Welcome to our annual EO/ESOP Podcast Summer School series. We selected some of our favorite episodes over the past year for your enjoyment while we spend the rest of our summer catching our breath and working on launching our exciting Season 7, beginning in late September 2023.
In this episode, Bret Keisling shares his thoughts about how being an ESOP contributes to the greater good of the community they operate in. The answer starts with job security and maintaining a strong tax base. We also know that employee owners are less likely to face layoffs and pay cuts, thus preserving safety net resources. He also highlights EO volunteerism that strengthens the relationship between the owners, the companies, and their communities.
... or watch the video below.
The body of this episode originally aired on December 3, 2022 as Mini-cast 212: Employee Owners and Their Communities.
ESOP Summer School Mini-cast 34 Transcript
[00:00:00] Bret Keisling: Welcome to our annual EO/ESOP podcast Summer School series. We selected some of our favorite episodes over the past year to bring you for your enjoyment while we spend the rest of our summer catching our breath and working on launching our exciting season seven beginning in September 2023. Enjoy.
[00:00:19] Bret Keisling: Welcome to the ESOP Mini-cast. Thank you so much for listening. My name is Bret Keisling and as it says on my business cards, I'm a passionate advocate for employee ownership. Next week. I travel to south Florida, where I'm both very honored and excited to be the keynote speaker at an employee retreat for approximately 70 employee owners of an ESOP.
[00:00:49] In future episodes, I'm sure I'll share more about the retreat and the company and what I shared with the employee owners, and as importantly to me, what I learned from them.
[00:00:58] To prepare for the retreat, I've had conversations with a number of members of the leadership team there to help me learn what information would be most beneficial or interesting for the employee owners to hear. As you'd expect, many of the questions or topics are specific to that company: about enhancing the culture, increasing share value, and what leadership skill sets are particularly helpful for employee-owned companies. And I can't wait to share my thoughts on those subjects.
[00:01:24] One of the questions sent to me just warmed my heart so much that I wanted to take a couple of minutes to discuss it on the Mini-cast today. The question wasn't really about their company specifically, but the bigger picture. That question is " What impact does being an ESOP have outside of our organization? For example, how does being in ESOP contribute to the greater good of our community?"
[00:01:46] This is such a great question and the answer to it has certainly evolved in the 15 years that I've been in employee ownership. And that evolution has become exponentially more obvious since our world was faced with COVID and all of the resulting disruption.
[00:01:59] The answer starts with jobs. And this one hasn't changed very much during my experiences. You'll often hear people in employee ownership talk about the silver tsunami, the vast number of baby boomers who own businesses and are nearing retirement age. We know that only 20% of businesses that go to market end up finding a buyer. We also know, by the way, that on average it takes four or five attempts to go to market for the business to be sold.
[00:02:23] This means that approximately 80% of businesses will actually cease to operate when the owners retire. That's a loss of jobs and the loss of jobs always affects the community. It removes businesses from the tax rolls. It removes all the employees from the tax rolls as well. Keeping those businesses operating and keeping those jobs intact is obviously important.
[00:02:44] We know that companies that transitioned to employee ownership are significantly less likely to end up selling to competitors or strategic acquirers. Which is good because we know those results often result in eliminating jobs or moving them to other places, which might be good for those communities, but it doesn't help our own communities.
[00:03:06] One of the most important data points coming out of the COVID years is one I talk about pretty regularly here on the podcast. Data shows that employee-owned companies were four times less likely to have layoffs during the pandemic and three to four times less likely to have wage reductions than non-employee-owned companies. That's a fact supported by data. The next part is my extrapolation. If employee owners are four times less likely to be laid off and three to four times less likely to take pay cuts, then it's reasonable to assume that employee owners were not availing themselves of important safety net services, such as unemployment compensation and food banks, et cetera. Not using these services strengthens their communities as well.
[00:03:48] Another way employee-owned companies further communities is by volunteering. Andesa Services, Hypertherm, and Davey Tree are just three companies whose leaders have been on the podcast in the last year or so talking about their commitment to employee owners volunteering in the community. All three companies allow their employees to spend a certain number of hours per year volunteering at organizations important to the associates and the company pays the employees while they're volunteering.
[00:04:16] Just at Hypertherm, in 2021 it's associates invested 25,000 total hours volunteering for non-profits of the associates' choosing. Certainly, the hours have a positive effect for the non-profits involved and allow the employee owners to strengthen the commitment between themselves, their EO companies, and the communities.
[00:04:36] Finally, I'll go back a year or so to a conversation I had with worker co-op expert Rodney North on the podcast when he posited that employee owners make for better citizens. Although I haven't seen data to confirm this, it makes sense to me.
[00:04:51] If you're an employee owner who works at a company that really believes that we're all in this together, or a I like to say, "we means we," it makes sense to me that in going about your daily lives, you're more interested in finding win-win solutions to our political problems and community problems rather than the winner takes all mentality that seems very much ingrained in our political culture right now.
[00:05:13] So, to sum up employee ownership's role in their communities absolutely starts with the jobs. The job stayed there. The tax base stays there. And the people stay. But it extends to the safety nets and often extends to volunteerism. And can lead all of us to becoming better citizens. And that's a pretty powerful place for employee ownership to find itself!
[00:05:34] With that we'll wrap up today's episode of the Mini-cast. I can't wait to travel to Florida next week, and then to share my thoughts with you before too long after that.
[00:05:42] Thank you so much for listening. This is Bret Keisling. Be well.
[00:05:46] Bitsy McCann: We'd love to hear from you. You can find us on Facebook and Twitter at EO Podcast Network. This podcast has been produced by Bret Keisling for the EO Podcast Network, original music composed by Max Keisling, branding and marketing by BitsyPlus Design, and I'm Bitsy McCann.
Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field and the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement, but if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.
A note on the transcript: This transcript was produced by Descript, an automated transcription service. While it has been reviewed by The EsOp Podcast, we can not guarantee the accuracy of the transcription. Please refer to the original audio when citing sources.