Now, you may be wondering, what is an ESOP? An ESOP is a defined contribution plan that provides our employees with an ownership interest in the company at no cost to them! While ESOP’s are relatively common in other industries, the structure is practically unheard of for salons, which typically have a single owner or a small number of partners.
For 30 years while growing to 10 locations, founder, Kenneth Anders, was a more traditional salon owner. As he began to look ahead to retirement, he started contemplating what would come next for the business he loved and its more than 300 employees. “I had a lot of people who believed in my dream and helped make it come true,” he says. “I want to do the same for them.”
An ESOP provided an exit strategy that he found much more palatable than selling the company he loved to an outsider. When an ESOP is formed, every employee has a stake in the business. There is a board of directors and other legal considerations of a corporation, and there’s a leadership team as in any salon, but everyone on staff is a part owner.
A Culture of Ownership and Pride at Kenneth's
Once you step into Kenneth's, you quickly realize something. It's not just a salon. The employees don't just work here. It's their company. They are proud to be part of it. They are owners. And that is not something you see every day.
Did you know ESOP companies are more secure? Yes, it’s true. Companies with an ESOP program are 25% more likely to stay in business. ESOP companies also have 8.8% higher sales average than non-ESOP companies. And the workers are 4 times less likely to be laid off during recessions than employees working for a non-ESOP company.
When the pandemic forced a two-month shutdown, our ESOP structure helped Kenneth’s salons navigate the bumps. Because Kenneth’s is 100% employee-owned, everyone saw that we were maintaining a profitable position. We were able to continue to pay people through the first pay period by projecting out what their pay would have been, and then we helped them maintain their insurance payments
Did you also know that nearly 1 in 5 women have nearly nothing saved for retirement? Women often place other saving and spending needs of their family ahead of their own retirement, which leaves them ill-prepared for this next chapter in life. ESOP employees have retirement accounts that are 2.2 times greater than at comparable non-ESOP companies. This is very important for our female-dominated industry!
For recruiting, our ownership culture at Kenneth's attracts the best talents. There’s a sense of pride, teamwork, and success. Because at the end of the day, they’re not just employees. They’re part owners. They are motivated by the company's success, knowing they have a vested interest in it.
Stability is essential in business. But stability does not mean you stop improving. Instead, it allows you to focus on consistency, which, in turn, brings excellent profit. At Kenneth's, this culture of ownership brings stability. It’s a nurturing environment where employees take pride in their work. That’s the Kenneth's way.
The table below summarizes the benefits of Kenneth’s ESOP program:
| Benefits | ESOP Program |
|---|---|
| More income | 5-12% more |
| Retirement accounts | 2.2 times greater |
| Less likely to be laid off | 4 times less |
| Higher sales | 8.8% higher |
| Full ownership | After 3 years |
The Future of Kenneth's ESOP Program
At Kenneth's, the future looks bright. We believe in our employees. We're passionate about creating a positive work environment. We're committed to elevating the beauty industry by empowering professionals to earn beyond expectations. The ESOP program is a key part of this future. It’s not just about the monetary benefits. It's about the sense of ownership it instills in the employees. It’s about the pride they take in their work. It’s about the teamwork, the success, and the stability it brings.