The Advantages of Employee-Owned Companies

Five significant advantages of employee-owned companies with ESOPs

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Are you looking to explore more opportunities in your future jobs? Here are some advantages to working at an employee-owned company. Kiplinger, a personal finance magazine that covers topics like retirement, taxes, insurance and much more, lists five in a recent article:

1. The first advantage of ESOPs is the boost of employee engagement through wealth distribution. ESOPs allow employees to own a portion of the company instead of selling to outsiders or selling to a small group of internal executives to purchase a company. As reported in Kiplinger, both risks and rewards come from ownership. For example, if company stock goes up, so does the net worth of employees, and because of this employees become more invested in having a successful business. 

2. Job satisfaction is one of many important factors when looking for employment. Forbes, the global media company reports, employee-owned companies tend to have higher job satisfaction because of their many rewards such as greater productivity, higher profitability, and increased revenue. According to the National Center for Employee Ownership, employee-owners are also more likely to have higher wages and better retirement benefits and are at a lower risk of losing their jobs in economic downturns than employees at non-ESOP companies.

3. Job security is another crucial factor when looking for long-term employment. The National Center For Employee Ownership reports that people who work for ESOPs have increased job stability, higher incomes, and an increase in productivity. Kiplinger also reports that companies with employee ownership tend to emphasize long-term stability over short-term profit. The Kiplinger also argues that this approach can lead to enhanced job security and may also reduce the likelihood of extensive layoffs. Moreover, research indicates that employee-owned businesses tend to experience faster growth due to the alignment of interests between ESOP participants who aim to build wealth and the company’s objectives.

4. The fourth advantage is keeping jobs local. Kiplinger explains that through the adoption of employee ownership structures like ESOPs, communities benefit from increased investments that also reduce the risk of job relocation. This approach can be beneficial because job opportunities stay in local areas and can also promote community development as well as reduce unemployment.

5. The fifth and final advantage is personal wealth-building. In the Kiplinger article, they also highlight ESOP company competitive pay and comprehensive benefits. They also point out ESOPs staff exceptional opportunities for wealth accumulation through participation in the Employee Stock Ownership Plan which gives workers ownership interest in the company through stocks.