General Networks Corporation, of which Compass365 is a division, is an Employee-Owned Organization, better known as an ESOP (Employee Stock Ownership Plan). There’s value in operating as an ESOP that extends not only to the organization but to its employees and customers as well. In this post, I’ll share what I believe to be the most compelling benefits of working for an ESOP.
First, a little history
General Networks Corporation was founded by Randy and Nancy Wise in 1984 as an IT Services firm in Glendale, California where we continue to be headquartered in our original office to this day. Although we’ve become a primarily remote workforce, we do have a small operations and Technical Services staff that goes into the office in Glendale, very near the charming city of Montrose. In 1992, Randy and Nancy were ready to move on and worked with the leadership within the organization to restructure General Networks as an ESOP to ensure that all employees would have a direct impact from our hard work, successes, and failures. Having seen a number of firms sold and destroyed, the team knew they wanted to put a structure in place that would encourage and reward those who truly care and work each day to keep it thriving. Since that time, we’ve grown organically and are now 75+ people strong, a Microsoft Gold Partner, CA Certified Small Business, and hold a California CMAS to do business with state and local agencies. There are now four distinct divisions within General Networks, with Compass365 being the Microsoft Collaboration Solutions and Services division implementing SharePoint, Teams, and Power Platform solutions for customers.
What is an ESOP?
An Employee Stock Ownership Plan (ESOP) is a type of benefit plan where employees receive shares of the company’s stock as part of their compensation. Unlike publicly traded stock, our ESOP stock is private and valued each year by an outside financial firm based on our performance and the number of shares available for distribution to employees. General Networks provides the ESOP as an additional component to our standard compensation plans, a pension-like plan that benefits you in the long run. Working at an ESOP has several benefits including:
- Ownership: Our employees have a stake in the company’s success, leading to increased motivation and engagement in our work and with our customers. With a focus on quality delivery for our customers, we are helping to build long-term relationships that are mutually beneficial and lead to additional opportunities to engage and provide value.
- Retirement Savings: ESOPs can serve as a tax-deferred retirement savings plan, allowing employees to build wealth and security for their future. In addition to the 2% match to our 401K, General Networks contributes money to our ESOP annually, based on profitability, growth, and some other factors. It’s always a nice surprise to learn what the ESOP grant is each year and that my work contributed in some way. It’s like getting a nice bonus, but one you will typically let grow until you are vested, close to retirement, or ready to leave the organization.
- Potential for Stock Appreciation: As the company grows and its stock value increases, employees can benefit from the appreciation of their stock holdings. These past years have been especially profitable, and our stock has been steadily appreciating, benefitting all.
- Improved Company Performance: Companies with ESOPs tend to have higher productivity and lower employee turnover. This can result in improved company performance and increased success over time. The combination of employee engagement and financial incentives can create a positive, productive workplace culture that benefits everyone involved. We can attest to positive results at Compass365/General Networks as we have an average of 8 years tenure on our consulting staff and clients who have been with us for 5, 10, 15, or even 20+ years. Over 60% of our revenue comes from organizations for whom we’ve worked continuously for 10 years or more.
- Tax Advantages: Finally, ESOPs offer a number of tax advantages for both the company and its employees. For the company, contributions to the ESOP can be deductible as a business expense. For employees, contributions to the plan can be made pre-tax, reducing their taxable income.
Compass365, a Microsoft Gold Partner, delivers SharePoint, Microsoft Teams, and Power Platform solutions that help IT and Business leaders improve the way their organizations operate and how their employees work. Contact us if we may be of assistance in your Microsoft 365 Collaboration Journey.