The One-Stop ESOP Blog

An ESOP is a Business Transition Tool

ESOP stands for Employee Stock Ownership Plan.  An ESOP is a qualified retirement plan that can be used as a business transition tool and as an employee ownership vehicle.

An employee stock ownership plan (ESOP) is a business transition tool that establishes an ESOP trust to be an ongoing perpetual owner of the company.

What is an Employee Stock Ownership Plan (ESOP)?

ESOP stands for Employee Stock Ownership Plan.  An ESOP is a qualified retirement plan that can be used as a business transition tool and as an employee ownership vehicle:

Building an ownership culture begins with defining and communicating organizational purpose and values, tying them to your performance management process, and rewarding employees for their contributions. Building a People Strategy around your ideal culture will generate change.

Part 2 of a 3-part series

Four Creative, Low-Cost Ways to Educate Employees About Benefits highlights several of the common challenges of educating and communicating the unique changes and additions to an employer’s benefits.

Building an ownership culture begins with defining and communicating organizational purpose and values, tying them to your performance management process, and rewarding employees for their contributions. Building a People Strategy around your ideal culture will generate change.

Part 1 of a 3-part series.

Numerous ESOP companies have an ESOP Communications Committee which focuses on providing proactive educational materials for fellow employee-owners to ensure everyone’s understanding of this unique, nontraditional benefit called employee ownership. I would like to highlight a few key factors that each committee must plan for in order to be effective in its role.

An ESOP is a unique, nontraditional benefit that is only experienced by approximately 6,700 companies in the United States of America according to a study completed by the NCEO. Most employee-owned companies have a unique culture, where employees are focused on improving the company’s overall performance daily because their daily activities have a direct impact on the overall value of the company.

The members of an effective ESOP Communication Committee are the unsung heroes and advocates that facilitate the messaging of employee ownership throughout the organization.  This special task force, when deployed correctly, can be a game-changer for ensuring the ESOP message resonates with all employee owners, no matter their position or tenure with the company. There are several key factors that each and every committee must plan for in order to be effective in its role.

Currently, the job market is experiencing record low unemployment, so retention is KEY. A recent Gallup Poll showcases the current landscape for employees in terms of their level of engagement for an employer.

• 32.5% of employees are engaged
• 51.8% of employees are not engaged
• 15.7% of employees are actively disengaged

Are your employees challenging you by feeling they are entitled to make decisions above their pay grade? Decisions outside the scope of their role? Feeling the need to “approve” peer compensation?

While these may seem like extreme examples, if you lose control of the message, this could become your reality. Management is still in control with an ESOP (employee stock ownership plan). Organizations still have an organization chart with positions and people identified to fill key roles. An employee ownership culture encourages empowerment and engagement but managing expectations is important to keep a healthy culture.