Powerful Ways Employee Ownership Can Impact Your Business
With labor shortages continuing to rise across the country, the driver shortage in the freight industry looms larger than ever and at Long Haul Trucking we struggle to find high-quality drivers as well. However, we have a silver bullet in that struggle that I want to share with you—employee ownership.
Our status as a 100% employee-owned company has helped create a remarkably low turnover rate, typically less than 25% each year.
After surviving, and in fact ultimately thriving during COVID, I am extremely confident that our success is 100% due to our dedicated employees who were given ownership in the business when in 2013 Long Haul’s Founder/Owner John Daniels started down the road to retirement.
Rather than selling to an outside company that couldn’t guarantee employees their jobs or the generous revenue percentages we’d grown accustomed to receiving, he sold 100% of the company to the employees through an Employee Stock Ownership Plan (ESOP).
The Benefits of Employee Ownership
“Employee ownership allows business owners to take care of the people who helped build their business,” said Daniels, now Chairman of Long Haul. “It’s also an empowering tool for business. When employee owners get their retirement statement and see the results of their hard work materialized, a light bulb goes off. A sense of pride and ownership compels them to work harder, together, and the company is better off for it.”
According to the Employee Ownership Expansion Network (EOX), more than 50% of small business owners do not have a plan for what will happen to their businesses when they are ready to retire. And a growing number of owners are reaching retirement age and scrambling for an exit plan.
In fact, research published by Project Equity found that 50% of all job-creating businesses in Minnesota, where Long Haul is headquartered, are owned by baby boomers. It is estimated that 60% of these businesses plan to transfer ownership in the next decade and COVID-19 has accelerated this timeline.
ESOPs offer owners a transition plan owners can feel good about while also solving two of the most vexing challenges in business today—employee retention and profitability. Granting employees ownership gives them value, purpose, and wealth in exchange for their tenure.
Consider what employee ownership can do for your business:
Boost Business Resiliency
Research shows that companies owned by their employees significantly outperformed other firms in retaining employees, protecting worker health and safety, and maintaining hours, salaries, and wages.
During 2020, despite the massive disruption in demand for shipping freight due to COVID, Long Haul’s ESOP saw an impressive 38% growth in its stock price.
Secure Employee Buy-In
As joint owners, employees work together toward a shared goal, helping and protecting each other, their business and its bottom line.
During COVID, the employee owners of Long Haul came together to create a plan to avoid layoffs, keeping every driver and office staff employed. Their buy-in included implementing a weekly base pay for drivers regardless of the freight available for hauling for each of them.
Employee-owned companies tend to have higher wages and better benefits. A portion of annual profits are allocated to employee retirement accounts, enabling employees to build wealth over time.
Long Haul pays full-time company drivers up to $75,000 a year, higher than the industry average. Additionally, the average Long Haul driver with a 10-year tenure has realized an ESOP account valued above $100k through their hard work and dedication. In the first seven years of making payments to retired and terminated employee owners, Long Haul has made distributions of $1.3 million, with an anticipated additional amount of $4 million in the next five years.
Investigating ESOP Opportunities
Organizations like EOX can help you understand employee ownership opportunities and whether they are right for your business. If there’s a fit, there’s tremendous benefit to be had. I like to say, “As an employee owner, you show up everyday to work for each other.”
It makes a lot of sense.