It is estimated that less than 10% of the workforce actually own their own business. That means over 90% are employees. This statistic is important because owners and employees differ in how they think about business issues.
- Cash Flow
- Revenue Growth
- Market Share
- Employee Retention
- Cost Control
And what does the employee think about?
- Job Security
- Work Environment
So what does this tell us when we look at both groups?
First, it says that employees look inward towards what directly impacts their lives – pay, recognition, job security, etc. Quite rightly, they think about themselves and their families. The owner, on the other hand, looks outward – cash flow, risk, employee retention etc. Neither view is better than the other, but they are different. The owner makes decisions that impact the whole company, while the employee makes decisions that impact the employee.
The importance of an Employee Share Ownership Plan (ESOP) is that it changes the perspectives of both the employee and the owner. It gives a special lens to each that helps each group make decisions that are more congruent and in line with how each group sees decision making in the company. It creates a culture of ownership which then leads to higher engagement, higher productivity, and higher profits. It also leads to a greater understanding and empathy of the difficulties faced by each group as they all try to live their lives and contribute their best efforts towards creating a successful business.
By Perry Phillips, President and Founder of ESOP Builders Inc.