You have an ESOP; now what?

You have an ESOP; now what? ESOPs in Canada

Putting in place a new plan, any plan, is always only the first step; it never runs itself. ESOPs are no different. It is not a set it and forget it tool.
The ESOP transaction is over and has been well received; now the cultural transformation begins. The initial euphoria provides momentum for the work ahead, but how do you harness it into meaningful actions? Employees may be hesitant and uncertain about how to go about this. It is up to the board of directors and/or the leadership individual(s) to channel this new entrepreneurial energy and focus it on the goals of the corporation. The goal for the ESOP team is to instill a participative culture where the new employee-owners start to act and think like owners. The four areas of interaction with its employees are ownership, participation, training, and information. A challenge for companies transitioning to a true ESOP culture is how to communicate it in a meaningful way. There are many types of corporate information to be shared, including strategic, tactical, and investments. However, the one most commonly shared is company financial information. Some of our clients wonder, so be reassured: specific personal information about salaries is never disclosed.
The continuum of sharing of financial information stretches from sharing NO financial information to FULL transparency based on financial statements. In practice what does this look like? One of our clients decided to share quarterly and year-end financial statements with all employee-owners. To do this, they held town hall meetings quarterly, with highlights of company performance, and annually on a more expansive basis. Those attending were advised that the proceedings were to be kept confidential. At the annual meetings, summarized, condensed financial results were shown on the screen as the presenter explained them and answered employees’ questions. No personal identifying information was shown, no printed material was made, and no electronic material was distributed. However it allowed the new employee-owners to participate at a higher level than pre-ESOP and communicated important information in a way that employee-owners could make a meaningful connection to the results of their day to day work.

By Joanna Phillips CHRL, CVB, Vice President and Perry Phillips, CPA, CA, CBV, President


How Does Neuroscience Affect Employee Engagement?

What is the foundation for effective employee engagement within your ESOP?

Trust. 

Actually, trust is the foundation for every relationship, in any area of your life.  And the only way to create a workplace environment for greater connection, collaboration, innovation, creativity, and success, is by building incrementally higher levels of trust every day.

A basic understanding of neuroscience can allow us to have a simple, understandable dialogue about some of the elements that instill trust, employee engagement, and can lead to an even more successful Employee Share Ownership Plan (ESOP).

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12 Successful Strategies for Creating a Participative Environment

Studies in the United States over the last 40 years have repeatedly identified that an employee share ownership plan (ESOP) with a participation component outperforms one without a participation element.

Participation means that the employees take on the responsibility of their particular job as well as the accountability that goes along with it by participating in decision-making in their sphere of influence within the organization.

Participation is vital to an ESOP. In fact, the same studies have shown that ESOPs without employee participation might be worse than having no ESOP at all. This negative result has been calculated at upwards of 6% of reduced production. 

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