Your guide to employee ownership in construction
Employee ownership encourages an engaging and collaborative environment that inspires new ideas and overcomes challenges. For employees and clients alike, that means everyone involved reaps the full benefits of a successful build experience.
As a 100-percent employee-owned company, our team at McCownGordon Construction believes our long-standing accomplishments stem from our commitment to our core values, mission to enhance the construction journey and drive toward a common goal. Our ownership mentality pushes us to always put our clients’ needs first, allowing us to build strong relationships with the people we work with.
Read on for more information on employee ownership in construction and how it impacts the success of a company.
What is employee ownership?
Employee ownership is a company structure that gives employees ownership through stock shares. As a result, all employees have a piece of the pie and a common mission to do what’s best for the company. In the construction industry, a lot of companies are owned by a few people or a single family. While this isn’t necessarily a bad thing, it doesn’t give employees incentive to truly care about the outcome of their work.
There are a variety of ways a company can become employee owned, but the most common practice is through an employee stock ownership plan (ESOP). An ESOP acts as a retirement plan that invests in company stock and places assets in a trust for employees. As time passes, employees gain more shares, which enables them to build up personal wealth into their ESOP account (a qualified retirement account similar to a 401K) as the company grows and performs well.
How an employee stock ownership plan works
The current structure of an ESOP wasn’t officially adopted in the United States until 1974 as a Congressional response to retirement instability. With an ESOP, a company allocates shares to each employee—typically full-time employees who are over 21. The longer employees stay, the more rights they have to their shares. This increasing entitlement over a share is called vesting. ESOPs require that employees become fully vested within three to six years, or upon reaching the qualified retirement age according to their company’s plan.
If an employee leaves their company, he or she receives the accumulated stock to roll over into an outside retirement account; however, many people stay with employee-owned companies for the long haul. Those who retire from employee-owned companies have an average of double the retirement savings. Behind the culture of an employee-owned company is a dedication to providing a good life and good business.
The culture of an employee-owned company can be a lot different from its counterparts. At its core, employee ownership creates an entrepreneurial atmosphere where employees help a company grow and evolve. The attitude and decision-making process not only centers around the client, it also focuses on continuous improvement and innovation.
One of the main characteristics of an employee-owned company is extremely high levels of engagement. Research shows that when employees are involved with each other and their company’s success, it promotes the development of unique and innovative ideas. It also helps ensure a better client experience, because employees know the success of their company hinges on delivering for the client and building lasting client relationships. As a result, employee-owned companies grow 6 to 11 percent incrementally each year. In other words, collaboration improves the overall performance of a company.
At McCownGordon, we’ve found that our open environment has created a culture that empowers our associates. This breaks down fears surrounding speaking up and sharing ideas, because everyone is open to hearing diverse perspectives. As a result, all of our employees have confidence that their opinion matters.
Benefits of employee ownership
Although the idea of employee ownership may seem new, for the decades it has been around, the internal structure has proven to come with many benefits for both employees and their clientele.
Aligns everyone toward the same goal
In some instances, there may be people in a company who are solely looking out for themselves and working toward a personal agenda. However, with an employee-owned company, a personal agenda could diminish the success of the company, which hurts everyone, not just one person.
Since employees have stakes in whether or not a company fails, they want to work together to get the job done. At the end of the day, they all have the common goal of growing their workplace. When everyone is on the same page, there’s less disarray and internal competition.
For clients, that means you’ll benefit from effective planning, streamlined communication, efficient operations and an overall enhanced construction journey because the team is invested in your success. When working with an employee-owned company, you can rest assured that everyone has your best interest at heart.
Promotes engagement and collaboration
Believe it or not, high engagement is the cornerstone to many successful companies. Highly engaged employees are people who value their job, are excited to do their job and are committed to the company they work for. This passion and engagement extends beyond the company, cascading into relationships with the company’s partners, clients and community.
Think about it. If you love what you do and only want to see your company succeed, doesn’t that make going to work that much more enjoyable?
Whether or not someone is engaged depends on factors such as:
- Clarity of their position
- Knowledge of growth capabilities
- Ability to take charge and feel important
- Strength of relationships between coworkers and clients
When those factors align through employee ownership, the outcome of the work/projects outshine others simply because employers want to go above and beyond to do their best. In a study of 1.8 million employees, Gallup has found that engaged companies:
- Treat customers better and more easily attract new ones
- Create better results and outcomes
- Retain their employees and decrease turnover rates
Decreases employee turnover rates
Speaking of staying with the same company, having low turnover rates is crucial for a company’s longevity and capability to build meaningful, long-lasting relationships. When employees feel empowered through an owner mindset, it gives them an incentive to stay on board and see where their efforts can take the company. Everything becomes goal driven, leading to the desire to see those goals come to fruition. As a result, people are less likely to actively search for new jobs that are more fulfilling.
For clients, that means you won’t see a lot of churn on your team, and you’re much more likely to work with seasoned experts with deep industry knowledge who work together like a well-oiled machine.
Boosts integrity and honesty
Employee ownership equals leadership, and integrity is the foundation for every great leader in the workplace. When employees care about their company’s reputation, it drives them to perform without compromising their values. At the core, it’s about doing what’s right simply because it’s the right thing to do.
With integrity, a company can prove to clients they will perform (or even outperform) to the highest expectations. This shows clients that a company can and will do what they promised to do, thus leaving behind any fear the job won’t get done properly.
Why McCownGordon Construction values employee ownership
Five years ago, McCownGordon Construction implemented our employee-owned structure to create the best possible environment for associates. In particular, the construction industry depends on everyone putting in 100% to make a successful build, and we have found that employee ownership gets us there.
We have personally seen all the benefits that come with being an employee-owned construction company. Over the past few years, our engagement level has increased, and we pride ourselves on being nationally ranked in the top 3 to 5 percent in company engagement. This means we not only show up for work, we are excited to come and try new things. Because of our active engagement, we innovate and supply the best resources for our clients, including staying above the curve on technology and new construction standards.
In addition, employee ownership has allowed us to retain our employees. The industry turnover rate is in the double digits; however, with our structure, we’ve kept our rate in the single digits. From our college interns to our senior-level staff, everyone knows they have the opportunity to grow for years to come within the company. Plus, with long-term projects, clients are more likely to remain with the same team rather than face switch outs and employee changes.
Possibly the biggest reason why we value employee ownership is because it aligns with our mission—to deliver the best building experience and enhance the journey for our associates, clients, partners and community. Within that mission, we are structured around three main values: integrity, performance and relationships.
Being employee owned ensures our associates work with integrity by holding themselves accountable and following through with each project. Since everyone shares the common goal of providing high-quality new builds and renovations, their performance levels match their desire to be the best. Lastly, it’s our community and dedication to building relationships that set us apart. We aren’t here to simply do a job and leave; we are here to become a long-term partner with our clients. For this reason, many of our clients come back time and time again for different projects.
Learn more about employee ownership at McCownGordon Construction
At McCownGordon, our team of builders and engineers maintain a customer-focused mentality, allowing us to outperform even your highest expectations. Dedicated to promoting integrity, performance and relationships, it’s our people and values that truly make the difference.
Our customers aren’t simply another project; they’re an extension of our team and community. Together, we don’t just build—we bring creative visions to life. From first thought to final nail, we deliver quality work to ensure our builds stand above the rest.
We have three regional offices around the Midwest—Kansas City, Manhattan and Wichita. Call us at 888-304-4929 or use our free online quote tool to start building today.