We have reviewed methods for transitioning your business compared to selling to an Employee Stock Ownership Plan (ESOP). One of the arguments against ESOPs is the perceived lack of diversification, because all the participants’ investments are in company stock. The National Center for Employee Ownership (NCEO) has done a great job of addressing this myth by showcasing how employee ownership can create jobs, strengthen the economy, and develop companies, illustrated in this infographic.
The infographic from the NCEO highlights the following benefits:
- ESOP companies are 25% more likely to stay in business.
- Employee-owners were 4x less likely to be laid off during the recent recession.
- Employees at ESOP companies have 2.5x greater retirement accounts.
- Employees at ESOP companies receive 5% - 12% more in wages.
- Productivity improves by 4% - 5% on average in the year an ESOP is adopted.
- Over a 10-year period, ESOP companies have 25% higher job growth than comparable companies without an ESOP
- ESOP companies increased sales by about 2.3% - 2.4% per year.
- ESOP companies see average yearly post-ESOP improvement in return on assets of +2.7%.
Each of these benefits associated with employee ownership can really help with not only engaging your employee owners, but with improving recruitment and retention rates compared to non-ESOP companies.
Infographic by National Center for Employee Ownership (NCEO) from The Economic Power of Employee Ownership