Myth Busted: My employees won’t be interested in joining an Employee Share Ownership Plan - Succession Plus

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Myth Busted: My employees won’t be interested in joining an Employee Share Ownership Plan

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Myth Busted: My employees won’t be interested in joining an Employee Share Ownership Plan

By , October 2, 2018
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Often employers think that employees are not interested or wouldn’t want to be involved in the company’s employee share plan – nothing could be further from the truth.

The academic research has regularly reported “strong support for the extrinsic satisfaction model of ESOP employee ownership: money matters.” It is also the case that employee ownership has a positive impact on average employee attitudes when it is coupled with significant financial rewards and / or participative management practices.

Average company ESOP satisfaction and organisational commitment are high and average company turnover intention is low when the ESOP provides substantial financial benefits to employees, when management is highly committed to employee ownership and when the company maintains an extensive ESOP communications program.

In more recent research amongst employees in Australian ESOP’s (by Computershare in 2017):

52% of plan participants say that the plan reduced the chance they would leave the company either “to a great extent” or “to some extent”.

63% of participants feel “very loyal” to the company.

73% of plan participants agree or strongly agree that the company is a good place to work.

The numbers speak for themselves – employees are very happy to be involved and are more likely to contribute, stay and help build the value.

 

There’s no place like Home Depot

Home Depot Inc. was founded in 1978, went public in 1981 and became an employee-owned company in 1986. “As soon as we went public employees were given a couple of options;’ said Jerry Shields, spokesperson for the Atlanta, Ga.-based home improvement retailer.

“Employees were given the opportunity to buy stock at 15 percent below market value. In 1986 we started an ESOP, called the Future Builder plan, based on a percentage of the profit. The company would put that money into a vesting fund for employees.

“All full-time employees are stockholders in Home Depot. People feel like it’s their company, and they act like it’s their company,” said Shields.

And that’s what makes a company’s investment worth it. “Everyone performs and makes decisions as if it were their company. They feel a part of it, and they take care of each customer as if it were their own customer.”

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.