The first time I heard the news Palmer Group was going to become an ESOP company, I was unsure what to make of this change. The terms and financial jargon were a tad overwhelming, and I started to wonder, “Why is this an advantage? What exactly does it mean for me and my career to be part of an Employee Stock Ownership Plan?” I’ve since learned that behind all of the financial intricacies, being part of an ESOP company is an invaluable asset and one that directly impacts and benefits me, my coworkers, and my company.
Being part of an ESOP company means your voice matters; you have skin in the game now. This is favorable because when everyone has a stake in the company, goals start to align, and collaborative culture begins to grow. As an employee-owner, whether you’ve been with the company for two years or you are part of senior management, your job is important. Coworkers are interdependent as progress for one means progress for all. Here are some stats from the National Center for Employee Ownership that put things in perspective for me:
- Employee-owners were 4x less likely to be laid off during the recent recession
- Employees at ESOP companies have 2.5x greater wealth in their retirement accounts compared to employees from non-employee owned companies
- Employees at ESOP companies receive 5%-12% more in wages
Facts and statistics reinforce why being part of an ESOP is a secure, beneficial position. At the same time, being an employee-owner has other long-term benefits for your company culture. The mindset of an owner starts sinking in. Not only are you personally invested in the company’s progress, but management is more open and transparent; all of the employees are on this journey together. When you’re an owner, you have a sense of pride when your company does well. Everyone played a part in the success. The CEO isn’t the only one that reaps the rewards; we all get the benefits, and the share price of your company will reflect this. As employee-owners, we achieve progress together.
ESOP lingo can be confusing, so increased employee education is valuable. Plans differ from company to company, so it’s helpful to know what topics to read up on or what questions to ask. We all want to understand how this retirement plan works. Ask management to explain the intricacies of each financial statement, define diversification or explain what would happen if you left the company. All of these topics make a significant difference in your understanding of your company’s ESOP plan.