Why 20/20 Plumbing & Heating is an Employee-Owned Business
20/20 Plumbing & Heating has a business model that few are familiar with: an ESOP. This means the company is owned by employees through an Employee Stock Ownership Plan (ESOP).
There are about 7,000 ESOPs in the US, employing 14 million workers and accounting for about 10% of the private sector workforce.
An ESOP is a defined contribution retirement plan that is invested primarily in the common stock of the sponsoring company. An ESOP is a flexible succession strategy for business owners interested in selling all or part of their business.
20/20 Plumbing & Heating became employee-owned because it was the best option in an ownership transition and it stabilized our future ownership. We continue to be employee-owned because it provides a great incentive for all employees and a reward for our continued company success.
Benefits of an ESOP
ESOPs offer a unique set of benefits — to the company and to its employees.
ESOPs align employee goals with company goals
In an ESOP, employees are motivated to do what is best for the company and understand why it’s in their best interests to do their part to meet company goals. The company’s success will directly benefit the health of the employee’s investment into the company.
ESOPs can help improve organizational performance
According to the Employee Ownership Foundation’s 21st Annual Economic Survey of ESOP Companies, 70.5% of respondents reported profitability increased and 76.2% reported an increase in revenue. In addition, 80% said the company’s stock value increased as determined by outside independent valuations. ESOPs report better performance because the interests of employees and the ESOPs are aligned.
ESOPs t help employees prepare for retirement
ESOP employees have a big advantage when it comes to retirement savings. The retirement balances of ESOP employees can be about three to five times higher on average than the balances of employees who work for a company that only has a 401(k) plan. Research shows that employees in ESOPs tend to enjoy better pay, greater benefits and increased personal wealth compared to employees in businesses without an ESOP.
At 20/20 Plumbing & Heating, we attribute our growth and success in part to our unique business model. We are grateful for our healthy and united team culture and look forward to continued growth and prosperity in the future.