESOPs are more likely to have:
• Lower voluntary turnover.
• Higher return on equity.
• Higher employee commitment and motivation.
• High-trust supervision.
• Financial stability.
Employee-owners are typically more customer service oriented because they know their company’s success is a direct result of their customers’ success. These employees consistently strive to provide a positive customer experience and take ownership of this experience by maintaining a high level of communication, integrity and safety performance in the work they do.
Keys to choosing an ESOP
Being an ESOP alone does not always indicate the company has an “ownership culture.” As mentioned before, the company must have highly involved management. It is also important for the company to utilize the ESOP as a management style, granting their employee-owners the autonomy to own the work they do and empower them to make decisions and act with integrity to benefit not only the company but also its customers. This management style, along with a strong investment in the people, greatly benefits companies and individuals working for or with an ESOP company.
For more information, visit www.austinindustrial.com or call (713) 641-3400.