The Top 5 Things We’ve Learned From Being an ESOP

Jan. 1, 2001, was a pivotal milestone in our firm’s history and a date that our people celebrate every year during Employee Ownership Month. On that day, KSM put into motion a bold decision that reshaped its future by becoming an ESOP (employee stock ownership plan), giving all our employees ownership in our firm. This decision was driven by a vision to preserve the entrepreneurial spirit, culture, and independence that had defined KSM since our founding in 1942. By giving employees a real stake in the firm, our partners at the time aimed to inspire greater commitment and responsibility, and provide motivation to embrace ownership and drive long-term success. Now, more than two decades later, we can confidently say that becoming an ESOP was one of the most impactful decisions KSM has made. Over the years, we’ve gained valuable insights that have enriched our firm and strengthened our dedication to our people, clients, and communities.

Here are the top five lessons we’ve learned from being an ESOP.

1. A Unified Culture Builds a Stronger, More Connected Team

One of the most significant changes we’ve experienced as an ESOP is the profound impact it has had on our company culture. While KSM has always valued collaboration and support, employee ownership deepened team connections in ways we hadn’t anticipated. Ownership means every team member understands that their contributions directly affect the firm’s success, fostering a collective sense of accountability and purpose.

The ownership mentality permeates every aspect of our firm. Employees aren’t just working for a paycheck – they’re building their future alongside their colleagues. To further support this focus, we created the role of Director of Workplace Culture & Experience to continue to foster a more connected culture. By continually investing in our people, we’re investing in the future of our firm, creating a more loyal, engaged, and productive team that is committed to maintaining the high level of client service that KSM is known for. Our dedication to cultivating and empowering our workplace has earned KSM recognition as one of Indiana’s Best Places to Work for 19 consecutive years.

2. Employee Ownership Is a Powerful Differentiator for Attracting and Keeping Top Talent

One of the biggest advantages of being an ESOP is its impact on attracting and retaining top talent. In a hyper-competitive job market, where potential employees seek meaningful experiences and opportunities to grow, our ESOP is a powerful differentiator. Prospective employees are drawn to the idea of joining a firm where they can own a piece of the business and have a direct stake in its success.

Retention is equally critical, and our ESOP has helped keep turnover well below the industry average. Over the past five years, our turnover rate has averaged 11%, much lower than the 15% industry average as noted in an INSIDE Public Accounting 2023 report. The long-term wealth-building opportunities our ESOP provides give employees a compelling reason to stay, knowing that their financial future grows alongside the firm’s success. This stability is crucial, particularly in an industry where client relationships, continuity of service, and institutional knowledge are essential for success.

3. A Sense of Ownership Drives Innovation and Entrepreneurial Spirit

Our ESOP structure has been a cornerstone of KSM’s financial strength and growth, fostering a culture of accountability and innovation that supports our entrepreneurial spirit. Employee ownership empowers every team member to think like a leader, encouraging proactive problem-solving and creative solutions. This mindset drives innovation across the firm, whether through client service, internal processes, or strategic growth initiatives. The principles behind our ESOP have empowered our employees to take greater responsibility for the firm’s long-term success, continuously contributing new ideas that keep us ahead in a competitive marketplace.

We’ve also invested significantly in technology to enhance our service offerings, adopting state-of-the-art tools and platforms that improve operational efficiency and deliver greater value to our clients. Our entrepreneurial mindset and ongoing investment pushes us to continuously explore new ways to improve both client service and business processes, ensuring that KSM remains adaptable and competitive in a constantly changing industry.

4. Consistent Financial Growth Through the ESOP Model Builds Long-Term Wealth and Security

One of the clearest indicators of our ESOP’s strength is its ability to deliver exceptional returns. Since its inception in 2001, KSM’s stock has achieved double-digit returns in 21 out of 23 years, consistently outperforming the broader market. Even during economic uncertainty, such as the Great Recession and COVID-19 pandemic, the value of our ESOP shares continued to grow, underscoring the long-term stability of our ownership model. This steady growth has helped employees build significant wealth in their ESOP accounts, offering a level of financial security that surpasses many traditional retirement plans.

By reinvesting profits into our workforce, we are creating a direct link between our firm’s growth and the financial wellbeing of our employees regardless of position or tenure. This structure not only rewards our people for their workplace contributions but also promotes long-term commitment, engagement, and continued investment in their professional development and personal growth.

5. Employee Ownership Creates a Ripple Effect of Positive Community Change

At KSM, we believe in making a positive impact in the communities in which our people live and work. We’ve seen firsthand how employee ownership not only benefits our employees but also strengthens the communities around us. By keeping jobs local and contributing to economic stability, ESOPs create a ripple effect that extends far beyond the walls of any company. To further expand our impact, KSM actively gives back through volunteering, financial support, and community leadership.

With guidance from our firm’s Community Engagement Manager, KSM plans and implements philanthropic initiatives that connect employees with causes they are passionate about. Our team is encouraged to volunteer, engage in community service, and support nonprofit organizations. This mission-driven approach ensures that making a difference is deeply embedded in our culture, reflecting our commitment to both personal fulfillment and social responsibility.

The Lasting Impact of Employee Ownership

KSM’s journey as an ESOP has demonstrated the power of employee ownership, from strengthening our culture to fueling long-term business growth and creating meaningful connections with the communities we serve. By putting ownership in the hands of our people, we’ve empowered them to shape their financial futures while fostering a deeper sense of purpose and responsibility across the firm. As KSM continues to evolve, these lessons remain central to who we are, ensuring that we remain a resilient, innovative, and community-centered firm for years to come.