This article argues that maximizing shareholder returns is not the best way to run a sustainable for-profit corporation. The author points to several “B Corporations”, or benefit corporations which do a much better job of engaging their workforce than traditional for-profit corporations.
A ‘B Corp’ measures its success across five (5) metrics: employees (pay more than the competitors), customers (charge less than the competitors); community (contribute more than the competitors); environment (reduce impact); and shareholders (pay a bit less…but still be very successful).
The article describes several very successful B Corps. One of these businesses has recently implemented an ESOP, not as a strategy for retaining employees (their wages are already higher than the competitors), but as a strategy for uniting the interests of various groups including employees, shareholders and community.
Takeaway:
- ESOPs can be used effectively in corporations focused on the welfare of the community.