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The winning innovations of two companies working to strengthen their ownership cultures

In recent years, the state of California has experienced catastrophic wildfires, and on October 8, 2017, the North Bay Fires caused devastation for thousands of families in Sonoma County.

Thirty-nine of 76 companies on the annual Fortune 100 Best Companies to Work For list have some form of broad-based employee ownership.

Thirty-nine of 76 companies on the annual Fortune 100 Best Companies to Work For list have some form of broad-based employee ownership.

By Chad Duke, Scott Insurance, NCEO Member Employee-owned companies understand the value of ownership. These innovative companies often have superior workplace cultures, top-notch retirement savings, and the ability to maintain independence over the long haul.

It’s simple. The best ESOP companies are the ones that generate the most ideas from the most people about the most things. That is what research has shown consistently for decades, and the idea is spreading to more and more ESOPs.

In the U.S. ESOPs are by far the most important form of broad-based employee ownership. But there are other ways employees can become owners as well.

When Can I Diversify the Shares in My ESOP Account?

Being an owner in an ESOP is different from being an owner in other ways most people are familiar with. Most notably, employees do not pay for the stock in their accounts (with a few rare exceptions). Owning just about anything else means you have to buy it. In part because of this, ESOP ownership comes with fewer rights, some of which are meaningful, and others not so much. The table below compares being an owner in an ESOP with being an owner of stock in a public company or being an owner of a house.

You have probably been told that ESOPs are part of your retirement plan—and that’s true. In fact, ESOPs are legally part of the Employee Retirement Income Security Act of 1974, which was passed to establish a set of rules to ensure that the tax incentives Congress provides for companies and employees to fund retirement plans are fairly distributed to workers rather than concentrated on a small percentage of well-paid people. ESOPs, pension plans, 401(k) plans, IRAs, and other similar plans are all covered by the law.