ESOP Careers – Employee Retention Research Report

Attracting, hiring, and training new workers can be costly — and those aren’t the only prices paid when workers quit. Open positions require other employees to shoulder extra burdens, causing stress that can lead to burnout — and potentially, the loss of even more workers.

According to Pew Research, 2.5% of U.S. workers (about 4 million people) switched jobs every month from January to March of 2022. If no single worker had switched more than once during that time, it would mean that just over a third of all workers would have changed jobs during the first quarter of the year.¹

A recent study calculated an average of 42 days and a price range of $2,792 to $4,425 to replace an employee.² Few businesses are well positioned to absorb these kinds of costs.

Employers are looking for innovative ways to recruit and retain employees before they experience a spiral of attrition and mounting losses that include:

Lost productivity and efficiency

Lost sales or customers due to lack of capacity

Costs to recruit, hire, onboard, and train new employees

Deterioration of workplace culture

Millennial and Gen Z employees are also seeking advancement opportunities. Some workers cite a desire to change careers that they attribute to “COVID clarity,” or the time away from work due to pandemic shutdowns, and an opportunity to reflect on values and priorities.

Other considerations that rank toward the top in similar surveys include stability and security, advancement opportunities, a chance to do their best work, and values alignment between employee and employer.

Employers trying to gain a competitive edge have begun looking at recruitment and retention strategies like remote and hybrid options, bonuses, and additional benefits to meet workers’ desires for work-life balance, mental health support, financial wellness, training and development, etc.

Experts in worker retention recommend more innovative retention strategies that include adding more benefits to compensation packages. But how can employers know which benefits will deliver employee recruiting and retention value?

ESOP Partners recently surveyed currently employed, primarily millennial-aged workers. Our results mirrored common findings in many ways — yet our survey respondents placed higher value on job longevity and lower on new benefit trends. Above all, the majority of respondents reported interest in an employer-sponsored retirement plan that doesn’t require a contribution from employees’ paychecks — as is the case with an employee stock ownership plan (ESOP).

Here are the top takeaways from our summer 2022 survey:

Stability and security

Higher wages and better benefits

Workplace culture

An advantage in employee retirement readiness

Employee engagement and loyalty

A 2021 survey of mid- and lower-level employees⁴ found that, as a result of the pandemic, non-ESOP employees experienced…

Six times the rate of downsizing or job loss
Three times the rate of financial insecurity
Twice the rate of inability to pay down debt

… than their peers at ESOP companies. What’s more, a 2022 study found that ESOP employees give their companies higher marks for social justice, community investment, volunteering, and economic opportunity.⁵ This points to an ESOP company’s advantage in delivering not only a desirable retirement benefit, but also a workplace culture that aligns with employee values and engenders opportunities for workers to create meaning on the job.

Some of this higher ranking may be attributable to the effect of “ownership thinking,” since ESOP employees become beneficial owners by earning shareholder stakes over time. (Note: When an ESOP employee retires or leaves, the ESOP buys back the shares at their current fair market value—this is, in short, how the ESOP retirement benefit works.) As employee-owners, workers may feel their own values contribute more to corporate culture than those without similar shareholder stakes.

Notably, the level of interest in an added retirement benefit plan is somewhat at odds with workers’ awareness of ESOPs. When we asked whether respondents knew what the acronym “ESOP” stands for, only slightly more than half (53%) selected “Employee Stock Ownership Plan” from the available responses. This suggests workers and employers alike could benefit from an increased understanding of employee ownership and an investigation into whether this additional qualified benefit plan could deliver valuable advantages on both sides of the employer-employee relationship.

12 months or less	12%
1 to 2 years	20%
5 years or more	68%

A financial education program	6.7%
A new wellness initiative	14.7%
A 100% employer-funded retirement plan	78.6%

Recruiting & Retention Value of Employee Benefits

Do Workers Want Trendy Perks or Another Retirement Benefit?

Lost productivity and efficiency

Lost sales or customers due to lack of capacity

Costs to recruit, hire, onboard, and train new employees

Deterioration of workplace culture

Why Are Employees Quitting Their Jobs?

Retirement Benefit Appeals to Generations Facing Financial Challenges

Assuming your current job is secure, how long do you expect to remain with your current employer?

Which of the following employer-provided benefits would you value most?

Employees & Employers Lack Awareness of Employee Stock Ownership Plans

Stability and security

Higher wages and better benefits

Workplace culture

An advantage in employee retirement readiness

Employee engagement and loyalty

Build Your Ownership Culture & Maximize the Business Benefit of Your ESOP

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