A common refrain among business owners locally is that they can’t keep good employees. From restaurants to retail, construction to office work, it’s hard to get people to stick around. Some workers leave for better opportunities elsewhere, some start competing companies and some just want a break. Employee retention ranks high on the list of business headaches in Southwest Florida.
Some local companies have found the solution to this problem through employee share ownership plans (ESOPs), a business model where everyone—not just those at the top—benefits from a company’s success.
“It’s a resounding yes for retention,” says Gary Griffin, president of Fort Myers-based B&I Contractors, which is 100% employee-owned. “I started at B&I in 1986, and by the time I’d been here through 1991, two of our biggest competitors were former employees who left the company and started their own businesses. Since we moved to an employee-owned model, very few employees have left our company to start competing businesses.”
To demonstrate the success of the program, Griffin points to the top guys in his management team: an operations manager who recently retired after 33 years with the company, a senior project manager who retired with 17 years and a service manager who will retire next year with 30 years. “These are people who could have gone somewhere else for other opportunities,” Griffin says. Because they were vested in the company as shareholders, they had a motivation to stay. And this motivation extends throughout the company. “We have an employee-ownership attitude,” Griffin says. “Our employees conduct themselves as if they’re owners of the company, and they are.”
Research confirms Griffin’s experience. A large project undertaken by the National Bureau of Economic Research and cited in the Harvard Business Review concluded that shared capitalism programs such as ESOPs boost employee productivity. Not surprisingly, they also encourage overall employee happiness, more than bonuses or incentive pay. “Individual performance-related pay plans do not have this positive well-being effect,” writes the Harvard Business Review. “They can incentivize through income, but they don’t affect worker well-being in the same way as shared capitalism programs.”
This isn’t news to another local juggernaut, Publix Supermarkets. With more than 1,200 stores nationwide and more than 220,000 employees, Florida-based Publix is the largest employee-owned company in the United States. All Publix employees, from the kid who bags the groceries to the manager who oversees the store, receive company stock after 12 months of employment. That’s one of the reasons Publix has made Fortune’s “100 Best Companies to Work For” list every year between 1998 and 2020.
Of course, employee-ownership programs don’t come without certain drawbacks. One in particular is cost. Griffin says B&I pays around $60,000 a year to outside consultants for appraisals, audits and administration of their employee stock program. The company also spends between $40,000 and $60,000 annually on internal administration costs for the program. “We’re a 700-employee company,” he says. “For a smaller company, that might be a deal-killer. But for a company our size, the upsides are worth it.”