There’s an old joke I would hear in Russia endlessly, in the old days, dated from the Soviet Union: They pretend to pay us, and we pretend to work.
Habitually accompanied by a grim Slavic chuckle, this humor was taken quite seriously.
A contemporary version exists, now making the rounds on social media, to which I swear I’m not hooked: The Boss pays us minimum wage, we turn in minimum work, and he acts all surprised. You can flip the order around, I’ve learned from the comments space, and it makes just as much sense. This meme is cross-cultural – the kind of griping most often enlightening.
We can go cross-millennial, if you please. Graffiti at an Egyptian pyramid-building site has been preserved, that reads, essentially, If they don’t give us more onions and beer, we’re not shifting another ten-ton block. The struggle is eternal, my friends, but that doesn’t suggest a dearth of solutions.
In the last analysis, the issue is motivation – beer, garlic, ducats, dollars. Most alluring, there’s control, personal involvement and interest. This raises our heads to the topic: proposals from two un-like-minded congressmen, which happen to jibe with some global trends.
Original thinking rarely flows from Washington or any other capital. Perhaps that’s a good thing: when politicos get notions, life can get hairy. It’s best when they borrow from real life, foster ideas, take aim with a few tax breaks, and see how things run. That’s what Senator Ron Johnson, a stern Wisconsin Republican, and Representative Alexandria Ocasio-Cortez, uber-liberal New Yorker, have apparently done. Together, they’ve introduced bills to support increased employee ownership at various companies.
Their independent, complementary proposals aim for expansion of ESOPs – employee stock ownership plans. It’s simple in concept: under an ESOP, staff gain the opportunity to own shares in their place of work. This grants valuable assets for personal financial planning and a direct stake in the company’s success. Smart companies offering ESOPs also tend to create mechanisms that encourage employees to voice ideas for improving the business, with benefits that favor all concerned – the entire team, we might offer.
The idea isn’t exactly new. Like many things, this goes back – not, alas, to my favored Greeks, but rather – to Sears, Roebuck and Co. (from whom Amazon filched its business model – good thinking). In the mid-19th century, Sears socked away stock for long-term employees (people didn’t flit from job to job back then, as today), so they’d have something to fund their retirement. Consider that government pensions didn’t exist – you were on your own. Procter & Gamble had a similar program, suggesting some of the seemingly evilest conglomerates had something of a soul. It’s always best to think positive, I think – it’s more encouraging that castigation.
Variants of ESOPs have received tryouts in manifold markets. In the UK, multifaceted retailer Frasers Group has been flirting with ESOPs for several years via employee incentive schemes, the latter word being the artless preference of our British cousins and not a passing reference to the underhanded workings of evil conglomerates. In 2009 and 2012, these offerings, which involved awards of stock and cash bonuses if the company reached share price and performance targets, resulted in the firm’s EBITDA rising 180%, its shares advancing from 130 pence to 735 pence. Materially involving staff makes growth targets less arbitrary, company ops personal, creates a win-win for staff and executives. Is this the future of business?
Back home the verdict is still out, as few US companies employ ESOPs – not even 7,000 at last count – a drop in the bucket. Income disparity is a hot issue, an examination of its roots revealing lack of economic choice, inadequate retirement funding, limited educational options, poor access to healthcare, and so on. Despite the long history, ESOPs manage to sound a bold, revolutionary idea today.
The two congressmen, despite being planted on opposite sides of a wide, virtually alligator-infested isle, are of like minds. Senator Jonson’s bill would offer grants of $20,000 per employee to companies offering staff that amount in shares via an ESOP. Rep. Ocasio-Cortez would force – I employ this word in the best possible way for government, as in forcing people to wear seatbelts – companies receiving federal aid to offer ESOPs to employees. The latter proposal may be going too far, but sometimes I stand with the maximalists. Time will tell what Congress can stomach.
Our country is in turmoil over the problem of economic equality. We hear wide analysis, from laissez-faire to socialism, of the scale of the problem and the possible solutions. To my mind, one insidious issue is in employee education: even people with money sometimes miss opportunities – they squander their funds, through no real fault beyond lack of knowledge.
I’ve had countless conversations over the years, led by one simple question: what is it, exactly, that I do? Investment company? Equity research? Compliance specialist? Whole-life versus universal? I patiently explain; easy to do because I’m simple myself; but family and friends, they usually don’t get it – they haven’t been exposed, you see.
An ESOP brings employees directly into the mix of financial performance, stock movements and the details of company planning. Evidence to date suggests that when employees are owners, they educate themselves, quickly, and wise companies support them in this alacrity.
After World War 2, my father – sans college degree, but an engineer despite that handicap – needed to learn to read blueprints. His company, an industrial menace out of Upton Sinclair, paid for his course – at Harvard University, no less – and dad came out on top. As I commonly observe, good ideas have no shelf life.
Just as commonly, we can rely on John Adams, founding father, second president, revolutionary: “All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.”
How the heck did he know, that Federalist fossil? The answer suggests itself: there is nothing new under the sun. ESOPs, at least a century old, yet still nascent, may help us overcome, to the most sensible extent we can hope, the eternal conundrums of equity, opportunity and worker engagement.