Taking Stock: Employee Ownership Can Boost Your Employee Retention
Executive Director
Business advisors sometimes ask company owners to do a mental exercise: Think about how they would manage their companies if they knew they were planning to sell in a year. The limits of this idea, but a similar mental exercise is one you might want to do. Imagine someone at your company receives an unsolicited job offer. What would be different at your company if your goal was to ensure that every current employee-owner would want to toss that offer in the circular file?
The most obvious step is one that most of the companies that participated in our 2022 ESOP executive compensation survey have taken—79% of the respondents said they had a larger-than-usual increase in base pay for nonmanagement workers.
Beyond the bottom-line dollars and cents, your HR department ought to be thinking like marketers. People gradually come to take for granted things they are used to, and well-crafted messaging can help remind your employees of how their work is rewarded. A total benefits statement can help, and it can be as simple as a table, customized for each person at your company, that shows the annual value of their base pay, plus the cost to the company of their health and retirement benefits, accrued vacation, any bonuses, and the company’s contribution to the ESOP.
But HR can use other marketing approaches too. Perhaps the most important one is “compared to what?” No matter where you are or what industry you’re in, from time to time there will be an ownership transition in another company most of your workforce is familiar with. Sometimes these transitions will be positive, but often they are not. Tell those stories about companies that did not sell to an ESOP. They might be about the economic wellbeing of employees at those other companies, or they might be about the culture and management practices. You may also find that new employees or, even better, employees who left your company and came back, can be ideal spokespersons to remind people about the value of working at your company.
One of my mentors, Charles Edmunson, said that people learn by talking, not by listening, and that’s the core idea behind a number of good ideas. One member company makes a point of involving lots of people in interviewing potential new hires. That not only gives the prospective employees a good sense of your culture, it also puts your current employees in the role of host. Representing their company, and saying all those great things about the company, remind them that those things are true.
Another way to get people talking is the stay interview, and a third is an employee survey. You may design your own, but many of our member companies use professional databases with comparison data. And if you’re interested, the NCEO’s Ownership Culture Survey can give you questions about employee ownership and comparison data from other employee-owned companies, and you can also tap into the NCEO’s experience in how to make productive use of the data.
One common theme running through a lot of these ideas is the central role of your human resources staff. A strong HR function is a common factor among many of the highest-performing employee-owned companies, and I predict that one outcome of the so-called Great Resignation, changing expectations for remote work, and all that COVID brought to bear is going to be a gradual elevation of HR within executive teams and company strategy.