Business View Magazine - January 2024

This ESOP was initiated in 2009, and by 2015, the company had bought the remainder of the founder’s shares, officially transitioning from a C-Corporation to an S-Corporation. Since then, the ESOP structure has played a pivotal role in shaping the company’s growth trajectory. THE EMPOWERING EFFECTS OF ESOP STRUCTURE ON COMPANY CULTURE “Being an ESOP makes a huge difference in the day- to-day, where our employees understand that they’re really owners and feel empowered to give input,” Stemm says, noting the fact that 501(c) Services’ internal dynamic really fosters a sense of vitality among employees. Unlike shareholder-owned companies, the employees are both the primary workers and beneficiaries of the operation. Therefore, employee-owners are especially enthusiastic about shaping the company’s strategic vision and decision-making processes. Thanks to this, transparency is a guiding principle at 501(c) Services, and its culture encourages open communication, innovative thinking, and a shared responsibility for the company. More importantly, the company’s ESOP structure allows it to differentiate itself from its competitors. According to Stemm, 501(c) Services works in a “high touch” industry full of passionate, mission-focused individuals, so interacting with customers in a way that is both credible and personal is essential. “Being an ESOPmakes [us] more compelling to them. When our customers are talking to one of our staff members, they’re talking to one of the owners…I think that makes a difference,” Stemm says, explaining that the company’s genuine approach helps it feel not so cold and corporate to its customers. However, it’s not just customers that the company appeals to, as 501(c) Services’ ESOP structure significantly influences recruitment efforts, as prospective employees are drawn to the prospect of being part owners. “We’re very intentional about our culture here, [we] make sure people feel valued and appreciated… Chief Operating Officer Eric Stemm says, “I think he was honestly concerned for the people he worked with for the past two decades being harmed in the transition or just working in a place that wasn’t as meaningful.” Fortunately, those founding concerns were the catalyst for the company’s Employee StockOwnership Plan (ESOP) structure, which emerged as the ideal solution, ensuring a smooth transition that preserved the firm’s ethos and prioritized the well-being of its employees. 126 BUSINESS VIEW MAGAZINE VOLUME 11, ISSUE 01