ESOP is a good idea, industry says

Some respondents said it doesn’t motivate employees
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Monday, April 18, 2016

YARMOUTH, Maine—Integration firms Tech Systems and Pro-Tec Design both implemented Employee Stock Ownership Plans in the last 12 months, and most respondents to Security Systems News’ latest poll said that ESOP is a good plan, benefiting the owners and the employees.

A majority of respondents, 57 percent, said that an ESOP strategy benefits all parties involved, the owners and the employees.

Other exit strategy options are more profitable for business owners, 19 percent said. “I personally would never sell my business without receiving a cash payment,” Steve Kaufer, president of Maximum Security, wrote in.

Twenty-four percent of respondents aren’t considering retirement plans yet.

“I currently work for an ESOP (outside of the security industry) and we have complete visibility of all the

Eleven percent said that ESOP isn’t necessarily the best way to motivate employees. “You can accomplish the same thing through compensation plans. There is less legal challenge if handled through compensation,” one reader wrote in.

“I don’t think it would motivate everyone the same way,” another reader said. “For those that prefer immediate gratification, bonus payments based on performance are great.”

Employees work harder as part-owners of a business, 38 percent said. “[An ESOP] encourages employees to treat the company's finances as their own ... and gets them to watch their own expenses as opposed to having strict guidelines from management,” one person wrote in. “[It] enables the company to attract talent in a hot job market, may help the company's cash flow by enabling the company to pay lower salaries [and] helps with retention since employees are motivated to stay.”

More than half of respondents said ownership increases loyalty. “There is peer pressure when people have some skin in the game. [ESOP] makes people more aware of waste ... be it time, or other resources,” a respondent said.

Most respondents—73 percent—said that their companies are privately held. Nineteen percent said they are publicly traded, while an additional eight percent said they work for a private-equity owned business.