Communities Benefit When Employee-Owned Companies Make Them Their Homes
One of the key impacts of the pandemic and the societal events of the past two years has been the rise of purpose-led companies.
The keynote address at the recent 2022 National Center for Employee Ownership (NCEO) convention centered on how employee-owners work for the shared success and the good of their local communities.
Purpose-driven companies aren’t new, of course. But a growing awareness of them has emerged as society and people place increased focus on businesses and organizational culture that focuses on not only the bottom line. Consider that in the most recent Edelman Trust Barometer, employees said they expect CEOs to be the “face of change” and they want more, not less, engagement by businesses on the issues of our day, including climate change, economic inequality, access to healthcare and systemic justice.
Compared to conventional businesses, employee-owned companies put service to communities on par with their business goals. A recent study sponsored by the Employee-Owned S Corporations of America found workers at private businesses owned by employee stock ownership plans (ESOPs) place a higher priority on their companies’ commitment to corporate social responsibility (CSR) than employees at non-ESOP companies.
- Greater than eight-in-10 ESOP employees said it’s very important for their companies to invest in the local community, compared to 53% of non-ESOP employees.
- ESOP employees were twice as likely as non-ESOP employees to say their companies made an effort to provide economic opportunity in the community.
Practicing what is right and being accountable pays off. Purpose-led companies experience higher market share gains and, on average, grow three times faster than their competitors while achieving higher employee and customer satisfaction, research suggests.
Listening to the CEOs of employee-owned businesses, talking about how strongly they feel about supporting their communities, drives this home. As Kimberley Jones, CEO of Butler/Till, an employee-and-woman owned marketing agency based in Rochester, N.Y., puts it: “Employee ownership is perhaps the best-kept secret of our economy. It strengthens communities, fosters a financially savvy workforce, increases resiliency during recessions, and offers big benefits during economic booms.”
Community-minded ESOPs make a profound difference in their communities and their employees. Consider Hypertherm, a New Hampshire maker of industrial cutting systems and software has a long-standing commitment to make a positive contribution to where its 1,800-plus Associates live and work. (At Hypertherm, all employees are “Associates.”)
Hypertherm backs up its commitment with 40 hours a year of community service time when and where its Associates choose. In 2021, 62% of Associates volunteered, averaging 21 hours of service and delivering nearly 25,000 hours of global volunteer time.
Another example? Durham & Bates Insurance, a Portland, Ore., ESOP that won the Portland Business Journal’s 2019 Corporate Philanthropy Award for its community service and corporate giving.
As the century-old company’s website puts it, “Supporting others is a natural instinct for every one of our associates.” It supports dozens of organizations throughout the region and country, and its associates dedicate hundreds of hours and donate needed resources to organizations that feed families, provide clothing and shelter, boost the arts and combat diseases, among other things.
Giving back by ESOPs takes diverse forms. Consulting firm DK Pierce & Associates, a Zionsville, Ind., women-owned business that became an ESOP in December, organizes the annual DKP Olympics, a series of games that raise funds for the fire and sheriff’s departments. Wiley/Wilson, a Lynchburg, Va., architecture-engineering firm employee-owned since 2004, specifically supports children and youth programs and was named the ESOP Association’s Mid-Atlantic Chapter Company of the Year for 2022.
And Acadian Companies, a Lafayette, La., supplier of ambulance and emergency services 80% owned by employees, has established nearly 20 Explorer Scout posts throughout Louisiana, Texas and Tennessee, and it also supplies standby ambulance services without charge to hundreds of high school and college football games annually.
Obviously, many non-ESOPs are purpose-led and also help improve and benefit their communities. But I’ve found over the past 20 years of consulting on employee ownership that, in general, ESOPs and their employees and executives tend to be more driven by doing good and giving back.
Today in particular, when so many challenges persist, purpose isn’t another business buzzword. To me, it is a predominant ingredient in helping define what an organization stands for – and why it exists. The evidence is clear: Giving back to local communities strengthens the localities… and the company as well.