Historically, employers and employees alike generally assumed that health insurance benefits and an employee assistance program (EAP) added up to sufficient support for employee wellbeing.
But just as the nature of work has changed over decades for many Americans, so has the role of work within life, and employers have come to understand that employee well-being:
- Demands more than a paycheck and insurance benefits
- Impacts employee performance (and thus, company profitability)
- Distinguishes employers of choice against competitors
In fact, according to Gallup, only 24% of U.S. workers strongly agree that their employers care about their well-being. That points to a commonly missed opportunity, considering those employees who do feel cared for are:
- 69% less likely to look for a new job
- 71% less likely to report burnout
- Five times more likely to advocate for your brand
Proactive employers are exploring ways to stem burnout, improve retention, and demonstrate care. They’re incorporating wellness goals into employee development plans, destigmatizing EAPs, and even adding fruits to in-house snack offerings.
Human well-being is multidimensional and complex; there’s no “all-in-one solution” for demonstrating care. But if you’re a shareholder of a closely held private company, you have access to a uniquely powerful option for improving employees’ wellbeing: employee ownership through an employee stock ownership plan, or ESOP.
Employee Wellbeing Demands More Than a Wellness Initiative
Workers’ pandemic experiences highlighted the ways work can be a force for positive or negative impacts on wellness, particularly in terms of mental health impacts.
Whether your employees found themselves working remotely almost overnight or they were essential frontline workers, pandemic effects took a toll. Companies were smart to take steps to show care—and in fact, ESOPs fared better than their non-ESOP peer companies—but physical and social wellness are only part of the whole picture.
Gallup defines well-being as a multidimensional, holistic measure of a good life that incorporates thriving across five areas: career, socialization, finances, one’s physical state, and the context of a community.
The most obvious focus area where many employers turn is career well-being. Finding ways for employees to exercise greater autonomy, creating more pleasant in-office experiences, and providing career growth opportunities are areas where virtually any employer can improve.
But ESOPs a few unique advantages—and in addition, employee ownership has the potential to vitally influence other areas of employee wellbeing:
How Do ESOPs Enhance Career Wellbeing?
An ESOP taps directly into key drivers of career well-being by giving employees an ownership stake, which research shows increases engagement and satisfaction. Employee owners feel invested in the success of the company and empowered to care about company decisions. When an ESOP takes an open-book approach to management, employees grow their awareness of how their work connects to the company’s growth, too.
Using an ESOP as a business ownership transition tool also enables business owners to develop a strategic succession plan to support ongoing company success after the sale. That opens doors for employees to develop and grow into future leaders—which can be an effective way to retain quality employees.
How Does Employee Ownership Build Social Wellbeing?
ESOPs facilitate a collaborative work culture that enhances mutual trust and respect, and encourages coworkers to form strong connections. Employees have a significant point in common with teammates’ interests: they’re all owners working toward a shared goal of profitability.
This shared sense of vision creates purpose and value for the contributions of all employees across the organization. That can help build camaraderie and support across departments and divisions. In essence, an ESOP can help create an environment where employees feel part of a cohesive community working interdependently to grow the company.
ESOPs Make a Difference in Employee Financial Stability
One of the most tangible benefits of ESOPs is that it enables eligible employees to share in the company’s success through stock ownership. Employees earn equity over time, and get access to that equity as in the form of an ESOP distribution—usually requiring zero contribution by the employee.
That adds up to a retirement benefit that increases employee financial resilience in ways other retirement plans don’t. Plus, ESOP companies also offer 401(k) benefits at a higher rate than their non-ESOP peers — so overall, ESOP employees tend to have significantly greater retirement savings than the median U.S. worker.
Employers that take steps to enhance retirement readiness are demonstrating that they care about their employees not only while they’re employed, but also after retirement.
Physical and Community Impacts of ESOPs on Workers
A 2020 Rutgers study showed that ESOP companies outperformed their non-employee-owned peers in workplace health and safety throughout the early COVID-19 crisis. ESOP companies were more likely to add protective measures for workers.
In addition, the positive workplace culture, satisfaction, and stability created by ESOPs can also benefit employee well-being by helping to limit work stress. Empowered employees may be more likely to take initiative to improve workplace safety and look out for one another — and many ESOPs incorporate physical wellness into their culture and communications committee initiatives.
Many ESOPs enjoy a thriving sense of community within the workplace, but many ESOPs’ dedication to community expands well beyond the company walls. Many ESOPs help preserve and protect jobs in communities that depend on them to stay economically healthy, and their community roots are often deep. These meaningful ties also lend greater purpose to work, rounding out the picture of holistic employee wellbeing.
Employee-owners are also more likely to make decisions that ensure the long-term health and sustainability of the company since it's in their own interest as owners. This translates to thinking about safety, quality, innovation and other factors beyond short-term profits.
It’s no surprise studies consistently show ESOP companies report higher productivity, better retention, and lower turnover-related costs — and ultimately, it’s important to recognize that long-term, sustainable, healthy company growth depends on employees whose lives are healthy and sustainable, too. Find out how an ESOP can help your business support employee well-being — along with productivity, waste reduction, innovation, and much more. Download our free guide to building an ownership culture. Just click below to get your copy.