Do your employees love their jobs? Only about half of U.S. workers do, with job unhappiness at a staggering all-time high, Gallup finds. Three-in-five employees are considering resigning in 2023. What’s the cost of unhappy employees to American business and the economy’s productivity, performance and profits? At least half a trillion dollars annually, and that was a pre-pandemic estimate.
No wonder the Labor Department has begun a so-called Good Jobs Initiative to, among other goals, engage employers and employees as partners in improving job quality and pathways to good jobs.
So where in the U.S. economy do we find people who like their jobs? I’m proud to say it’s at employee-owned companies. Over 100 studies indicate that employee ownership links generally to better job stability, productivity, pay – and firm resilience.
During the pandemic, for instance, ESOPs retained jobs at a four-to-one rate compared with non-employee-owned companies while also maintaining normal hours and operations at a significantly higher rate. Verit Advisors’ own in-depth research, released early in 2023 and based on interviews with 90 ESOP leaders, found that their employees express a strong sense of affiliation and purpose, which they believe generates a higher retention rate of employees and managers.
In addition, these leaders perceive the benefits to ESOPs evolve over time, with those whose ESOPs are at least a decade old noting their employees’ higher sense of purpose resulting from ownership. “Employee ownership can be a big win-win for American workers and businesses – boosting freedom, prosperity, and competitiveness,” asserts Maureen Conway, executive director of the Aspen Institute’s Economic Opportunities Program.
The Aspen Institute partnered in mid-June with Rutgers University’s Institute for the Study of Employee Ownership and Profit Sharing on a two-day ideas forum. Its focus: to highlight the intensifying interest in employee ownership by Congress, with passage of two bills – the Main Street Employee Ownership Act and the Work Act — and a recently introduced Employee Equity Investment Act.
I returned from the forum invigorated by the unceasing belief that job satisfaction reigns for most ESOP employees, because their companies help them build a foundation for their career purpose and future, while at the same time ESOPs contribute to firms’ value-creation.
The forum included the real-world experiences of ESOP leaders who maintain that employee ownership creates an engaging and positive culture, supports good jobs, and sustains strong business results.
Why is employee ownership important to job satisfaction? My POV, based on over 30 years advising, structuring and closing over 400 ESOP transactions, mirrors closely that of Hoffman & Hoffman, an HVAC and building automation company based in Greensboro, N.C., that in 2016 became 100% employee-owned. In January 2022, Hoffman & Hoffman posted its five reasons for working at an ESOP, a dynamic I’ve seen at work in hundreds of ESOPs:
1. Greater Job Satisfaction: ESOP employees gain greater job satisfaction by having a personal interest in seeing that their work benefits the company. Often, ESOPs see greater productivity, higher profitability, and increased revenue, which tend to continue over time from employee motivation.
2. Every Employee is an Owner, so You Work with Equally Dedicated People: Each employee has something to gain from a job well done, and it is amazing to see coworkers working together toward a common goal of company success.
3. Training & Advancement Opportunities: ESOPs want to invest in their employees because their employees invest in them. Employee Ownership Foundation-funded research found that employee-ownership companies are 30% more likely to provide employee training than non-ESOP companies.
4. Better Retirement Savings: ESOPs are similar to 401(k) retirement accounts, but with one major difference: Employees don’t contribute their own funds to the retirement plan. Employers make the contributions, and employees benefit from the accumulation of those funds over time. ESOP participants have roughly 2.2 times as much in their retirement savings accounts as participants in comparable non-ESOP companies.
5. Job Security: In difficult economic times, employees of private and publicly held companies are much more likely to be laid off than ESOP employees. As noted, during the pandemic, ESOPs retained jobs at a four-to-one rate versus non-employee-owned companies.
The enthusiasm for employee ownership that I experienced at the Aspen Institute forum and the momentum around ESOPs and similar plans nationally is why I continue to believe that the 2020s will be the Decade of ESOPs.
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