ESOP Benefits

Postal Strike Looming – Is There a Better Way?

Admittedly, the business of Canada Post has changed dramatically in recent years, which is contributing to the looming postal strike.

Moving away from paper-based communication and transactions has slowed the flow of business to Canada’s Postal Service. As consumers we have seen increased rates and cancelled home delivery as two public facing ways the public corporation has tried to make its business model make sense.

Canada's postal strike could be solved by employee share ownership.

Personally I am firm believer in accessible public services, however the privatization of postal services in the U.K., New Zealand, Finland and Sweden suggest that it may be worth considering.

When the U.K. privatized Royal Mail, it sold 10 per cent of the company shares to its employees, the largest employee-owned share sale resulting from any government privatization.

Consistently, research into employee ownership shows greatly improved business results. Allowing your employees to own a piece of the company creates room for creativity and innovation more difficult to foster in a bureaucracy.

The Toronto Stock Exchange compared ESOP versus non- ESOP public companies and showed that in ESOP companies:
– five-year profit growth was 123% higher
– net profit margins were 95% higher;
– productivity measured by revenue per employee was 24% higher;
– return on average total equity was 92.3% higher
– return on capital was 65.5% higher.

So, as the challenges continue to mount against Canada Post, and the strike looms, perhaps the U.K. model of an employee-owned postal service is worth considering.

By Jennifer Williams, employee ownership specialist at ESOP Builders Inc.