7 reasons to consider employee ownership/ESOPs

by Employee Share Ownership on January 23, 2012

1. It improves the bottom line
Study after study confirms that companies that implement broad based and extensive employee ownership or ESOPs improve their performance as a result – and outperform companies that are similar but have no employee ownership. Employees look for ways to cut costs and to raise performance when they are involved in the business and share the rewards.

2. It makes managing the business easier.
When the employees share a fundamental concern for the performance and success of the venture and have a say in the decisions that involve them, it’s easier and quicker to have decisions implemented and to get them to do what needs doing. It’s gratifying to be able to share the celebrations of success.

3. It supplies the glue with which to build a business-oriented culture.
When everyone in the business shares a strong interest in the financial success of the venture, people pay attention to business priorities and cooperate productively to get things done. People can rely on each other.

4. Makes work more meaningful.
Conception and execution at work are reunited. Rather than toiling to build wealth for someone else, people who own a piece of their company can find purpose as part of a team that is competing to succeed in their own right in a meaningful challenge.

5. It serves as a currency for attracting talent.
A young firm that is short on cash can offer equity interests to attract and hire individuals with the talent and experience the venture needs.

6.It facilitates ownership succession in closely held businesses.
Too often, business owners wishing to retire face the prospect of closing the doors and terminating the venture, or selling it to a large buyer who will dismember the business and merge it out of existence. A sale of the firm to its employees using an Employee Share Ownership Plan (ESOP) keeps the firm independent and thriving.

7. It creates wealth in places it would not otherwise exist.
By more broadly distributing productive capital, employee ownership allows regular employees an opportunity to develop asset value without having to use savings or risk their other assets to get it. It anchors jobs and capital in the local community.

If you want to find out more about how employee ownership/ESOPs can help your organisation, call 0424 557 297, become a member or attend one of our training sessions.

See also “A Visual Guide to Employee Ownership”

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