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10Questions: Driving Performance Through ESOPs « Back
August 2012
Page 3 of 3
Keeling: What general advice would you give to ESOP corporations on succession planning?

Moss: The broader subject of succession planning is really the extension of the leadership develop conversation above. We address here the more general issue of leadership succession, rather than the narrow question of ‘disaster planning’ – that is, whatever will we do if the CEO or other key player passes away suddenly. Every leader needs a plan to develop the person who will eventually step into her or his role, not strictly to perform their job as it stands today, but rather to perform the job that person will be required to handle as the firm grows and executes its strategic plan. Along with that growth comes organisational complexity, and this requires that leadership consistently monitor whether managers at all levels have and are using the necessary competencies. Accordingly, succession planning is not a task for the C-suite alone. It is a mandate to which all leaders should be held accountable. In effect, succession planning is both the inspiration for and the ultimate outcome of effective leadership development.

Keeling: What are the primary factors behind a sustainable ESOP structure that delivers long term value?

Moss: Several inter-dependent factors drive the sustainability of ESOP firms. From a narrow ESOP perspective, we require an actively supportive legislative and regulatory environment, so that the ESOP form continues to thrive as a broadly-shared equity ownership vehicle. We also require an evolving approach to managing the ESOP repurchase obligation, that is, the requirement that ESOP firms liquidate the shares of their ESOP participants at an appropriate time following termination of employment. Within any individual ESOP firm, we need sufficient sustained profitability to generate adequate investment returns, which in turn we use to fund strategic growth and remain competitive as the market evolves. Pretty simple stuff, on paper. What ESOP companies need, on the ground, day in and day out, is a culture that actively supports appropriate levels of workforce engagement, so that the firm can actually execute its strategy. And to do this, consistently and effectively, ESOP firms need leaders, today and in the future, who understand the marginal performance opportunity that the ESOP provides and who are ready, willing, and able to bring out the best in themselves and their employee-owners.

J. Michael Keeling, CAE, is President and Chief Staff Officer of The ESOP Association, a national trade association promoting the growth of employee ownership in America through Employee Stock Ownership Plans, or ESOPs. He is also President of the Association’s affiliated 501(c)(3) educational and research foundation, the Employee Ownership Foundation. He is a graduate of Yale University and the University of Texas Law School. He can be contacted on +1 (202) 293 2971 or by email:

Alexander P. Moss, MPPM, is a founder and principal of Praxis Consulting Group, Inc., where he advises employee owned, non-profit, and mission-driven corporate clients in fully engaging employees to drive organisational performance. He currently serves as a Trustee of the Employee Ownership Foundation, is a past Board Member of both The ESOP Association and the National Center for Employee Ownership, and is past Chair of the ESOP Association’s Professional Advisory Committee on Ownership Culture. He can be contacted on +1 (215) 753 0304 or by email:
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