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V O L . X X X N O. X X I V § 2 O C T O B E R 2 1 , 2 0 2 4 10 Q: We have an ESOP. How do we increase our company value so that all of our shareholders benefit? ACE advises: Members of an Employee Stock Ownership Plan are vital stakeholders, regard- less of their position in the company. Their contributions influence the company's valuation, share value and personal financial prosperity. Increasing an employee-owned business's value maximizes benefits for employee-owners. Here are some effective strategies. Build a strong leadership team: Foster a culture of collaboration and innovation through regular leadership meetings focusing on driv- ing the company forward by increasing revenue streams, reducing waste, managing risk and maintaining cash flow. Customer relationships: Cultivate strong customer relationships to enhance loyalty and brand reputation. Nur ture and train employee owners: Encourage an ownership mentality, involve them in decision-making, and provide growth opportunities. Create a plan: Develop an annual strategic plan with the leadership team to drive growth and profitability. Develop and document processes: Your pro- cedures are your tactical plan. Establish clear, repeatable procedures and implement a robust training program. Communicate the plan: Keep employees informed about plan and progress and ESOP health to maintain engagement. Do not forget that they are a valuable source of tactical ideas. Diversify and strengthen revenue streams: Expand market reach by increasing brand aware- ness. Diversify your products and services. Reduce waste and maximize efficiency: Optimize asset utilization and streamline processes. Mitigate risks: Identify and address potential strategic, operational, financial, compliance and reputational risks to profitability. Maintain healthy financials: Remember that cash is king. Healthy cash flow is key to both profit and equity value. E mployee S toc k O wnership Plans offer a unique opportu- nity for companies to create a cul- ture of ownership and drive employee engagement. Maine has seen a flurry of compa- nies go ESOP over the past decade. However, for an ESOP to be fully effective, employee-owners must understand how the plan works and why it matters. Education is crucial to unlocking that understanding, lead- ing to higher engagement, improved company performance and increased employee-owner satisfaction. Studies have shown that compa- nies with highly engaged coworkers outperform others by up to 21% in profitability. For ESOP-owned com- panies, the stakes are even higher. Employee-owners with a clear under- standing of their stake in the com- pany are more likely to take actions that contribute to the organization's success. According to the National Center for Employee Ownership (NCEO), companies with ESOPs grow 2.5% faster than non-ESOP companies, largely due to the sense of ownership employee-owners feel. For employee-owners to appreci- ate the value of an ESOP, they need to understand its structure and bene- fits. Ongoing education initiatives can help make the ESOP concept clear and engaging. Here are specific strat- egies to educate employee-owners. Orient new employees: Intro- ducing the ESOP during new hire orientations ensures that employees understand from day one that they are part-owners. is is crucial for setting expectations and establish- ing a culture of ownership early on. A strong introduction to ESOP princi- ples ensures employee-owners know how their efforts affect the compa- ny's success and their financial future. Provide ESOP statements with explanations: Providing annual ESOP account statements is an excel- lent opportunity for education. ese statements should not only show the value of the shares but also explain what factors caused an increase or decrease in value. is transparency builds trust and helps employee-owners under- stand the direct connection between their work and their financial stake. Hold interactive workshops: Workshops can help break down the complexities of ESOPs, finan- cial literacy and company perfor- mance. Using real-life examples or case studies, companies can show how day-to-day decisions — such as reduc- ing costs or improving customer satis- faction — impact the value of ESOP shares. Interactive learning tools like group activities and Q&A sessions can make ESOP concepts more engag- ing and easier to understand. Cou- ple it with education on your 401(k) plan so they understand the similari- ties and differences between the two qualified retirement plans. Fo r m E S O P c o m m i t t e e s : Employee-led ESOP committees are an effective way to promote aware- ness and foster peer-to-peer learning. ese committees can organize events, distribute educational materials, and provide a space for employee-owners to ask questions. Involving employ- ees in leadership roles through ESOP committees enhances their knowl- edge and commitment to the ESOP. K.I.S.S: Keep it simple! ESOPs can be complex, filled with jargon and financial terminology. Simpli- fying the language used in educa- tional materials is crucial to ensure all employees understand their own- ership role. Visual aids, infographics and short explanatory videos can help break down difficult concepts, mak- ing them more accessible and engag- ing for everyone. N a t e M o o d y i s a retirement plan advisor and partner at Lebel & Harriman R e t i r e m e n t A d v i s o r s , a f inancial services f irm in Falmouth. B Y N A T E M O O D Y , L E B E L & H A R R I M A N B Y N A T E M O O D Y , L E B E L & H A R R I M A N How to educate your employee-owners on your ESOP H OW TO A n s w e r e d b y P r i s c i l l a H a n s e n M a h o n e y , B l a z i n g T r a i l s C o a c h i n g The Association for Consulting Expertise is a nonprofit group of independent consultants who value "Success through collaboration." The public is welcome to attend its regular meetings to share best practices and engage with industry experts. For more information go to www.consultexpertise.com. ACE member Priscilla Hansen Mahoney, founder of Blazing Trails Coaching LLC, offers practical, down-to-earth business strategies for contracting businesses and their teams. Blazing Trails Coaching is a proud sponsor of the Maine ESOPs Conference, which focuses on providing education, networking, collaboration, and advocacy for Maine employee-owned businesses. Learn more at www.blazingtrailscoaching.com. A S K AC E