The resilience of employee-owned companies in a crisis has earned headlines, with most focused on considerable advantages to the employee-owners themselves. But they’re not the only ones reaping the benefits. Clients and customers of these companies also see a big upside.
Our company, Burns & McDonnell, has been 100% employee-owned since 1986. So, we’ve seen for decades how these benefits extend to clients. Here are a few:
1. Employees (and their Knowledge) Stick Around Longer
Clients and customers can get used to seeing familiar faces, as employee-owned companies regularly outperform others on employee retention. Research from Zogby Strategies and Employee-Owned S Corporations of America (ESCA) shows companies with an Employee Stock Ownership Plan (ESOP) were six times more likely to retain staff during the pandemic compared to other firms.
Enhancing employee skills through training and shared institutional knowledge is also a priority. And relationships with suppliers, consultants and other partners are deep and lasting. This makes a difference when experience and continuity counts, whether the product is a perfect cup of coffee or a multibillion-dollar construction project.
2. More Agility Through Accountability
Doing business with an employee-owned company means most people you come across are owners. Clients and customers have much to gain from this personal investment, as engaged workers with a stake in the company’s financial success translates to superior business performance. Studies from the National Center for Employee Ownership (NCEO) found ESOPs show higher productivity and faster growth than other companies.
Employee-owners are often more empowered to problem solve and make decisions quickly to keep a client’s efforts moving forward — and they’re accountable for the success of those solutions. This creativity and commitment helped employee-owned companies in some of the most challenged industries — food service, for instance — keep their doors open. And clients of other employee-owned companies saw their projects progress without skipping a beat.
3. Stability Clients Can Count On
The pandemic has challenged the business community in unexpected ways. Amid this struggle, ESOPs fared better in job retention, benefits and workplace safety, according to a study from Rutgers University and the Employee Ownership Foundation. This echoes previous studies about the strong performance of ESOPs in both boom and bust cycles. The future is bright, too, with employee-owned companies seeing a return to business as usual nearly six times more likely.
A Prairie Capitol survey of ESOP construction firms showed more than two-thirds of ESOP respondents had no impact from the pandemic in relation to cash flow and liquidity, culture or sustainability. This resilience has attracted the interest of private equity groups, which are investing in employee engagement and ownership models with increased frequency.