In the U.S. there are an estimated 10,000+ Employee Stock Ownership Plans, or ESOPs, making business owners out of some 11 million employees. Not only do these companies tend to outperform other comparable companies that aren’t employee-owned, but their workers are able to build up retirement savings at rates far surpassing the national averages.
· Just ask Aaron King
King is a 60-year-old truck driver for Lowell, Arkansas-based Central States Manufacturing Company. In the 23 years he’s been driving for the Central States he’s seen the company steadily weather the recession, grow rapidly, and become solidly profitable for its employees. Additionally, King’s been able to save up about $1.25 million in his company retirement account.
Because of the ESOP model, and desire to maximize profits, King, known as the millionaire truck driver, has observed that much of the common wasteful and dangerous behavior is minimized by employee self-policing. “We hold one another accountable,” he says. “Somebody leaving a bundle of metal where it could be run over – a $3,000 bundle – we go and get the guy and talk to him. It’s going to come out of all our paychecks.”
Another employee at the Central States, 33-year-old production supervisor Marcus Hedrick, has worked with the company since he was 17. He’s already amassed $250,000 and is well on his way to an Aron King-like early retirement. Hedrick says of his friends doing similar work, “most of them don’t have anything for retirement.”
Central States’ open-book management approach does more than just turn workers into owners, “We teach people to be business people – what capitalism is,” says Rick Carpenter, chairman and former majority owner of Central States.
Business models like these and employee-owner stories like King and Hedrick prove that the so-called “retirement crisis” in America is manageable – if companies are willing to profit-share with their employees. However, what it will also take is a collective interest in making businesses benefit everyone long-term – including the employees.
Lakeland, Florida-based Publix Super Markets, a well-known grocery store chain and the largest employee-owned company in the world is far surpassing their competitors by creating a corporate culture of respect and advancement from within. With an annual voluntary turnover rate of only 5% – they are certainly doing something right.
ESOPs are the answer to our country’s retirement woes and can help fight high turnover in industries known for their quickly burnt out employees. The trucking firms are good candidates because employee turnover at some firms is as high as 100% – well above the national average of 16.4 percent across industries.
When employee-owners have a say in important company decisions, like whether to open a new store or close an underperforming branch, or even whether to purchase used trucks or new for their transportation needs, they feel more engaged and connected to the day-to-day workings of the business and more dedicated to their jobs and missions.