Design is not just what it looks like and feels like. Design is how it works. - Steve Jobs
It’s doubtful that Steve Jobs was thinking about employee benefit programs when he made this statement. Yet, it’s as applicable to employee benefits as it is to technology. Good design is critical to achieving good outcomes.
A useful framework for benefit designs that produce good outcomes consists of the four B’s:
The tendency of many companies is to first and foremost look at budget. However, that is the one objective that is probably easiest to achieve (note that easy does not necessarily translate into pleasant). Companies can change employee contributions, retirement plan match rates or benefit levels to achieve their budget goal. Read more
In February, I posted a blog about T.C., my new kitten. It may be just me, but since then every time Bear, our Wheaten Terrier, looks at me, I feel guilty. It is as if the dog is saying, “I have been your loyal companion for 10 years and you write about the cat?”
Today, I am going to rectify this situation in the hopes of keeping some pet harmony in my house. But, what would Bear want to know about Employee Stock Ownership Plans (ESOPs)? I can only imagine that she would want to know how benefits were going to accrue—given that she has been around almost ten times as long as T.C. Read more
Imitation is the sincerest form of flattery.
-Charles Caleb Colton
The New York Times recently ran an op-ed about Employee Stock Ownership Plans (ESOPs). Authored by Gar Alperovitz, a professor of policy economy at the University of Maryland, it explores the legacy of the boomer boss; specifically, what happens when the business owner decides to sell and why ESOPs are often one of the best routes to take. Read more
You have to play the entire game. This was very evident in game six of the recent Stanley Cup Championship. I missed most of the game, but tuned in with six minutes left and Boston leading 2 to 1. With just over a minute remaining, Chicago scored two goals in seventeen seconds to take a 3 to 2 lead. The Blackhawks took home the Stanley Cup trophy and bragging rights for the next year.
Countless athletes, coaches and fans have watched events such as this unfold. This is not limited to sports. Business owners also understand that you have to play the entire game if you are to be successful. Read more
There are 2,860 miles between Des Moines, Iowa and Cancun, Mexico. This distance is great enough that you don’t expect to run into anyone you know, much less several of them. Yet, while vacationing in Cancun with my family I ran into coworkers, students at my daughter’s school and someone who lived about a half mile from us (even though we didn’t know it until then). So much for anonymity. But, it is a great reminder of the importance of the Golden Rule:
Do unto others as you would have them do unto you.
Business owners that have sold all or part of their company to Employee Stock Ownership Plans understand this well. They recognize that many of the things that are important to them are also important to their employees.
Business owners are generally looking for a return in excess of what they could make as a salary working elsewhere. Employees also appreciate the upside potential that comes with ownership – a return on their sweat equity. They want the ability to see their wealth increase by more than just their salary as a result of their efforts. They want the knowledge that if things go well they can retire more comfortably than they could on their savings alone. Read more
In April, the National Center for Employee Ownership (NCEO) hosted their annual Employee Ownership Conference in Seattle, Washington. Over a thousand ESOP owners, service providers and prospects attended the event where contemporary issues of interest to employee owned companies were discussed.
With there only being about 11,000 companies with Employee Stock Ownership Plans (ESOPs) in the United States this was a good showing1. But, there have been about 11,000 ESOPs for over a decade.