Your ESOP as a recruitment tool

Dan Stoltz, ESOP Sr. Relationship Manager, Principal®

One of the most enjoyable parts of my job is travelling the country and visiting ESOP companies. The pride of employee ownership is often felt from the moment I walk through the front door. Awards and articles about the company’s ESOP are presented in the foyer. Meeting rooms have an ESOP theme. Employees are seen in apparel with employee-owner branding. The atmosphere energizes me and I look forward to learning more about the company.

When an individual owns something, they tend to take better care of it. Studies by the Employee Ownership Foundation show ESOP companies have higher rates of sales growth and sales per employee than non-ESOP companies. In return, the employees are typically rewarded for their efforts.  A survey of younger workers conducted1 by the Bureau of Labor statistics show that employee owners have2:

  • 92% higher median household wealth
  • 33% higher income from wages
  • 53% longer median job tenure

Younger workers today expect to work with you for less than two3 years. Your ESOP can be a powerful vehicle that can be used to reverse that trend. While the ESOP provides great benefits for retirement the younger workforce is not necessarily thinking about retirement. The opportunity to learn and grow is one of the more important aspects of what millennials look for in a job. Is there a better place to learn and grow than an ESOP company where there is normally more information shared by management and involvement in decision making by employee owners? Younger workers may also change jobs more frequently for slightly higher wages to help repay student debt. As discussed earlier in this article, wages are typically higher in employee owned companies.

The number of ESOP companies in the United States is small, and thus, the benefits of working for an ESOP company are not widely known. An investment in educating prospective employees on the value of your ESOP may help retain the candidates you desire.

To further discuss how the ESOP can be part of your recruitment strategy, contact your Principal ESOP representative.

1 The National Longitudinal Surveys (NLS), sponsored by the U.S. Bureau of Labor Statistics, consists of a number of cohorts. The “NLSY97” cohort is comprised of 8,984 individuals who were ages 13 to 17 when they were initially interviewed in round 1 (1997). They were re-interviewed annually, with the latest interview in 2013.

2 Relative to workers who are not employee owners.

3 Source for the statement about younger workers expecting to work with a company for less than two years -

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.

Principal, Principal and symbol design, and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.