T. C. II

It has been a year since I wrote about T.C., our black kitten. In that year she has grown into her name, The Cat.  She exhibits many of the characteristics that you would expect from a cat, particularly self-confidence and pride.

HZ1226 ICONS CAT

Many companies with Employee Stock Ownership Plans (ESOPs) showcase these same characteristics – and rightfully so.  Most of you have probably seen buildings, signs, trucks, or advertisements highlighting that the company is employee owned.  These companies proudly promote employee ownership in the same way that other companies promote things such as:

  • A family owned company
  • In business since XXXX
  • An XYZ city based company

Comments like these are designed to instill employee pride and community confidence in the company.  What can people infer from the employee owned company statement?

First, I’m more than an employee, I’m also an owner.  As an owner:

  • Your satisfaction is my concern.  Not the concern of just managers or a small group of owners, it is my concern as well.
  • I can afford to take a long term view of our relationship.  After all, as an owner I plan to be here for a long time.

In addition, you can infer that the company plans to stay and prosper in the community.  With an ESOP the beneficial owners are the employees who generally live in the same (or close) community to where the company is located.  Although there are no guarantees, an ESOP owned company is more likely to remain where it is located.

The company is less likely to reduce its work force in difficult economic times.  In fact, during the great recession employees at ESOP owned companies were four times less likely to be laid off1.  This is summarized in this infographic from the NCEO.

Finally, you can expect employee owners to shamelessly promote their company.  They understand the link between growing the company and growing their retirement account balance.   After all, they are more than employees, they are also owners.

Just like pride and self-confidence are not the only characteristics that T.C. exhibits, this is not an exhaustive list of characteristics of employee owned companies.  One of the best ways to learn more – ask an employee/owner.  They will be proud to tell you more.

1The Economic Power of Employee Ownership, the National Center for Employee Ownership

***

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Click to follow me on Twitter –  @jlripperger.

Click here to follow my ESOP blog

Affiliation Disclosures

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

t14013102md