A recent study conducted by the Employee Ownership Foundation and the Rutgers School of Management and Labor Relations cited that majority ESOP-owned companies outperformed non-employee owned companies during the COVID-19 pandemic in the areas of job retention, pay, benefits, and workplace safety. Economic experts have advised companies to further focus on their retention efforts in order to keep the employees they’ve already trained and developed as the demand for talent, particularly skilled workers, increases.

ESOP companies tend to have a leg up with the additional retirement benefits made available to their employees, but often wish they had additional incentive plans to offer key employees responsible for achieving meaningful growth and increased profitability. When a company is first sold to an ESOP, a management incentive plan is commonly constructed at the time of the transaction to accommodate the current executive team. As companies grow over time and see changes in command, it may make sense for an ESOP company to refresh its incentive plan and possibly realign the plan to match the company’s current benchmarks and personnel needs.

If hiring and retaining talent as an ESOP company is a top priority, it’s worth exploring the ways in which the ESOP itself and any management incentive plans may be optimized to best position the company and all stakeholders for success.