5 Key Traits of Successful Employee Share Ownership Plans

Imagine if your employees were as focused, driven, and motivated about your business as you are – imagine if they came up with new ideas and cost savings regularly and imagine if they were as interested in profit as you. Sounds like Utopia but it is possible and in fact it is happening with businesses that effectively use Employee Share Ownership Plans.

The research tells us that businesses that combine employee ownership with a participative management style grow 8-11% per year faster than they otherwise would have.

Employee Share Ownership Plans are a great way to:

• Attract, retain and motivate key employees.
• Improve business performance – profitability, staff retention, productivity.
• Build an internal succession plan for staff and business owners.

“Employee ownership is a different way of thinking about business. It targets long-term sustainability by recognising that employee/owners are more committed to developing innovative products and processes. The result is competitive advantage and lasting success – in good times and bad.” 
– Sir Stuart Hampson, Former Chair of the John Lewis Partnership, the largest ESOP in the world with over 80,000 employees in the plan

There is no one-size-fits-all structure and designing an appropriate ESOP will involve consideration of your businesses current performance. In any case, the following simple rules should apply to successful Employee Share Ownership Plans:

1. Be Simple – well thought out and easy for all staff to understand
2. Be Applicable – applies to all staff consistently (although you can choose to offer greater reward to particular levels or staff or for particular relevant outcomes for which employees have control)
3. Be Transparent – communicated clearly and without ambiguity. All performance indicators must be able to be measured objectively and progress communicated regularly
4. Be Reliable – once communicated, should not change often
5. Be Supported – the system must be supported by all company owners, board and management

Craig West

Executive Chairman | Succession Plus

Craig West is a strategic accountant with over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.

In March 2014, Craig was appointed Executive Chairman of the SME Association of Australia, Australia’s largest small business organisation representing over 300,000 business owners.

In October 2014, he was awarded the Exit Planner of the Year at the Exit Planning Institute Annual Conference in Texas, USA, due to his innovative development of an exit planning process to help business owners maximise business value and achieve a successful exit.

Craig’s proprietary structure - a Peak Performance Trust - has won the Australia-wide award for the Employee Share Ownership Plan of the year twice in four years.

In November 2018, Craig launched SME Experts in partnership with Mark Bouris’ Mentored on Podcast One and quickly grew the monthly podcast audience to over 26,500 downloads; in October 2019, he released a new podcast focused on medium-sized businesses - Mid-Market Matters.

In July 2021, Craig joined the NSW Committee for STEP (Society of Trust & Estate Practitioners) – focusing on advising families across generations.

Craig has also launched a SaaS platform, Capitaliz (which captures the 21-step process), to assist other advisers internationally deliver advisory services at scale.

In November 2021, Craig was appointed Executive Chairman of NSW Leaders, a business mentoring group for leading NSW businesses.

In July 2022, Craig West received the award of Doctor of Business Administration for his research thesis titled “Examination of the key factors driving business exit options in Australian Small and Medium Enterprises.”

Craig is passionate about encouraging business owners to think strategically, maximise the value of their business and achieve a successful exit.