A group of us met to talk about why we do what we do. The obvious answer: we do what we do because we have the knowledge and experience and there is demand for our services as an independent institutional ESOP trustee. It’s how we generate profit and grow the business for our shareholders and employee owners. But that was not the reason that emerged from our conversation.
What drives us is that through our work we make a difference in people’s lives.
ESOPs have the power to improve the working lives of employees – directly by increasing employee engagement and indirectly by improving company performance which in turn provides greater employment stability and the opportunity for advancement and better pay. In smaller communities like our hometown of Quincy, IL and in rural America, selling a business to an ESOP improves employees’ lives by keeping jobs local.
The sale of a business to an ESOP can have positive effects at the community level too. The likelihood that jobs will leave the community – especially damaging in smaller communities and rural areas – is reduced. Wages paid by the business stay in the community, supporting local businesses and generating tax dollars to support schools and social programs rather than vanishing with jobs exported elsewhere. A business that played an important philanthropic role in the community continues to play that role.
From a longer-term perspective, an ESOP can generate otherwise unattainable life-changing wealth for employees, their children, and their grandchildren. This wealth may enable a family to pay for college, to purchase a home, to fund a dignified retirement. In urban areas, the wealth generated by years of employees’ labor can remain in the community from which employees are drawn – communities that are often desperate for a means by which they can lift themselves up.
How do we know this?
We know this from our work on behalf of the participants of ESOPs for which we serve as fiduciary. The grandparent able to pay a grandchild’s college tuition. Participants with ESOP balances many times their 401(k) balances. Warehouse workers able to retire early. Wealth whose impact extends generations.
We know this from stories shared amongst ESOP professionals. Funds to pay for the care of a special needs child. A $100,000 check to a newly disabled employee. A business saved due to workers who kept working during the pandemic rather than taking higher unemployment benefits. The owner who sold for less to keep jobs in his community.
Finally, we know this from research conducted over the past 25 years by researchers at EY, Rutgers University School of Management and Labor Relations, the Beyster Institute, the Upjohn Institute and others that demonstrates consistently that employee ownership is tied to increased earnings and family wealth and improvements in company performance and job stability relative to non-ESOP-owned companies. This is why we do what we do everyday … and why we ourselves chose to become employee owned.
This content is sponsored by TI-Trust, the TEA National 2023 Strategic Partner.