How an ESOP Can Impact Your Company Culture for the Better

Businesses that operate under an Employee Stock Ownership Plan (ESOP) tend to have more motivated employees who generally take more ownership of their roles within the organization, leading to a healthier company culture that prioritizes fellow owners as well as customers. 

Read on to learn more about ESOP and how it can positively impact your company culture:

What is an ESOP?

First things first, it’s important to define what the term ESOP means. In short, it stands for an employee plan that gives employees ownership or shares within the company for which they work. This means that they own a unit of capital or a piece of the company’s profits or assets. In other words, they aren’t merely passive employees but become joint owners, who have a vested interest in whether the company does well.

What Are The Benefits of Operating as an ESOP?

There are many benefits as you might imagine for operating as an ESOP company. However, one of the most notable is likely the reduction in the general turn rate. In most businesses, there exists a high turnover rate, going as high as 30% in some cases. Conversely, ESOP companies tend to have much less turnover than average companies. This means they can reduce the cost of training and recruiting as their employees stay put once in place. ESOP companies also tend to withstand economic downturns better. In fact, during the past two years when so many businesses went under due to challenges surrounding the COVID-19 pandemic, ESOP companies flourished in comparison to other, publicly-traded companies.

Why ESOP Matters: As an Employee and as a Customer

Another notable benefit of an ESOP environment is the fact that it gives employees the means to build a retirement plan without the need for a monetary investment on the employer's part. While many companies will provide some sort of 401K, it has been proven that ESOP retirement benefits are more equitably distributed and typically larger than more traditional forms of wealth investment. ESOPs are also tax-exempt trusts, which means employees don’t have to pay taxes on their earnings. This of course instantly translates to a greater profit.

How Could The Benefits of an ESOP Impact Your Company Culture?

Employees of ESOP companies tend to feel they have a greater voice and much more impact on their own success. Many times, in a traditional employee/ownership set up, employees are often left feeling as if they are used to make a buck but will never get ahead themselves. This leads to feelings of resentment and can often conclude with an employee transferring or quitting. However, when it comes to ESOP companies, their employees are invested, it changes the entire culture of the company for the better. After all, this allows employees to have ownership in their own success. They can quite literally get ahead by working harder in an ESOP company, whereas that same work ethic might get them anywhere in a traditional company setup.

Operating as an ESOP Unlocks Endless Opportunities

Operating as an ESOP benefits all of the employee owners as well as the customers of said company.  After all, customers are served by actual owners in the company in the form of employees, which dramatically improves overall customer service. Furthermore, each and every employee will feel like they have some skin in the game, motivation for success because they will see ESOP stock prices increase when the company does well. We know this because of our success in operating as an ESOP. When working with our team, you can rest assured that we have your best interests in mind, because when you succeed as a company, we succeed as well. That’s why we are, Humans Helping Humans!

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