Fractional ownership and other perks make for engaged employees
Today’s labour crunch is giving farm managers greater incentive to apply outside-the-box thinking to attract and retain workers.
If you’re managing a farm, you might want to take a page from other business sectors by giving employees the opportunity to acquire small ownership stakes.
Employee Share Ownership Plans
Employee Share Ownership Plans (ESOPs) are rare on farms but have found success elsewhere. Consulting firm ESOP Builders reports that 40% of Profit magazine’s 200 Fastest Growing Companies in Canada have ESOPs.
In the U.S., over 11,000 companies and 10 million employees have share ownership plans, including Microsoft, Hewlett-Packard, Proctor & Gamble, Cisco, Intel, Xerox, Motorola and Merrill Lynch.
With growing farm sizes and employee ranks, Dan Ohler, Employee Ownership Specialist with ESOP Builders, sees employee ownership becoming a very viable alternative.
Younger people want employment to be more than just a job.
“There can be huge advantages for attraction and retainment,” he says.
Ohler believes younger people want employment to be more than just a job and having an opportunity to be part owners can be a huge way to attract them. Partial ownership can also encourage current employees with valuable skills to stick around, he says.
And ESOPs can even work with seasonal workers. A solar installation firm utilized ESOPs to convince seasonal employees to return year after year. “They come back because they know they have a stake in the game,” Ohler says.
How to do it
Ohler recommends offering certain employees the chance to buy shares rather than giving them away as, say, a bonus.
“The employee has had to come up with cash out of their pocket. It means a little more than if you just give it to them,” Ohler says.
Since farm labourers may not have the savings necessary to buy shares, he suggests farm operators consider payroll deductions to go toward the purchase of shares.
The employer could also grant an employee options for shares, Ohler adds. These options provide the employee the right to purchase the shares at some point in the future at a pre-agreed upon price.
Options can work well as an attraction strategy, Ohler says.
A new employee would be given the right to buy shares at today’s share value, but not until the third year of granting the option, for example. If the employee works out, share values may have increased significantly by the time the options vest, making the employee more motivated to buy and continue making valuable contributions to the business.
If, however, the employee is let go before that time, they’ll lose the right to buy the shares.
As invested stakeholders, employees share in the risks and rewards of the farm.
“It gives the employees a sense of ownership where they start to make better decisions daily, and it’s a great way to keep them, because then they’re not going to go down the street,” says Ohler.
ESOP Builders reports that non-farm companies that implemented ESOPs benefitted via:
- Highly engaged workforces: Employees are more productive and engaged, with 20% higher performance scores and significantly less absenteeism.
- Attracting and retaining talented staff: When recruiting, ESOP companies receive 3.5 times more applications than non-ESOPs, while turnover is significantly reduced – by up to 200%, according to the U.S.-based National Center for Employee Ownership.
Other unconventional offerings
While fractional ownership can be a nice offering to help attract and retain employees, it’s not the only option. Housing and access to transportation have also become fairly common for farmers offering non-monetary compensation.
“I remember a farmer telling me they offered their employee a brand-new truck that was theirs to use from the get-go and theirs to own if they put in five years,” says Heather Watson, executive director of Farm Management Canada.
But there are other less conventional benefits as well. “I’ve heard of farms instituting social programming and group activities to help build comradery and a sense of belonging,” says Watson.
The more that farms can provide employee benefits comparable to non-farm sectors, the better their chances of attracting and retaining employees, she says.
“Things like comparable wages, bonus/performance programs, loyalty programs, health benefits including counselling, and pension programs make a lot of sense,” says Watson.
Perks and bonuses could also include employee family members. Beyond company parties and sporting events, they could include gift cards or other meaningful gifts relevant to the interest of your employee.
Given the nature of the work, farms can also provide additional benefits that other businesses can’t – like a share of the production, be it a side of beef, fruits and vegetables, or other farm products.
Even the farm working environment itself — working outdoors, with animals, feeding the world, helping support the community — may speak to employees’ needs and values beyond simply wages, she says.
“There’s a lot of opportunity for farmers to think outside of the box by looking at what other businesses are doing, and then what else they can offer that only a farm can,” says Watson.
From an AgriSuccess article by Richard Kamchen.