According a recent SHRM article, Record 4.5 Million Workers Quit in November, The “Great Resignation” has no end in sight. For certain industries, attracting and retaining workers is especially difficult in these times. The trucking, hospitality and grocery industries are no stranger to these perils.
Clearly, there are many factors that impact an employee's decision to leave their job. But for employers, what innovative strategies and long-term solutions exist to provide incentives for employees to join and stay with a company? An ESOP (employee stock ownership plan) may be just that solution.
Over the next few weeks, as part of this series, I will share several resources explaining ESOPs and how they can be used to find and keep your talent in the pipeline. If you have any additional questions or wish to speak with someone about ESOPs further, please contact Marc Schechter at (858) 444-2300 or [email protected].
Week 4 of 6: Why are ESOPs an effective tool in addressing high turnover?
An Employee Stock Ownership Plan (ESOP) provides a way to reward employees for their hard work by allowing them to share in the growth in value of the company. This gives employees an incentive to see the company thrive and continue to grow. With a long-term interest in the business, it also encourages employees to stay with the company, saving the company costs associated with high turnover rates. ESOPs can also address two major problems facing the United States today:
- the vast number of Americans with little to no retirement savings; and
- the many owners of small- to medium-sized businesses with no succession plan in place for when they retire (“Silver Tsunami”).
The widespread adoption of an ESOP program may be a solution to both of these problems. An ESOP also provides a way to:
- keep the company local
- provide good jobs to residents
- act as a beneficial member of the community
- maintain the company's hard-earned goodwill (as something many business owners take pride in especially with their name attached to the company)
Week 1 of 6: What is an ESOP?
An Employee Stock Ownership Plan (ESOP) is a qualified retirement plan that invests primarily in employer securities. ESOPs allow employees to share in ownership of their employer. Eligible employees are provided stock ownership as a benefit of working for the company. There are many benefits to providing an ESOP to employees, including the ability to maintain a certain corporate culture and provide employer-funded retirement benefits. Read on: https://www.bsllp.com/practiceareas/esop.html. Download ESOP information booklet by clicking here.
Week 2 of 6: What are the benefits of an ESOP?
One of the benefits of an ESOP is the understanding that employees who have an ownership interest in the company will be encouraged to do what is best for the company's financial interest. As shareholders in the company through participation in the ESOP, the employee has a financial incentive to see the company succeed. This may increase productivity, reduce waste, and increase profitability. There are benefits for employees, the company, the selling owner, and tax benefits. Read on: https://www.bsllp.com/the-benefits-of-being-an-employee-owned-company
Week 3 of 6: Is my company too small for an ESOP?
ESOPs are not for everyone, but here are some considerations if you are asking yourself, “Is my company too small for an ESOP?” Read on: https://www.bsllp.com/is-your-company-too-small-for-an-esop