There’s a tradition at Cleveland’s Great Lakes Brewing Company. Each day around 4 o’clock, employees gather in the brewpub for a complimentary “shift beer.” It’s a chance to celebrate the fruits of their labor. Soon though, the employees at the 30-year-old company will be getting a new perk, probably worth a lot more than a free drink.
By the end of this year, it’ll be one of the latest companies to form an Employee Stock Ownership Plan, or ESOP. Basically, it goes like this: work at a company for a while and eventually own it. Or at least a nice chunk of it.
Currently, nearly 7,000 businesses in the U.S. have them, and a recent survey by the ESOP Association suggests that companies that do may see their employees become more productive as a result.
In the coming months, Great Lakes will get appraised and divided into shares. Over time, those shares will be transferred to the company’s 200-plus employees.
Over a pint of stout, Becca Ritterspach, Great Lakes’ HR Specialist, says the prospect of being an employee/owner makes her feel more invested in her job “… not only because, we have this feeling of actual ownership in the company, but it’s nice to work in a place where the owners trust you with that.”
Jason DeRivera, who works on the bottling line, agrees. “There’s a knowledge of when I see the profit statements for the year, I know part of that is mine,” he said.
Great Lakes’ employees don’t know yet what their shares will be worth. However, researchers at Rutgers University say employees at ESOP companies hold, on average, $134,000 in equity.
A breakdown of ESOPs by industry, based on an analysis of data from the Department of Labor. [National Center for Employee Ownership]
The ESOP as a Succession Plan
“An ownership mentality can make a difference in a person’s view of things,” said Michael Keeling, President of the ESOP Association. Recently, the association surveyed owners of more than 180 ESOP companies, and two-thirds of them said their workers were more productive after implementing the plan.