The Great Resignation describes the recent trend of people massively quitting their jobs, with 4.5 million such cases recorded in the USA only in the month of November, and an additional 4.3 million in December. Many companies are facing this problem – but definitely not those with the Employee Share Ownership Plan model.
Employee-owned companies are able to retain workers because they genuinely care about them and are willing to share the fruits of the mutual hard work. Following the example of one of the 6,500 ESOP companies in the USA, Johnny’s Pizza House in L.A. reports that employees are happy with their jobs and do not plan on leaving. As the president of Johnny’s Pizza House, DeLacerda, said: “…[with employee ownership,] there’s a loyalty factor that’s hard to put a dollar amount on.”
And why wouldn’t employees be loyal if they are treated right? As one of the cashiers working at Johnny’s Pizza House, Denise Pouncy, told NBC News: “Johnny’s is the best company to work for. You meet new people, you have great bosses and leadership — they take the time to know their employees. And when I get ready to retire, I know I’m going to be comfortable.”
Being comfortable is a mild way to put it. Some of Johnny’s owner-employees have received seven-figure checks when they retired, its president Melvin DeLacerda said.
Retiring with six- and seven-figure pay-outs is not uncommon, managers of some of the ESOP companies told NBC News. In fact, retirement accounts of workers at employee-owned companies are on average twice as large as those held in 401(k)s at traditional companies — $132,000 versus $64,000, according to the new ESCA study.
At McKay Nursery Company, an ESOP from Wisconsin, more than 10 people cashed out with over $1 million; some of them were management but quite a few were regular nursery workers. Tim Jonas, McKay’s chief financial officer, says the structure encourages workers to perform more efficiently. “It has definitely attracted workers,” he stated. “If they stay here five years or more, they tend to be lifetime employees because they can see the value in the retirement account.”
But benefits from employee ownership are not limited to being surrounded by nice co-workers and receiving substantially higher retirement benefits, nor are they specific to the examples discussed. According to the founder of MMC Corp, Tom Sanders, who decided to convert his company into an ESOP after finding out that none of his children were interested in running the family business upon his retirement, the shift resulted in significant growth and satisfied workers.
“Your young people stay interested. They’re not as tempted to go out and be an entrepreneur because they can be an entrepreneur at their own desks every day.”, Tom Sanders reports.
Besides, research has shown multiple times that companies owned by their workers tend to pay higher wages, have lower turnover, better benefits and more inclusive cultures. With the wealth gap widening across the U.S. and more Americans expressing dissatisfaction in their jobs, employee-owned companies say their structure of shared capitalism is the solution.
“It’s hard for the working middle class to build real wealth only from wages,” said Joseph R. Blasi, a professor at Rutgers University and director of its Institute for the Study of Employee Ownership and Profit Sharing. “This structure provides workers with a second income by having an ownership holding in the company.”