Who Gets Stock Options?
At AVI Systems an employee has to be with the company for five years to get 100 percent vested in the ESOP, says Perkins, who hit the one-year mark in April. “It’s 20 percent each year leading up to five years.”
In order to get employees to fully embrace ESOP and take on responsibility of being shareholders, it’s important for a company to continually communicate what those stakes actually are. AVI Systems does a nice job of that, says Kendra Lettau, process management architect.
“It’s funny. You don’t really grasp how important being a part owner of a company really is until it’s spelled out for you,” Lettau says. So AVI Systems take extra steps to really detail each employ-ee’s compensation plan.
“For instance, mine at this point is basically just my base pay, profit sharing at the end of the year, matches in 401(k) and the employee stock ownership plan. They break it out and tell you how much they’re actually contributing to you. It helps you wrap your head around it. You’re with the company two years, four years, five years, that money starts to add up. That aspect of it is just the financial part but it does really create an environment of holding you accountable.”
What is the Cultural Impact?
Beyond the core benefit of ESOP — succession planning — the biggest benefit seems to be in the effect it has on company culture.
“It promotes a lot of working together and it promotes teamwork like crazy,” Perkins says. “It promotes people being aware, because it’s your money. It’s your company. It’s not like you’re working for so and so and they’re getting all of the money. It’s your money, too.
It affects your bottom line.”
It also seems to create an environment in which employees are accountable not just for their own actions but for their coworkers’. After all, those coworkers work for the company that they own.
Related: 4 Ways to Turn Employees into Powerful Brand Evangelists
“You’re not going to let one of your coworkers get away with being a slacker,” Lettau says. “It’s not [a case in which] it doesn’t affect me and that it’s just his paycheck. It does affect me and I’m going to call you out on it. I’ll make sure we find a solution and that we’re all working toward the better good.”
Meanwhile, a company that collectively works toward the better good is likely to address issues quickly. In her role as process management architect attending to efficiencies in operations, Lettau sees this in action.
When an AVI Systems employee sees that something is broken, she says, “they’re on it immediately because it’s not in their interest to let it bleed for a while. It’s not the CEO thinking that he’s wasting his money. It’s the employees thinking that I’m wasting everybody’s money by not fixing this situation.”
It also seems to foster, at least at AVI Systems, a strong promote-from-within culture. The Minneapolis-based integration firm with 17 U.S. locations is big on posting jobs internally before pushing outside the AVI walls. This gives employee-owners an opportunity to move from region to region and also chart realistic career paths.
“It gives employees a promise that if you put 100 percent into the company,” Perkins says, “we’ll train you and put 100 percent into you.”
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