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).
The landscape in today’s job market for hiring companies is difficult, especially with the unemployment rate at 4.1% for the past three months, according to the Bureau of Labor Statistics. Unemployment rates are at the lowest since 2000. Employers continue to need top talent to grow operations. This was evident with December’s jobs report indicating, once again, that we added jobs, another 148,000 to be exact. Companies have added 2.1 million employees in 2017 and 2.2 million employees in 2016, so it doesn’t appear to be slowing down anytime soon.
In the initial start-up phase of your company, your personal and professional goals were aligned. Now, as you consider the next season of life away from your business, you must start researching your options for transitioning your business. In parts one and two of New Year, New Ownership Plan, I reviewed, at a high level, some of the advantages and disadvantages of selling to an ESOP or a private equity firm. In part 3, I will provide some insight on the advantages and disadvantages of selling to a third-party. When transitioning your business, you are faced with one basic question: Do you sell the business to an internal (employees or family members) or external (private equity or third-party) party? It is very important that you research each option and find the one that aligns with your vision for the future.
In part one of New Year, New Ownership Plan, I reviewed, at a high level, the benefits associated with transitioning your business to an Employee Stock Ownership Plan. As I mentioned in the previous blog article, this is not the only option you have as a business owner. Another option could be selling to a private equity firm. I would like to highlight the advantages and disadvantages associated with this option.
An Employee Stock Ownership Plan can be a perfect option for transitioning your business, but it is not the only option. The next series of articles will focus on the different ways a business owner can transition their business. This decision can and should involve a lengthy research process to ensure the best fit for you, the business owner!
Providing proactive education and building awareness is important to help employee owners understand their importance and impact on the ESOP on a daily basis and to maximize their expectations and return through the entire lifecycle of the Plan. The ESOP Trust has saved the company a lot in taxes and has provided each employee owner with a financial stake in the company’s value today and into the future.
Today’s blog article focuses on what information should be shared to ensure you keep employee owners’ attention. My previous blog article, The Secret Ingredient in Employee Ownership, highlighted how to engage employees through creating a sense of value among your employee owners through the following four key emotions: enthusiasm, inspiration, empowerment, and confidence.