Announcing ESOP in the current times is viewed as a choice of leadership. We thought of bringing two of the most talked-about leadership approaches to the table. Let’s take a read!
ESOPs have gained considerable popularity in recent years for two key reasons. First are the ways in which they can increase a brand’s value, and second are the positive effects they have on a company’s employee culture — specifically in regards to leadership. The values embedded in ESOPs represent much more than their tangible benefits, including transparency, open communication, and others that add up to the idea of team-based leadership. This style of leadership encourages employees to work together towards a collective mission rather than to yield to one executive power.
There are clear advantages to introducing an ESOP in both top-down and bottom-up systems, but there are also drawbacks. Since ESOPs require every person in a company to communicate openly, work together, and set role boundaries, introducing one in a company with any kind of management system can create an atmosphere where the executive is respected by their employees and that respect is mutual. Let’s take a closer look at the difference between ESOP as the result of top-down leadership versus bottom-up!
Top-down management is the most common business structure and is organized exactly how it sounds. The top calls the shots, and their orders are carried out down the chain of command. In this system, a CEO would theoretically decide to introduce an ESOP and the upper management would be responsible for exercising its benefits. Meanwhile, the employees beneath them would simply receive information and go with the flow.
If the top dog introduces an ESOP, it’s usually for their advantage. ESOPs give CEOs more flexibility with their retirement plan and allow them to ease away from their role in the company. This can be helpful in terms of productivity and practicality, seeing as there are no disputes or disagreements to be ironed out concerning the plan. It’s a done deal per the CEO’s decision, and that’s that. This brings me to perhaps the biggest negative of a top-down ESOP scenario, or the fact that lower-level employees have no say in its exercise. There could be lower-level concerns that never make their way up to the top of the totem pole, and if the bottom is the group receiving those benefits, how is that a fair system?
