A Time to Every Purpose
As an old rocker (both age and vintage-wise), I still listen and play along with lots of the songs of my youth. There’s nothing like “In-A-Gadda-Da-Vida” to energize me in the late afternoon. But lately I’ve been hearing the old Byrds’ classic “Turn, Turn, Turn” in my head. And it has everything to do with the idea that it’s time, as in “…and a time to every purpose….”
This is truly the right time for the employee ownership community to assert itself and its models of organization to the rest of the country and, yes, the world. We continue to be bombarded with the outrageous stories of executive mismanagement, lack of integrity, carelessness for the stakeholders of their companies, and a general attitude of entitlement that not only allows but encourages outrageous compensations even as their companies are destructing. Employees of these companies often express sudden surprise over the condition of the firms in which they work and trusted. “Bailout” has quickly become a business buzzword.
Presently, the U.S. and rest of the world possesses but one view of the corporation, and it is the model of Lehman Brothers, General Motors, AIG and the other headliners of the past several months. If there was ever a time when the country needed some positive news about the condition of business, it’s right now. And ESOPs have the most positive stories to tell. If one of the purposes of the employee ownership community is to spread the word about a different way for companies to be structured and operated, then it has reached the time to do so.
The business community-at-large is desperately looking for something, anything, to hang onto with hope. That hope is to be found within employee ownership, where involvement, transparency, collaborative work and values are often at the foundation of the firms. Congress is desperately seeking answers as to how it can possibly affect change within our capitalist system without destroying the “free” markets, changes that can better protect against the collapses we are witnessing with such rising frequency. That change lies in greater employee ownership, where participation, broader ownership, and greater singularity of interests fundamentally restructure and strengthen business without destroying the capitalist system. The American worker is desperately searching for an economic opportunity where the playing field is even and what’s good for the top executive is the same as what’s good for that worker. Employee ownership levels the playing field of whatever game we may be in so that we more closely win and lose together.
The employee ownership community has a great deal to teach the business world, the government and its non-ESOP peers. Many within the employee ownership community serve on ESOP company boards where the ESOP stock continues to appreciate even as the employees’ 401(k), IRA and other retirement accounts are evaporating. The New York Times and the IRS may revel in taking one-sided shots at employee ownership in cases where it has stumbled, but now is the time for the ESOP community to be educating the world about its realities. This is not to suggest that every ESOP company is insulated from the difficulties we face economically at present; in fact, every entity has been directly impacted by the short-sightedness, greed and malfeasance of a relative few. But experience tells us that ESOP companies weather storms better. And any organization stands a far better chance of survival when all hands are engaged and pulling in the same direction.
So what’s the point? Members of the employee ownership community must speak: before local Rotary, Chamber of Commerce or other business audience. They must write and invite their elected officials to visit their companies, now more than ever. They are obligated to create letters to the editors of local newspapers to contrast the workings of employee ownership with companies about whom we have It is time to tout employee ownership and the methodologies that so frequently characterize the very best ESOP firms. The country needs a direction, a hope, and the time is right to turn, turn, turn attitudes to at least one thing in business that makes sense….
In fact, we know specifically from research at Rutgers that ESOP companies are significantly more likely to stay in business over time than comparable conventional companies. Also, in a time when companies are cutting back on 401(k) contributions, it’s worth remembering that ESOP companies contribute about twice as much to the ESOP alone as the typical company contribution to 401(k) plans — and most have 401(k) plans as well anyway. 401(k) plans (which I strongly support) are, by design, skewed to higher paid people who can afford to defer more and thus get a higher match (and some eligible employees won;t contribute anything); ESOPs give everyone the same percentage of pay as soon as they become participants. Finally, over half the work force has no retirement plan at all. Sure, ESOPs are not very diversified, but, given what is happening to company contributions to 401(k) plans and so many people not being in any plan, I’d far rather be 100% undiverdified in something substantial (an ESOP) than 100% diversified in little or nothing.