In “The Dark Knight” (2008), there’s a memorable scene where Bruce Wayne (Batman) walks up to Harvey Dent (Joker) while having dinner and delivers the famous line – “I Own the Place.” It’s a wildly famous line, but one that in Corporate America only 7% of the workforce gets the opportunity to say aloud.
And KellyMitchell employees are part of that number.
KellyMitchell is structured as an Employee Stock Ownership Plan (ESOP). We sat down with Jess Gericke, KellyMitchell’s Vice-President of Human Resources – an ESOP Expert – to understand what this means and how it impacts the individual employees and the company.
What is an ESOP?
Our founders, Mark LoCigno and Cassandra Sanford, were looking for a way to ensure that the success of KellyMitchell was shared with our employees. One way that could be done is by moving the ownership structure of an organization to an ESOP. It is a federally regulated plan that on a very basic level, issues shares to employees on an annual basis, and the value of those shares is determined by the financial performance of the company. Similar to the stock market, these shares can eventually be redeemed for cash; unlike the stock market, that cannot be "cashed out” until retirement. In that sense, it is considered a “retirement plan” account.
Why an ESOP?
There is a fairly large handful of options as far as company-wide retirement plans go: IRA’s, 410(k)s, 403(b)s, and many more. So... Why choose an ESOP? “An ESOP is very different from other types of retirement plans. The main difference is that the employees' actions can positively affect the value of the company, and in return, employees benefit directly because the value of the shares goes up. An ESOP is meaningful because employees have a unique opportunity to own part of the company and have a direct impact in making the stock more valuable,” says Jessica. ESOPs also show employees how their individual roles impact the company and their share price, which can be a large factor in motivating employees to perform well, for both themselves and the company they work for.
Jessica also highlights how ESOPs can impact company loyalty for employees: “Retirement is a long way off for many employees, however the longer the employee stays with the company, the more shares they will accumulate allowing them to build significant wealth as shares appreciate over time.” Employee retention is a large part of the structure of ESOPs –the longer an employee stays with a company, the more shares they accumulate, and therefore the more opportunity they have to accumulate wealth. ESOPs encourage employees to think about the company's future and sustainability, rather than just short-term gains, providing an avenue to align employees' goals more closely with the company's strategic objectives and encourage them to grow within, and therefore stay with the company. ESOPs tend to have lower turnover and increased trust and loyalty because employees have a vested interest in their success.
Employee Productivity and Company Culture
Employee performance and participation have a direct impact on the share price of a company’s ESOP, which is why implementing an ESOP can be a large factor in promoting ownership and empowerment within employees. “This mentality of ownership leads to increased motivation, productivity and dedication. Employees are more likely to increase collaboration and work harder for the company’s best interest because they directly benefit from the company's financial growth,”explains Jessica. When employees have a stake in the company through ESOPs, they often develop this “ownership mentality” that Jessica mentions, which has the potential to lead to greater loyalty and motivation, contributing to the company's success over the long term. Employees are more likely to feel invested in the company's goals and outcomes, creating a more positive and motivated workplace culture.
What makes KellyMitchell’s ESOP unique?
Employee-owned companies make up about 12% of the private sector in the United States, making ESOP a rare benefit... Especially in the staffing industry! "Less than 1% of IT Staffing Firms are employee owned and KellyMitchell is proud to offer our employees such an amazing benefit!,” says Jessica. Just like all other ESOPs, KellyMitchell has unique eligibility criteria for employees to participate in the ESOP, those requirements being one year of service and 1,000 hours worked. As employees become eligible for the ESOP, shares are allocated at no cost. KellyMitchell has a 6-year vesting period, meaning employees who participate will become 100% vested after 6 years.
As of 2020, KellyMitchell is a newly formed ESOP, and since then, the already remarkable company culture has become stronger than ever: “Becoming an ESOP allowed us to maintain a strong employee-centered culture and to continue making it a place where we all love to work!,” says Jessica. “We are always cheering each other on, and becoming an ESOP has allowed the company culture to become stronger.”Jessica also highlights how becoming an ESOP opens an opportunity for KellyMitchell to educate their employees: “Because we are an ESOP, KellyMitchell has really focused on educating their employees on understanding financial literacy and how financial mechanisms have an impact on the ESOP.”
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