Employee-owned companies offer advantages in workforce recruitment, retention

This story first published in “Celebrating Employee Ownership,” a special section that celebrates employee ownership during National Employee Ownership Month.

Like many manufacturers, employee-owned Plastic Products, Inc. in West Branch, Iowa has witnessed a constrained workforce.

Ben Holder, president and CEO of Plastic Products, has seen nationwide trends leading to labor shortages in manufacturing. “Many manufacturers are running into challenges: how do you get people and how do you hold onto them?” Holder said.

ESOPs like Plastic Products are not immune to larger cultural shifts and fluctuations in the market, but they can offer a set of advantages that are attractive to workers.

Plastic Products began its journey as an employee-owned company in the late 1980s when 30 percent of its stock was sold into an ESOP to fund employee retirements. In 2013, owner and president Marlene Smith retired, choosing to sell her shares in the company to the company ESOP rather than to an outside party. PPC has been 100 percent employee owned since then.

Plastic Products — which has plants in Iowa, Minnesota, Kentucky, Tennessee, Illinois and Arizona — uses its ESOP status to recruit workers.

“We use ESOP to recruit,” Holder said. “Whether it’s posting at a laundromat, on Indeed or visiting schools, we tell them about it.” Some potential employees know what an ESOP offers: a positive work environment and the opportunity to become an employee-owner.

But many people don’t know much about ESOPs, and that’s where the company’s dedication to educating workers kicks in. When recruiting new employees, Plastic Products makes sure to explain the advantages of an ESOP when it comes to saving for the future.

“The big take-away is that this is a long-term retirement package that exceeds most 401Ks, social security, and many other plans,” Holder said.

That future money may seem abstract at first to younger workers. It’s important to explain this benefit when other manufacturing companies without an ESOP structure may be able to offer a slightly higher per-hour wage.

For example, an ESOP company might distribute 15 percent of each employee’s overall compensation in stock each year in addition to their full wages. So, a worker earning $50,000 a year would receive a total of $15,000 of stock in just two years. And if the company is doing well, that stock rises in value. Holder delights in watching those newer employees look at their statements and see how much they own even after a year or two.

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Because employees at an ESOP are employee-owners, accruing increasing amounts of stock, they look at the business as if it is their own, which it is. And they have a hand in making it better.

Like many ESOP companies, Plastic Products has a program designed to make it easy for workers to suggest things on the manufacturing floor that will make it more efficient and effective. The program, called “Find a Better Way,” encourages workers to identify problems and work with others to address them. The program has been a great success: in six years, more than 800 improvements designed by workers have been implemented.

“I don’t come up with the ideas,” Holder said. “It’s all grass roots on the plant floor.”

Holder makes it easy for workers to connect with him about problems or changes they’d like to make. Everyone who works for Plastic Products has his cell phone number, and he meets regularly with workers at each of the plants, making management transparent and collegial.

A positive company culture and education about ESOPs are key to hiring and retaining workers, and Plastic Products employees enjoy another benefit: company-wide celebrations. The company invites employees to compete in kickball matches and holds annual parties to celebrate stock distributions, complete with “guess the stock prices” contests.

Are employees good at guessing stock prices? Most of the time they are.

“Workers here are also owners,” Holder said. “They know what’s going on.”