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.
Hiring a new leader to join your employee ownership culture? I was recently speaking with a human resources manager compiling a job specification for a senior manager succession plan she needed to fill due to a pending retirement. As we began discussing the transition, a thoughtful dialogue on what leadership looked like in an employee-owned culture soon became the focus. Here are some key attributes we came up with.
“Live your values. If you don’t know what they are, go find out.” -Art Barter
When an organization develops a culture based on a strongly held and widely shared set of beliefs that are supported by the business strategy, amazing things happen. Based on an extensive study, employee ownership increases sales 2.3 to 2.4% per year over what would have been expected without an ESOP (Employee Stock Option Plan), reports the National Center for Employee Ownership (NCEO).
Business succession planning will be critical for numerous businesses as approximately 10,000 Baby Boomers reach age 65 on a daily basis according to a Pew Research study. According to this study published in December of 2010, by 2030 all Baby Boomers will be at least age 65 and will represent approximately 18% of the nation’s total population.
Many business owners may wonder, “What is an employee stock ownership plan (ESOP)?” This a common question from business owners seeking business succession plans as a method for liquidating their equity in the business while maintaining the culture and values of the company they built during their working years.
Part One of our Roles and Responsibilities of an ESOP Plan Trustee highlighted the requirements for an ESOP Plan Trustee according to Title 29 of U.S. Code Section 1104(a) and IRS Section 401(a)(28)(c).