So, ESS Is An ESOP. Does It Really Make a Difference?
When we say “we own it” – we mean it. Our Employee Stock Ownership Plan (ESOP) means our company is owned by the people who work here. Being an employee-owned firm is the foundation of our values, our culture and the way we serve our clients and partners. Not so sure? In this article we’ll unpack some ESOP power stats, learn how being an ESOP impacts the bottom line, and gain insights from a few of our valued partners from other ESOP firms.
HOW DO ESOP COMPANIES STACK UP?
“Employee-owned businesses generally outperform conventionally-owned businesses and do a better job of weathering difficult business climates,” stated The ESOP Association (TEA). There are 6,243 ESOP companies in the United States today, and 12% of those companies are within the construction industry. If you’re doing the math, that means out of the 700,000 construction companies nationwide – only 750 construction companies are ESOPs. Another great statistic from the TEA 2020 Press Kit says that ESOP companies are 1.4 times more likely to offer employer sponsored training!
HOW DO WE BENEFIT FROM BEING AN ESOP?
RECRUITING AND RETAINING TALENT
Like many construction companies, recruiting and retaining talent is a big challenge. One of the greatest tools we use to compete in our industry’s “war for talent” is the benefit of employee-ownership. Employee-ownership helps us recruit top candidates and retain the best in the business. The turnover rate for employees in the construction industry is nearly 30%, making it the most of any industry. Replacement costs for talent can be a big burden on construction companies. Having a high-performing ESOP is a big perk. It helps us retain top tier talent while saving hundreds of thousands of dollars in replacement costs. Those savings make a difference to our bottom line, and go straight to our employee-owners’ back pockets. From our experience we agree with The ESOP Association, which shared that, “companies with employee stock ownership are far more likely to retain employees than conventionally-owned businesses.”
When talented people stay in the ESS family for years, we gain valuable industry experience and knowledge to produce quality work, time and time again. Amy Allen, Chief Administrative Officer and General Counsel stated, “the thing I like about ESOPs is that you can control your own profit. When you are an employee-owner, decisions you make each day on the job ultimately have an impact on the bottom line.” We are proud to say that many of our employee-owners choose to call ESS their last employer.
BUILDING THE FUTURE
Our ESOP also plays a large role in our merger and acquisition (M&A) strategy. Over the years, ESS’ aggressive M&A strategy has helped us add top notch companies to the ESS family. In doing so we’ve grown substantially; diversifying our service lines, expanding our geographic footprint, and growing to nearly 1,400 employee-owners strong.
ESS enjoys being a mentor to companies looking to become an ESOP. In the beginning of our mentorship we start the conversation about pride of employee-ownership, and help walk them through the process of becoming an ESOP. We mentor them in hopes that they are successful. This mentorship also benefits ESS. If the firm decides they are interested in being acquired in the future, we are positioned well to bring them into the ESS family.
In the words of Keith Bennett, “ESOP puts us in the driver seat. It positions us in two ways. One, we’re at the table. Two, if their endeavors don’t work out in a couple of years we will be there to bring them into our family. Our strategy makes us one of the number one merger and acquisition teams out there. We are out in the marketplace and everyone gets excited.”
DO OUR PARTNERS SEE THE “ESOP DIFFERENCE?”
We think our partners have premier experiences when they work with ESS. But we didn’t just want to assume, so we called them up. Here’s what a few of our valued partners had to say.
Bartlett & West is an engineering firm that ESS has continued to work with over the years. Based out of Topeka, Kansas this 100% employee-owned company has recently partnered with us on our Mineola Hill I-70 Truck Climbing Lanes Design-Build project in Missouri and our Bella Vista Bypass I-49 project in Missouri, as well as countless other projects. In 1986 Bartlett & West bought out their founders and became 100% employee-owned. Since then, they have expanded their services and become a nationally-ranked engineering firm.
Todd Kempker, Transportation Lead for Bartlett & West oversees all transportation resources in the company and serves as a project manager as well. He has been an employee-owner at Bartlett & West for almost 13 years. When asked about our partnership Todd stated, “one of the reasons that we’ve teamed up with Emery Sapp is the employee-ownership ties. We enjoy working with other firms that share the same values, and are able to connect with us from a cultural standpoint. ESS also tends to be very innovative, and I can tell you guys care a lot. It is evident that everyone has a stake in the game, and a lot of that has to do with employee-ownership.”
Finding a trusted contractor isn’t always easy. Bartlett & West knows that struggle firsthand. When asked why they continue to choose ESS as a partner Todd stated, “we have had success each time we partner with you guys and that is a big reason we continue to choose you.”
Ready for more? Founded in 1944, Parsons Corporation (Parsons) is a global solutions provider focused on the defense, intelligence and critical infrastructure markets. Parsons’ ESOP is a unique hybrid. They are employee-owned, but two years ago they decided to also open up their stock to the public and now trade in the New York Stock Exchange (NYSE:PSN). You may know Parsons from our partnership on the I-70 Columbia Bridges Design-Build project or on the current I-44 Bridges Rebuild Design-Build project between Sarcoxie and Halltown in Missouri.
Tim Broyles has been with this company for 12 years and the local expert for Missouri Operations when it comes to Parsons’ Transportation Group. When asked if he noticed any difference working with ESS as opposed to conventional firms he stated, “yes, it’s always been different because it’s Emery Sapp. You guys actively participate in each project, and there is a high level of quality that you always produce. I can physically see the personal commitment, but we just think of it as that is who you are….that’s just Emery Sapp. We believe because of that it serves as a good partnership for us. You guys are killing it and have positioned yourself as the leading edge of heavy civil construction.”
Another one? Yes please! Sargent Corporation (Sargent) was founded in 1992 in Maine, and currently is 400 employee-owners strong. Our partnership with Sargent started when FMI Peer Groups paired ESS and Sargent together. FMI Peer Groups pairs construction industry leaders together to collaborate on strategy and thought leadership. ESS shared countless conversations, panels and discussions about the value and benefits of becoming an ESOP. Sargent ultimately decided to dive into employee-ownership and became an ESOP in 2013.
Tasha Gardner has been with Sargent since October of 2017, however her relationship with this company goes far beyond. She was Sargent’s outside CPA of the company since 1993 and has had the pleasure of watching them flourish through employee-ownership. Since becoming an ESOP, Tasha has noticed a difference. “I just started to see the traction and increase in value. Our people definitely have a lot of pride in the work they do. They live out our core values much like you guys at ESS do even though we are still relatively new to the ESOP world.”
We asked Tasha how she feels about being an employee-owner and she said, “I feel a big sense of responsibility to my now 400 bosses. We are always asking the question about what would be better for our people. We want them to be successful, and for them to retire well. It’s also more fun working in this environment because we are all owners.”