What Makes ESOP Companies Special?

In one word, culture.

Although employees at ESOP companies aren’t legal owners of the company (the trustee of the ESOP is), they are beneficial owners, and that creates a different mindset. They think and behave like owners of the company when they get to work because they know that making the company better and more valuable will benefit them. The company has to work to implement this culture, but it’s extremely powerful when it’s done properly. You’ve probably noticed this when you’ve patronized employee-owned companies like Publix, Wawa, Davey Tree and Houchens Insurance.

That translates into better businesses. There are mountains of research showing that employee-owned companies perform better than comparable, non-employee owned companies. They have better employee retention rates and are much less likely to cut jobs, even in difficult economic times (including the Covid-19 pandemic). A summary of the most comprehensive research on this topic is here.

What’s more, ESOP companies are very open about sharing their cultural successes with other employee-owned companies. Most large ESOP conferences, including those sponsored by the NCEO and the ESOP Association, have sessions on communications and culture in which ESOP companies will discuss some of the ideas that have worked for them. ESOP companies want to see other ESOP companies succeed, and the cultural advantages are a big reason why they do.