Rewarding and retaining employees with employee-share-ownership or profit-sharing plans

As demographics change and younger generations begin to make up larger portions of the workforce, traditional, top-down type business models and management structures are fast losing their power in the real estate and construction industry. Employees are looking for deeper ties to their workplace and they want to be more than just another team member punching in each day.

Consider the example of Amy, a manager with a manufacturing company for more than a decade. She likes her job, works hard, and enjoys the team she works with. But despite reaching the goals set out for her by the organization and witnessing tremendous growth in the company, Amy feels like she isn’t rewarded for her efforts. Over recent months, she’s explored new opportunities and wants to work somewhere that rewards employees as the business grows.

Amy plays a critical role in the organization. Her depth of experience and expertise makes her incredibly important to the operations, yet the business faces the threat of losing her. As a business leader, you’ve likely heard a story like this. You know how valuable key employees can be, and how difficult it can be to replace a team member that leaves. So how do you retain employees and make them feel a part of the big picture?

Employee share ownership plans (ESOPs) and employee profit-sharing plans (EPSPs) can be a part of the solution for the real estate and construction industry. These business models can create deep, meaningful personal connections between the employees and the business. Just imagine the power of employees that not just know, but feel, that organizational success will also lead to personal success and fulfillment. Through these models, employees feel their hard work will lead directly to positive results for the business, and therefore, positive results for themselves.

What is the impact on employee engagement?

ESOPs and EPSPs work on a straight-forward premise. A business owner works with their key employees to establish clear goals and metrics to strive for. The goals can be relevant to each person’s area of expertise while also including larger business objectives. If the goals are met, the team members get to share in the financial success that comes with the accomplishments.

We often see an increase in motivation and connection to the business. Team members used to have a transactional relationship with their employer. Under an ESOP or EPSP, team members begin to see themselves as owners and stewards of the business. Employees understand that the decisions they make have a more significant impact and their approach adjusts in time.

How does ESOPs/EPSPs improve employee retention?

These models provide a unique opportunity to your team members that is hard to find in other places. They’re key employees for a reason: they perform strongly in their role, they’ve earned the trust of management, and they know the expectations. But ESOPs and EPSPs allow them to get more out of a role they’re already comfortable in. It’s unlikely that a team member could find the same opportunity on an open job market.

When they become connected to the business, they want to stay and continue to drive growth because they know there is a significant reward for their efforts. We’ve seen strong retention rates for organizations that adopt these ESOPs or EPSPs.

New approaches to your real estate or construction business can help address two of the key challenges your business is facing: increasing employee retention and rewarding team members. Finding the right solution for your situation is a balancing act.

At MNP, we’ve helped organizations across diverse industries, including the real estate and construction industry, adopt ESOPs and EPSPs. To learn more about these opportunities and how it could fit your business, contact Eben Louw, CPA, CA, Partner, at 604.870.7413 or [email protected]