3 key questions to ask –
and answer
When planning their future and the future
of their business, owners should consider
the following:
• How are profits shared with employees?
• How are more ownership and value
shared with employees?
• How is future growth shared
with employees?
The answers to these questions will vary
depending on the business and owners’
objectives, but foundational to any situation
• What are the objectives for a profit
sharing or an ESOP? For example, is
this an attempt to attract new talent? To
keep strong employees from moving
to competitors? To transition out of
the business?
• Would profits be shared with all
employees or just a certain group? Some
companies only want to share with their
key employees, while others prefer to
share with all their employees.
30YEARS
1987-2017
DOLLARS AND SENSE
are a few key considerations:
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• Site Preparation &
Development
• Sewer & Water
• Drainage
• Shale & Gravel
• Tank Foundations,
Lots & Berm
Construction
• Landscaping
• and much more
DOING IT RIGHT
• Pipeline
Maintenance
• Excavation
• Backfill &
Compaction
• Hydrovac
• Hazardous site
clean-up
• Demolition &
Disposal
• Grading & Leveling
• How closely should profit sharing
be tied to corporate performance?
Are the leaders willing to develop a
profit-sharing system that is closely tied
to specific performance areas or is the
sharing more subjective?
It is possible to combine these outcomes
and develop a system that answers
all the questions, but any solution, no
matter how complex or simple, should specifically
address these questions.
Tips for a
successful transition
Employee ownership programs can be
autonomous or combined with profitsharing
programs. Generally, they allow
for all or only certain qualified employees
to become direct owners in the company.
Critical factors which lead to successful
ESOPs include:
• Having a culture or being willing
to develop a culture whereby
decision-making is decentralized and
management is engaged.
• Creating an ownership structure which
allows for employees to share in the
growth of the company without owners
needing to give up control.
• Creating a program that acts as a catalyst
to drive corporate growth and provides
employees with the ability to say, ‘We
are doing this together,’ instead of, ‘I
am doing it for management.’ This is a
major benefit of employee ownership.
• Developing a flexible ownership structure
from the outset that can evolve
with the needs of the business and the
owners. In this way, ownership could
eventually shift entirely to employees
along a clear, pre-determined plan.
• Having a system and methodology for
how employees will be able to obtain
their shares. Will they have to pay
full market value for such shares or a
discounted value? Will the full purchase
be made immediately or be done over
time? Will a bonus system be used to
help employees pay for their shares or
do they have to come up with the funds
themselves? Are the owners willing to
help employees buy in or not?
• Having an educational program in place
to help employees understand how
the plan – and ownership – work. For
example, not all employees are able to
distinguish clearly between their future
rights as minority owners and simply
remaining good employees and focusing
on their day-to-day responsibilities.
Both profit and ownership sharing programs
have enormous value in the right
situations. Spending the time upfront
to plan and clarify the needs of the business,
its owners and employees will go
a long way to help develop a structure
and implementation plan that makes the
plan successful. n
For more information, contact Mark
O’Rourke, CPA, CA, partner and Regional
SMARTShare Champion at 306-435-3347
or Mark.ORourke@mnp.ca.
Employee ownership programs can
be autonomous or combined with
profit-sharing programs.
50 | Issue 1 2021 www.carm.ca
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