ESOPs and Profit-Sharing Inspire Employees to Upskill

If you want your employees to upskill, money is a powerful motivator.

Whether through an ESOP or profit-sharing, shops with these programs usually tell me their employees are more motivated and proactive. After all, higher shop profits translate to higher personal compensation.

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The ESOP Puzzle

Employee stock ownership plans (or ESOPs) are essentially a secondary retirement fund that leadership seeks to grow. For accountability, A to Z Machine’s leadership team holds monthly town halls where employees can ask about strategy and performance. Manufacturing Engineering Manager Marc Manteufel says that as employees’ shares have grown in value, they have become invested in bettering the health of their stock and more regularly attend the town halls.

Astro Machine Works noticed a similar increase in employee interest over time, especially as shares in the program grew from $1.12 in 2018 to $114.50 five years later.

It’s All About Performance

Astro’s ESOP turbocharged a trend the shop saw after it started a twice-yearly bonus program based on its cash flow after expenses. The bonus grows with shop performance, so employees clearly see how their efforts affected the bottom line. President Eric Blow says this encourages them to upskill and take ownership of day-to-day operations.

AMPG has seen a similar result with its monthly profit-sharing program. Sales VP Alex Goldberg says the program instills a desire to look after the company’s best interests. Employees work harder and refer new employees with strong work ethics, as better profits for the shop mean better bonuses for them.

The Bottom Line: Direct correlations shop performance and employee compensation inspire employees to work harder and become more effective.

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