Jeff Mounts: 2019 Employee Owner of the Year

Jeff Mounts, Marketing Manager at ESP International, absolutely loves a certain quote. When you hear it, you understand a lot about Jeff, why he has become an invaluable member of the Communications Committee at ESP International, and why he earned The ESOP Association award for 2019 Employee Owner of the Year.


That quote? It’s from Albert Einstein, who said: “Creativity is intelligence having fun.”


Take a look at what Jeff has helped ESP accomplish in a short time, and you see a living representation of that blend of intelligence and fun Einstein so eloquently described.


In the Beginning


When Jeff joined ESP five years ago, he did so based on the recommendation of his college roommate and with the goal of shortening his commute. The ESOP? He had no idea what that was. But he learned quickly. And as a member of the Marketing Department, he soon joined the Communications Committee and became involved in marketing ESP’s ESOP.

Initially, Jeff wanted simply to educate himself, but the committee soon found he was a natural at educating others too. Leveraging his graphics and video skills, Jeff personally produced a series of short videos that are now some of the company’s best ESOP education content.

Later, as co-chair, he led the creation of the committee’s strategic plan and challenged the team to create innovative ideas to educate and engage employee-owners.


Communicating Internally and Externally


ESP’s Communications Committee exists primarily to educate ESP employees about their ESOP and to increase employee owners’ business literacy. But it also works to share information about ESOPs to external audiences. For example, the company has repeatedly and successfully engaged its elected officials in Congress. In fact, Iowa Congressman Dave Loebsack (D-IA-2), has visited ESP locations multiple times.


The group also works externally to educate the community about employee ownership—or, as Jeff puts it, to “make the ESP story public.” He has found that the website has become an incredibly important vehicle for carrying ESP’s message about its ESOP to a broader audience.


One of the ways the company engages the broader community is through its Charitable Foundation. Each year, ESP employees vote for the charity they would like to see the Foundation sponsor. Throughout the year they host fundraisers and donate a majority of the proceeds to that charity; the remaining funds are used to support other local non-profits.
The 2019 Charity of the Year was The Freedom Foundation.


How Does ESP Celebrate EOM?


Another way that ESP educates employees and the community is through its October Employee Ownership Month (EOM) activities. With a full calendar of events planned down to the day, ESP takes EOM to the next level. Activities include an EOM poster competition, company-wide ESOP Trivia Tuesdays, Business Literacy Thursdays, a can drive for charity, and more!


Clearly Jeff and his fellow committee members have taken his favorite quote to heart, using creativity to make business intelligence and ESOP education fun. (For EOM resources check out The ESOP Association’s EOM web page.)


Sharing: Key to Success


One of Jeff’s suggestions is to tap the existing knowledge of employee owners in other companies.


“Don’t be afraid to lean on other employee owned companies,” he says. “The Association has some pretty amazing members who are open to sharing ideas, who are willing to share what worked, what didn’t work.”

Jeff Mounts


He notes that ESP is fortunate to be located in an area with lots of employee owned companies, and he and his fellow employee owners regularly reach out to the region’s employee ownership brain trust. “We do a lot of networking and information sharing,” Jeff says. “We’ve held round tables and attended networking events in between conferences to discuss challenges, opportunities, new ideas.”


His final bit of advice: “Enjoy the fact that your owner decided to sell the company to you, the employee. It’s such a unique and amazing benefit.”

Developing Employee Owners

Providing training to employees helps keep their skills sharp and can lead to improved productivity. It also shows a commitment to employee growth and development that may pay additional dividends, including potentially having a positive effect on employee retention.

These benefits are more likely to be experienced at ESOP companies, which consistently outperform their conventionally-owned counterparts at offering employee training. In fact, ESOP companies are 1.4 times more likely to offer such training, according to newly updated research funded by the Employee Ownership Foundation. (See the graph below.)

ESOP companies also are more likely to provide training that leads to financial literacy. For many companies, this is a natural outgrowth of their legal requirement to provide annual valuations of company stock to their employee owners. At many ESOP companies, annual valuations have spawned large-scale meetings that include financial information about the company and its past, present, and future.

This kind of information sharing helps employee owners become better at managing both company finances, and personal finances too. (We’ll delve into that topic in our next blog post.)

These kinds of investments in employee training just make sense. When employees are given the chance to add new skills, or improve the skills they already possess, it makes greater efficiency and productivity possible.

That in turn leads to greater rewards in which everyone can share.

Why Companies Love ESOPs

In some ways, the benefits of having an ESOP are obvious: Tax benefits for S and C corps probably are at the top of the list, followed closely by increased employee engagement and productivity.

In other areas, research is constantly finding new and important ways that companies benefit from having an ESOP. Here are just some reasons that have been brought to light by recent research.

Attracting and Retaining Employees

Research sponsored by the Employee Ownership Foundation and released earlier this year shows that the vast majority of employees—from all walks of life and espousing political views that span the entire spectrum—want to work for employee owned companies.

All told, 72 percent of respondents to a nationally representative survey would rather work for a company owned by employees. That level of agreement just doesn’t exist in almost any other area of life.

What’s more, when choosing between two similar jobs, 61 percent would take the job at the employee owned company.

Think about the advantage this brings to ESOP companies: In a heated competition for talent, ESOPs hold a tremendous tie breaker that many other firms simply can’t offer.

In an era where corporate greed and excess is reported in the news on a continual basis, it is easy to see how companies that share the wealth through a consistent and reliable plan—like an ESOP—might be attractive to potential employees.

(Of course, to take advantage of this benefit, potential employees need to know what an ESOP is, and that you offer one. More on that in a later post.)

Attracting Customers

The same research study found that 38 percent of customers would prefer buying from employee owned companies. That means companies with ESOPs have a tremendous potential advantage when marketing their products and services.

Think how hard your business works to attract and retain customers, and how much money is invested in expanding your customer base. How many potential buyers might be persuaded to give your company a shot, if they only knew that you were employee owned? How much might those extra customers be worth to your business?

(Again, to reap these rewards, customers need to know that you are employee owned.)

Surviving Tough Economic Times

Companies with ESOPs were significantly more likely to survive tough economic periods, according to the data gathered and reported in the book How Did Employee Ownership Firms Weather the Last Two Recessions?

The book speculates that reasons for this phenomenon might include a more engaged workforce that strives to keep the business going when times are tough. That notion is supported by a 2013 study showing that ESOPs are linked to higher sales growth per worker and higher sales per worker. (Firm Survival, Performance, and Employee Ownership: Comparing Privately Held ESOP and non-ESOP Firms.)

Another potential reason—one also reported in the book—could be that employment at ESOP companies is more stable, experiencing fewer and smaller changes in annual employment than non-ESOP companies. For example:

  • In 2001, non-ESOP companies shed nearly six percent of their workforce, while ESOP companies added a small percentage of employees.
  • In 2004, ESOP companies grew staff by roughly four percent, while non-ESOP companies added nearly eight percent more staff. But those gains did not last all that long: In 2008-9, non-ESOP companies shed far more employees than ESOP companies.

These dramatic swings in staff size can have negative repercussions on the business as a whole. Those who remain employed at these companies may experience shock, survivor’s guilt, and burnout (if they are asked to take on too many of the duties of those who were let go).

Finally, the loss of institutional knowledge and expertise when staffs shrink can leave a business ill prepared to take advantage of the next upturn in the business cycle. By keeping staffing more stable, ESOPs may be better positioned to take advantage of the next rebound. And when they do, of course, all employee owners will share in the rewards.

Employees Love ESOPs—and Research Proves It

Today we kick off Employee Ownership Month, a month-long celebration of ESOPs and an opportunity to educate the world about the benefits employee ownership offers to employees and businesses alike.

It’s a celebration that takes a month to complete because there is that much to like—even, love—about ESOPs. And it is all backed up with data—much of it courtesy of the Employee Ownership Foundation and those who support it.

With so much ground to cover, it is impossible to fit it all into one blog post. So here we will focus on some of the key reasons employees love ESOPs. (Later we’ll look at why businesses love ESOPs.)

No-Cost Retirement Plan

Some of the reasons that employees love ESOPs are obvious and require no research. For example, ESOPs typically require no out of pocket expense from employee owners, who get a fantastic retirement option without investing a dime of their own money. There are precious few things in life you can obtain without money leaving your wallet; ESOPs are the rare exception.

A Second Retirement Option

What can employee owners do with all the money they don’t have to invest in an ESOP? They can invest it in other areas, including their 401(k)s. The Motley Fool reported that 20 percent of employees leave money on the table because they don’t put enough in their 401(k)s to earn the full 401(k) match offered by their employers. Because employee owners at ESOP companies don’t pay for their ESOPs, they are more likely to be to have the funds to invest in their 401(k)s so they can receive that full match.

What’s more, most employee owners have access to 401(k)s: Polls of ESOP Association members show that 93.6 percent offer a 401(k), in addition to their ESOP.

So, while many Americans (some estimate 40 percent or more) have no retirement savings at all, employee owners typically have two options for saving—and should be well positioned to capture the full 401(k) match offered by their ESOP companies.

Stable Jobs

Anecdotally, executives in the ESOP community talk about being right-sized—meaning they do not have to conduct massive layoffs when times are tight. That anecdotal information is reinforced by research from the General Social Survey (GSS) showing that employee owners are 6.2 times more likely to avoid a layoff than employees at conventionally owned firms.

Let that sink in for a second: Employee owners get two retirement plans—one of which costs them nothing—and they also are more likely to keep their jobs, and those terrific job-related benefits.

(The GSS, by the way, is the single best source for sociological and attitudinal trend data covering the United States. The Employee Ownership Foundation has funded GSS questions relating to employee ownership since 2004.)

Training

In a fast-changing world, employees are only as valuable as their updated skill sets. While some companies try to skimp on employee training, employee owned businesses see the value in investing in their employee owners’ futures.

Companies with ESOPs significantly outperform their conventionally-owned counterparts at offering employee training. In fact, ESOP companies are 1.4 times more likely to offer such training, according to research funded by the Employee Ownership Foundation. (See the graph below.)

Investing in training can be an essential way to develop employees and ensure they have the skills to advance and fill more prominent, vital roles in an organization. This kind of investment shows that employee owners are valued; it also helps ensure the kind of ongoing learning and development that keeps people engaged in efforts to move the company forward.

Everyone Loves ESOPs

With advantages like these, is it any wonder that employees want to work at employee owned businesses? Yet another GSS study found that 38 percent of Americans want to work for a company owned by its employees. This level of interest by employees in employee ownership provides a real benefit to ESOP companies. We’ll dive into that topic next time.

Changes at DOL

The Department of Labor is undergoing changes that may have a significant impact on the employee ownership community.

Today, the nomination of Eugene Scalia as Secretary of Labor moved another step closer to confirmation. Approved by the Senate Health, Education, Labor, and Pension Committee, Scalia’s nomination is expected to be put to a final vote later this week.

The nomination is notable for the ESOP community because it coincides with a restructuring at the Department of Labor. Some reports see the changes within the department as a sign that the agency will be leaner and able to produce regulations more quickly.

This article notes that the Employee Benefits Security Administration (EBSA), which oversees ESOPs, will now have a structure akin to that of the agency’s Office of the Solicitor. That office, the article states, has “a reputation for greater efficiency” and the changes may result in moving “guidance and regulations at a faster pace.”

This makes the nomination of Scalia even more notable, since he served as the Labor Solicitor during the administration of President George W. Bush.

If the changes to the leadership and structure of DOL result in faster production of regulations, they would be welcomed by the ESOP community.

ESOPs were officially established in 1974 (by the Employee Retirement Security Act), and in the 45 years since there have been no regulations on fundamental issues such as valuation. In 1988, the Department of Labor went through the entire, cumbersome regulation making process—but never issued valuation regulations.

The lack of regulations is a severe impediment to the creation of new ESOPs and the maintenance of existing ESOPs. Hopefully the changes taking place at the Labor Department will result in the rapid production of regulations our community needs and deserves.

Americans Want Employee Ownership

It’s no surprise that Americans disagree about a lot of things….

Just try getting consensus on a group of people’s preference for cats or dogs, pie flavors or person most likely to take the Iron Throne in Game of Thrones. Close to impossible.

However, in new research released in May, funded by the Employee Ownership Foundation, and conducted by Rutgers researchers, it has become clear that the one thing we can all agree on is that we want to work for a company owned by its employees.

Nearly three-fourths of respondents (72 percent) to the General Social Survey would rather work for an employee-owned company than one owned by conventional shareholders or the government. 

The research also reveled that employee owned businesses enjoy uniquely broad support among Democrats, Republicans, and Independents.

Employees’ preference for employee owned companies transcend ideological and partisan divides, with 74 percent of Democrats, 72 percent of Republicans, and 67 percent of Independents voicing a preference for employee ownership.

Among respondents who cast a ballot in the 2016 presidential election, 76.5 percent of Trump voters and 75.5 percent of Clinton voters prefer employee share ownership.

“These results show that employee ownership is the equivalent of a political unicorn—something very large majorities of Americans agree upon, completely independent of political leanings,” said Jim Bonham, President of the Employee Ownership Foundation. “This research shows that employees across the spectrum value owning a stake in the companies where they work. After decades in Washington, I can say this level of political agreement is truly unique and shows that employee ownership transcends our nation’s political divide.”

“These results show that employee ownership is the equivalent of a political unicorn—something very large majorities of Americans agree upon, completely independent of political leanings,” said Jim Bonham, President of the Employee Ownership Foundation.

“Americans disagree about a lot of things, but this is not one of them,” said Beyster Distinguished Professor Joseph Blasi, Director of the Rutgers Institute for the Study of Employee Ownership and Profit Sharing. “Democrat or Republican, female or male, black or white, union or non-union, a majority of respondents said they prefer to work for a company with employee share ownership. It is rare to find such a national consensus on anything.”

The survey findings align with recent bipartisan support for employee share ownership on Capitol Hill. In 2018, the Republican chairs and Democratic ranking members of the Senate and House Committees on Small Business co-sponsored the Main Street Employee Ownership Act. Signed last August, the new law makes it easier for retiring business owners to sell to their employees through an ESOP.

ESOPs Address Wealth Inequality, New Study Finds

There is new evidence that ESOPs can be a powerful mechanism for addressing wealth inequality in America. A study released today by the Rutgers Institute for the Study of Employee Ownership and Profit Sharing shows that ESOPs help families significantly increase their assets, thereby shrinking gender and racial wealth gaps.

The Employee Ownership Foundation assisted by helping connect researchers with ESOP companies. The Foundation also encourages academic study of employee ownership by funding Kelso Fellowships; one of the study’s co-authors—Janet Boguslaw—is a Kelso Fellow.

The study is encouraging, but also shows there is more work to be done: While ESOPs are helping to narrow the wealth gap, a gap nonetheless remains.

Greater support of and participation in ESOPs—across all demographics and especially in disadvantaged communities—should help further narrow the wealth divide.

“Low and mid-income employees who have the opportunity to share in the capital built through their labor have greater wealth than their non-employee owner peers. Period.”

–Janet Boguslaw, study co-author

The idea that ESOPs can address wealth inequality—especially for those who are farthest behind, economically speaking—is one that is gathering steam. The Aspen Institute Economic Opportunities Program and the Rockefeller Foundation also are examining how ESOPs can help address this growing concern.

About the Research

The research released today was supported by a grant from the W.K. Kellogg Foundation, and was three years in the making. A Rutgers-led team of 15 researchers from nine colleges and universities nationwide interviewed nearly 200 employees at 21 companies that offer an ESOP retirement account. About half of the employees surveyed are defined as low- or moderate-income, based on their earnings.

The ESOP account gives these employees significant wealth, above and beyond their wages and other income.

Among the findings:

• While the typical American household has $17,000 in savings, the low/moderate-income employees in the study have ESOP account values ranging from $15,000 to $6 million, with a median value of $165,000.

• Of the low/moderate-income employees surveyed, those closest to retirement (ages 60 to 64) have 10 times more wealth than the typical American in that age group.

• Many low/moderate-income employees—especially single women—told researchers the ESOP gives them a sense of economic security and enables them to think about retirement for the first time.

• In ESOP firms with participatory management, workers improved their communication skills and learned open book management, which also enabled them to make better financial decisions at home.

To Boguslaw, the research provides a clear message: “Low and mid-income employees who have the opportunity to share in the capital built through their labor have greater wealth than their non-employee owner peers. Period.”

Study co-author Lisa Schur,said: “Employee ownership can have particular benefits for low-income women and people of color, who are often marginalized at the bottom of workplace organizations.” She added: “Not only can employee ownership lead to economic rewards, but it can also help these workers attain increased voice and skills in the workplace.”

The research should spur greater interest in ESOPs, and provides additional evidence for lawmakers and policy experts to consider when deciding to support employee ownership initiatives.

Frank Luntz to Keynote National Conference

Frank Luntz, a world-renowned expert on business communication and political trends, will offer his unique insights on communicating in an employee owner setting at the National Conference in May.

Luntz will speak at a special Friday morning General Session that is open to all attendees. His remarks fit perfectly in this conference—the premiere national event for anyone interested in communicating about ESOPs and company culture, or advocating for employee ownership.

A nationally recognized speaker who has appeared on multiple television programs—including 60 Minutes, Nightline, Face the Nation, and The Daily Show—Luntz’s insights on corporate communication and political trends are legendary. He has become the go-to consultant for Fortune 100 companies that need guidance on communication and language. His clients have included Paramount, Nascar, Hilton Worldwide, and the Walt Disney Company.

Register for the National Conference and don’t miss this chance to hear unique insights on ESOP communication from one of the world’s foremost communication experts!

Destination DC

DC has all you need for a great spring trip.

See it all when you come to The ESOP Association’s National Conference this May!

You already know that the National Conference offers great content with more than 70 sessions, and a unique opportunity to visit your elected officials with your peers in the ESOP community. But you might be surprised by all the entertainment options that will be available to you when you come to our nation’s capital in May.

Washington is an exciting  city with a metropolitan population of more than six million people and host of unique options to quench your thirst, sate your hunger, and satisfy your desire for an entertaining spring visit.

Look at some of the options below, and be sure to check out our Going Out Guide for additional information.

Start with the Classics

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Visit the multitude of DC museums, many of them a short trip from the conference hotel and most of them absolutely free! Or take a walk to the National Mall and get great views of the Washington Monument, Lincoln Memorial, Vietnam Veteran’s Memorial, and the World War II Memorial.

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Save yourself the walking and sign up for our exclusive and wildly popular Night Tour of the Monuments when you register for the National Conference.

More interested in DC’s Night Life?

See a concert, laugh at a comedy club, see one of our resident spirits on a ghost tour, or find the kind of spirits that come in a bottle at one of the thousands of restaurants and bars in the city.

DC is home to rooftop bars, sidewalk cafes, and even a floating paddle bar on the Potomac River. If you can’t find something great to do at night here, you just haven’t tried.

Just want to hang out?

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Head over to Buffalo Billiards for daily food and drink specials and games like skeeball or pool. Or visit the thriving new waterfront area known as the District Wharf.

Get in touch with your wild side!

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Did you know if you want to see a Giant Panda in the flesh (and don’t want to leave the country) you’ve got only four options, and D.C. is one of them? Preview the experience with the live, Panda Cam. The national zoo has animals of all shapes and sizes—including the giant panda’s less famous cousin, the Red Panda—and best of all, the entry is free!
While you are at the Zoo, consider taking a hike in Rock Creek Park, or just going for a relaxing drive through this oasis of green in the heart of DC.

Speaking of Capitol Hill…


After visiting your elected officials, stop by one of our favorite spots, the Library of Congress. This library is the largest in the world with more than 168 million items. It’s also completely free to visit!

Whatever you decide to do, be sure to tag us with our conference hashtag #ESOPDC or show us how you’re living the ESOP rock star lifestyle with #ESOPsRock.

If you haven’t registered yet, what are you waiting for?

Register Today Before Early Bird Pricing Ends April 24, 2019

Have questions? E-mail Meetings@ESOPAssociation.org or call (202) 293-2971

See you in May!

ESOPs: Built to Last, No Matter the Election Results

By J. Michael Keeling, ESOP Association President

As I travel and visit with ESOP fans, I hear some concern that our longtime supporters in Congress are moving on, due to electoral defeat, retirement, or moving into new public offices outside of Congress. The fear is that legislative and regulatory support for ESOPs has been weakened, or at least is less certain.

There is no question that the defeat of ESOP advocates—such as former Representatives Erik Paulsen (R-MN) and Peter Roskam (R-IL), who served as senior members of the extremely important House tax committee—is not a welcome development for ESOPs.
The retirement of the Chair of the Senate tax committee, Senator Orrin Hatch (R-UT), and defeat of Senators Dean Heller (R-NV) and Claire McCaskill (D-MO) is not great news for ESOP support. Another concern: With Republicans now in the minority in the House, strong ESOP Champion Rep. Virginia Foxx (R-NC) no longer chairs the House committee that oversees the Department of Labor and how it regulates ESOPs.

The list could go on.

Do these changes in the Congress bode troublesome days for ESOPs?
I say “no.”

Why?
The past is prologue, even though it is not always perfectly repeated. And a look at our past shows that ESOPs have staying power and always attract new champions to replace those who have moved on.

In recent days, I have reviewed ESOP Association newsletter articles I have written going back to 1982. What did I see in these 37 years of articles?

I saw many super ESOP champions in the House who were defeated in their bids for re-election, or who sought offices outside of Congress, or who decided it was time to move on to a new chapter in their lives. I saw the same developments in the Senate.

And still ESOPs survived and thrived. For example, in the 1980s and 1990s, particularly in the House and sometimes because of Administration proposals, our community faced proposals that would have reduced or even eliminated laws that benefit ESOP creation and operations. These proposals were debated, and—thanks to the support of our ESOP advocates on the Hill—they were rejected.

Our community has thrived because of the help of the women and men who have served on Capitol Hill. And we have survived after they left Capitol Hill for other endeavors.
Some of the many ESOP Congressional advocates—from both chambers and both parties—who have helped ESOPs over the years include: Anthony (D), Pickle (D), Rangel (D), Nancy Johnson (R), Ramstad (R), Packwood (R), Snowe (R), Dole (R), Breaux (D), Binghaman (D), Landrew (D). The list could go on and on, including literally hundreds of former members of Congress and ESOP supporters from 1981 through 2018.
Why did these individuals support ESOPs? Was it because The ESOP Association paid super-duper lobbyists or DC swamp dwellers to “tell” them to support ESOPs? No, of course not.

The past is prologue, even though it is not always perfectly repeated. And a look at our past shows that ESOPs have staying power and always attract new champions to replace those who have moved on. -JMK

Was it because The ESOP Association PAC gave $500 to $10,000 per election cycle to the women and men in Congress who publicly supported positive ESOP law? Again, the answer is no.

It was because the leaders of ESOP companies asked their elected officials to visit their businesses so they could learn for themselves what being an ESOP means.
Over the years I have attended literally hundreds of fundraising events for ESOP advocates in Congress. More times than I can remember, they saw my name badge and recognized the name of The ESOP Association, and their faces brightened. “ESOPS are special!” they would tell me sincerely.

ESOPs thrive in the legislative arena because of you and your fellow ESOP participants—whether you are machine operators or CEOs—showing outsiders, such as members of Congress, what working in an ESOP company is like. The result is a palpable feeling, and it impresses Senators and Representatives more than anything we in Washington can do.
Members of Congress come and go. The ESOP spirit remains.

So memorable was the panic that set in among leaders of the ESOP world when the “Godfather of ESOP law,” the late Senator Russell Long (D-LA), announced he would retire at the end of 1986.

The women and men involved with The ESOP Association at that time were alarmed—to say the least—almost begging the Senator to stay. They feared that if their champion retired, all his good work on behalf of ESOPs would be undone.

Senator Long’s response was: “If ESOPs cannot survive when I am gone, they do not deserve to exist.”

And what happened? ESOPs not only survived, they actually gained additional favor in the law. Take note of the law that passed in the late 1990s that permitted S corporation ESOPs to exist and to avoid paying any Federal taxes.

We will miss our friends who are no longer in Congress. But as Russell Long knew, ESOPs will continue for the simple reason that they deserve to do so.