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Here’s the antidote to quiet quitting: give employees a piece of the company

By Russ Williams | CEO

September 7, 2022 | 5 min read

Here are three magic words for staving off quiet quitting: employee ownership stakes. Russ Williams, chief executive officer of Archer Malmo, explains.

man checks the stock market on smartphone

ESOPs are fruitful for both employer and employee, says Williams / Credit: Adobe Stock

Quiet quitting, the Great Resignation and looming economic uncertainty are top concerns for employers today.

As a result, advertising agencies have invested in several ‘perks’ that entice employees to stay loyal, productive and enthusiastic, from hybrid work arrangements to expanded PTO and family-friendly schedules. But why not take a page from Oprah, who famously handed out cars to her audience with the memorable “You get a car! You get a car!” Instead of keys to a new ride, however, consider handing out keys to the company. That is, make your employees the owners of the business: “You’re an owner! You’re an owner! You’re an owner!”

This is no gimmick, but a sound financial and human resources strategy that has proven successful for many companies called an Employee Stock Ownership Plan, or ESOP. ESOPs transfer ownership to employees through a retirement plan, whereby they earn shares of company stock. At a time when companies – in our industry and others – are searching for ways to steer themselves against economic uncertainty and invest in their talent for future growth, ESOPs can be that rare solution that does both. Here are five ways this ownership structure benefits employees and their companies.

1. ESOPs improve the bottom line

To incentivize employee ownership, the government exempts ESOPs from federal income taxes. This means the stockholder employees have their shares paid for faster – and the value of said shares accumulates more quickly. It also saves the company money and provides added financial stability in the long term by eliminating recurring expenses.

2. ESOPs foster employee engagement

What better way to align the values of your company with your employees than inviting them to own a piece of the pie? Owner employees are literally invested in the fate of the whole organization, as the long-term health of the whole matches up quite well with their own individual interests. Employees at ESOP companies stay about 53% longer in their jobs, which has been strongly correlated with employee happiness, and earn a third more in median wages than non-owner employees.

3. ESOPs weather economic downturns

During the 2008 economic crisis, ESOPs added employees and grew revenue, avoiding the waves of consolidations and mergers that can proliferate during economic downturns. As the US again faces a possible recession, the advertising industry is vulnerable to its shrinking marketing budgets. ESOPs have more flexibility when it comes to preserving their liquidity and weathering financial storms. Employee owners may not be as quick to hop on the private equity bandwagon or choose a short-term cash infusion over the long-term fiscal health of the organization.

4. ESOPs reduce income inequality

With employee ownership, there is less incentive to drive profits only to a smaller ownership or management group. Wealth is more evenly distributed and the benefits of the company’s success accrue more broadly. Employee-owners have a 92% higher median household wealth and 33% higher income from wages than those who are not employee-owners.

5. ESOPs improve workplace cultures

The past few years have seen a significant re-evaluation of what it takes to build and maintain a strong workplace culture and provide valuable benefits to foster that culture. Studies show that ESOP workers are more likely to seek and take advantage of benefits, including 23% who have access to childcare through work, compared with just 5% of employees who do not own shares of their companies. This holds true with similar benefits, including retirement plans, tuition reimbursement and parental leave.

Russ Williams is chief executive officer of Archer Malmo, an independent agency with roots in Memphis and Austin.

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