3 Benefits of Employee-Owned Companies

By: John Hotson,
Business Transition Alliance Co-Founder

More often than not, we are seeing the rise of employee-owned companies, or Employee Stock Ownership Plans (ESOP) where employees can become shareholders in their workplaces. Not only is this more of an incentive for employees to work hard and be motivated to help drive the company’s success, it is also a secure way for employers to retain their employees.

Employee retention, correlating to employee engagement and employer branding, is essential to a successful company. What better way to help your brand than by having your own employees say amazing things about their workplace?

What’s more, employee ownership is beneficial in business transitions. As a business owner, you want to make sure you are leaving your business in the hands of those who feel as passionate as you do about your business.

3 Benefits of Employee-Owned Companies

Here are 3 benefits of employee-owned companies:

  1. Employee retention: With an employee-owned company, employees are investing in your business, making them more likely to stick with your company because they feel as if it is their company, too. Employees can feel good about the work they are doing, knowing it is paying off in the long run. According to the Employee Ownership Foundation’s 21st Annual Economic Survey of ESOP Companies, 76% of respondents indicated the ESOP positively affected the overall productivity of the employees.
  2. Employee motivation: When employees feel as if they are working for their own business, they are increasingly more motivated to put their energy into their work because they are working for their money in this way. As well, it improves organizational performance by aligning company goals. When the company does better, so do the employees!
  3. Smooth ownership succession: For a business owner who is looking to sell their business, an employee-owned company through a shareholder program gives the selling owner the opportunity to decide when to sell all of the company all at once or through multiple transactions and to determine how much and when to sell. Essentially, the business owner is given a lot of flexibility in deciding what the best move is when it comes time for a business transition.

There are many more benefits to an employee-owned company, but we’ve shared the main three in this post. Contact us at contact@btahelps.com for additional information on how to best ensure smooth business successions and business transitions.

About John Hotson:

John is a seasoned marketing and communications professional and running addict. He has worked as both a business owner and advisor to owners who are committed to improving the value of their business. John is a principal of Clearwater Corporate Communications and a co-founder of The Business Transition Alliance.

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