What is an ESOP committee? For some companies, the ESOP committee directs and/or operates the plan. These types of ESOP committees deal with the technical side of ESOPs. For other companies, the ESOP committee is there to communicate the expectations of what it means to be employee owned - these are the committees I love to work with!
Let's dive a little deeper into this second type of ESOP committee. At the basic level, these committees tend to be a T-shirt and party committee. It is all about fun and the assumption is these types of activities will create ownership. They do have an impact but it is very short lived. They do not change the company's culture.
The advanced ESOP committees will have budgets, conduct surveys and implement training, even to the extent of being a part of the senior management evaluation process. Some of this may seem pretty scary to you but it does work if the organization wants it to. Even more specifically, the top leader must believe in the value of this type of ESOP committee. The leader allows this committee (with little guidance) to direct their own affairs and allows the committee to evolve over time to take on more significant activities.
Why would a leader want to go down this path? To me it is very simple. Do you want to have your key people tied up with maximizing employee ownership all the time or do you want them using their paid expertise to drive the company's performance? Every company pays a high wage for knowledge and skills that are key to their business. This does not guarantee that they are great communicators, are consensus builders, or understand how to evolve a company's culture.
I believe that everyone has the ability to want to make a company better. It does not have to fall only on the shoulders of senior management. It provides an opportunity for other employees to experience a different side of the business. Let me share a true story with you.
A company had an ESOP committee that was planning a summer picnic. They implemented a rule that at least six people needed to sign up to help or there would not be a picnic. They did not get six people to sign up and they canceled the summer picnic and used the budgeted dollars for other activities through out the year. One of the employee owners went to the CEO and said, "This is a bunch of bull. We should have a picnic and you and the management team should make it happen." The CEO replied, "The ESOP committee is charge of this and it is up to them. If you want to make sure we have a picnic, then I would suggest you get on the committee."
This was not the only employee that felt this way and ever since that one cancellation, there has always been a summer picnic. Why? The one individual did get on the committee, and it really was up to all the employee owners to decide - not management.
Does your management team deal with conversations that really should be held by others in the company? I firmly believe that management should be spending more time doing the things that others cannot do - utilizing their expertise. It really is amazing what people are capable of if they are given a chance.
I will delve deeper and share more insights into ESOP committees in future blogs. I would love to hear your stories and/or questions on this topic.
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