Why Employee Ownership is good for people AND business!
In 2019, KJT became an Employee Stock Ownership Plan (ESOP) company, fulfilling the vision of KJT founder and former CEO, Dr. Kenneth J. Tomaszewski, which was to sell 100% of the company to KJT employees so they could become financial participants in its long-term success.
In the simplest terms, ESOP is a retirement plan that is invested in the common stock of the sponsoring company (in this case, stock in KJT). However, according to current CEO Michaela Gascon, the reality is much more than that. “ESOPs motivate employees, increase productivity, improve retention, keep jobs local, contribute to business longevity, and so much more.”
The data proves her right! The Employee Ownership Foundation’s 21st Annual Economic Survey of ESOP companies found the following:
- 93.3% of respondents reported that creating employee ownership through an ESOP was a good business decision that benefited the company.
- 76% of respondents indicated the ESOP positively affected the overall productivity of the employees.
- Both profitability and revenue were up from previous years (pre-ESOP): 70.5% of respondents reported profitability increased and 76.2% of respondents noted revenue increased.
- 80% of respondents stated the company’s stock value increased as determined by outside independent valuations.
Why do ESOP companies typically report better performance? Gascon credits aligned incentives and an ownership mentality. “The ESOP creates a very tangible return on employees’ hard work, which leads to a highly motivated workforce. That in turn improves organizational performance, which positively affects the company’s earnings – ultimately contributing to a higher balance in employee ESOP accounts.”
“Being an ESOP company is such an important aspect of KJT’s culture, we updated our Mission Statement to reflect it,” she added. “KJT’s new Mission is to build a culture where all employees think like leaders with the freedom and ability to deliver what our clients need most to make the best business decisions and create marketplace advantage.”
As one of approximately 10,000 ESOPs in the United States (representing over 10 million employees), KJT is celebrating Employee Ownership Month in October with activities, awards and special employee recognitions, including: ESOP Trivia, an ‘Exemplary ESOP Employee’ contest, gifts for new fully-vested employee owners and an ESOP ‘Fact of the Day’ campaign.
As you can see, KJT is dedicated to the success of its ESOP model. If you’re interested in learning more about ESOPs, please check out the attached share-out from the KJT team that attended September’s 2021 Fall ESOP Forum, hosted by the National Center for Employee Ownership (NCEO). Read on for their reflections from the event: Fall ESOP Forum