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Forbes
a day ago
- Business
- Forbes
Employee Ownership Is Transforming Business Sustainability
In today's dynamic business landscape, succession planning is no longer optional but a strategic imperative. As private equity investments surge and talent shortages persist, traditional exit strategies such as mergers or acquisitions often come with significant disruption. Many businesses, particularly in professional services, face the challenge of preserving their culture, maintaining service quality, and sustaining growth during leadership transitions. Against this backdrop, Employee Stock Ownership Plans (ESOPs) offer a compelling, often underutilized alternative. Our firm's decision to transition to an ESOP has provided stability, independence, and a model for sustainable success that directly benefits clients, employees, and communities. Lou Grassi Addressing Grassi's Employee-Owners at the Firm's Annual Gathering in 2024 Unlike traditional sales to external entities, ESOPs transfer ownership to employees over time, aligning personal success with the business's long-term performance. This model significantly enhances employee engagement, as team members directly share in the company's growth and profitability. At our firm, adopting an ESOP structure led to measurable increases in productivity and lower turnover rates. The employee-ownership mindset ensures our staff are not merely employees but invested stakeholders, deeply committed to the success of our clients and the organization. Having advised approximately 35 ESOP companies, we have seen that employee-owned businesses consistently outperform their peers on key metrics such as retention, profitability, and resilience. One of the most significant challenges in any succession plan is preserving a company's operational continuity and core values. ESOPs offer a structured, gradual transition that minimizes disruption, preserves institutional knowledge, and maintains client relationships. Our decision to implement an ESOP stemmed from our unwavering commitment to independence, culture, and consistent client service. In contrast to private equity models, which often involve ownership changes every few years, ESOPs provide enduring stability. For our clients, this means continuity of service, depth of expertise, and a long-term partnership with advisors who are genuinely invested in their success. The financial structure of an ESOP provides distinct advantages to sellers and employees. Sellers can potentially defer capital gains taxes by reinvesting proceeds into qualified replacement property, a benefit unavailable in most private equity transactions. The business can deduct contributions made to fund the ESOP's debt repayment, enhancing overall cash flow and strengthening balance sheets. These savings create opportunities for reinvestment into technology, talent development, and client service enhancements. For employees, participation in an ESOP typically results in significantly higher retirement savings compared to peers in non-ESOP firms. In our case, the financial flexibility created by the ESOP has enabled strategic investments that keep us competitive and client-focused. Amid ongoing challenges in talent acquisition—highlighted by a 7.4% decline in accounting graduates reported by the AICPA—the ESOP model has become a powerful recruitment and retention tool. Offering meaningful ownership stakes without requiring financial buy-ins gives employees a direct path to wealth-building and career advancement. In our experience, the tangible sense of ownership has fostered a culture of collaboration, accountability, and innovation. Employee-owners think and act like business partners, resulting in higher client satisfaction, reduced turnover, and stronger team cohesion. For organizations facing generational talent gaps, ESOPs provide a compelling advantage in the competition for top performers. Transitioning to an ESOP does not dilute leadership effectiveness; it enhances it by aligning employee interests with organizational goals—ESOPs foster environments of shared responsibility and strategic focus. Our leadership team has been able to maintain complete operational control while benefiting from a workforce that is highly engaged in driving the firm's growth. The ESOP structure supports long-term strategic planning over short-term profit-taking, avoiding the common pitfalls seen in private equity-backed models. Rather than optimizing for quarterly returns, we can invest with a multi-year horizon, ensuring that client service quality and firm values remain paramount. While ESOPs present significant benefits, successful implementation requires careful planning, feasibility analysis, and experienced advisory support. Establishing an ESOP involves regulatory compliance, valuation considerations, and administrative responsibilities that must be managed thoughtfully. At our firm, meticulous planning was critical to our success—from conducting a detailed feasibility study to structuring the right alternative practice framework to separate audit and advisory services. For C-suite leaders considering this path, early engagement with experienced ESOP advisors and a commitment to transparent internal communication is essential to ensuring a smooth transition and maximizing long-term value. As firms navigate the evolving business environment—marked by heightened private equity activity, shifting workforce expectations, and increasing competition—succession planning must be about more than just ownership transfer. It must be about sustaining the organization's mission, values, and impact for future generations. ESOPs offer a proven, strategic alternative that simultaneously addresses financial, cultural, and operational objectives. Our experience reinforces that employee ownership preserves and strengthens businesses, ensuring they remain vibrant, client-centered, and growth-oriented. For C-suite leaders evaluating their succession options, ESOPs represent more than a transaction; they represent a transformational opportunity to build lasting value for all stakeholders. By investing in employees as owners, companies can secure their legacy, drive superior performance, and contribute to stronger communities in the decades to come.
Forbes
14-05-2025
- Business
- Forbes
The AI Advantage: How To Put More Focus On What Truly Matters
Heather Peters, CHRO, Sikich, a global company specializing in technology-enabled professional services. getty While there's plenty of speculation about what the future holds for AI, one thing is clear to me: AI is a today thing, not a tomorrow thing. As HR leaders, it's time to consider what role we want this technology to play in our field's future. As I think back on all the chatter about AI in the past year, it seems the conversation shifted away from the theoretical to the practical. Now, there's an eagerness, especially among early adopters, to share creative and successful use cases for AI. I find this knowledge sharing and collaboration in a time of uncharted waters to be incredibly inspiring. As a people leader, I know we must embrace AI to drive efficiency and empower HR teams to focus on what truly matters: meaningful and direct employee interaction and support. While there's no one-size-fits-all approach, here are three practical ways to unlock the power of AI and optimize your HR strategy. Evolving to meet the needs of an ever-changing workforce is critical, and extensive research shows that teaching employees to use AI effectively has many benefits. Some key findings include: • Productivity: When employees know how to leverage automation tools, they can see significant gains in productivity. The time saved allows them to concentrate on higher-value work that requires critical thinking and creativity. • Better Decision-Making: AI-driven insights enable employees to access more accurate data, leading to more informed and effective decision-making. • Employee Engagement: Reducing monotonous, repetitive tasks through AI implementation has been linked to increased job satisfaction. As employees shift toward more creative and strategic responsibilities, engagement and overall morale improve. At my company, Sikich, we've invested in AI learning opportunities to ensure our workforce is equipped to leverage new technologies effectively. From informal lunch-and-learn programs to quarterly training workshops, as well as having an AI Awareness Pilot Team, we show employees how they can utilize AI in their roles. Generative AI can help augment your human capital efforts by taking over routine tasks. To determine what you can automate, conduct an audit of your team's workflow to identify areas that don't necessarily need a human touch. These will typically be the easier, repetitive or time-consuming tasks that are more completion-oriented. I frequently use the term "special sauce" when making these distinctions. Take recruiting, for example. Reviewing and vetting 200 résumés from candidates who all have accounting degrees, have two years of work experience and are authorized to work in the U.S. is a rather repetitive and time-consuming exercise. It doesn't require the special sauce—in this case, a human recruiter's ability to understand nuance, make connections, develop relationships and determine culture fit. So, ask yourself, which tasks require the special sauce, and which don't? That's how you can pinpoint opportunities for automation. Data is critical to making sound and innovative business decisions, but only if you can make it work for you. For example, AI-powered tools automatically analyze large volumes of employee feedback from surveys, performance reviews and engagement programs. Then they can identify patterns and trends that might otherwise go unnoticed, such as shifts in engagement or satisfaction that signify turnover risk. At Sikich, we leverage AI to easily and efficiently synthesize data from our employee listening programs. The trends we see and hear then inform how we address issues proactively, thus enhancing our employee engagement efforts. AI can also assist HR teams by providing real-time insights into skill gaps and workforce performance, enabling you to make data-driven decisions on recruitment, training and development strategies. As HR leaders, future-proofing our organization's success means embracing and advocating for AI use. To truly unlock the power of this technology, we must prioritize a workplace culture of curiosity and innovation. By doing so, we will find endless possibilities and step into uncharted territories collaboratively and positively. Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify?
