ESOPs in ‘People Businesses’

This chapter deals with the economic and financial benefits provided by Employee Share Ownership Plans (ESOPs) in low asset businesses (LABs) in general and ‘people businesses’ in particular (PBs). The chapter was prepared after detailed discussion with directors of the quoted public relations group, Shandwick. The basic thesis is that establishing a commonality of goals between a company’s shareholders, management team and its employees is particularly difficult in ‘creative’ or ‘knowledge’ driven businesses. Furthermore, this problem was exacerbated during the 1980s by the growth in the scale of many companies operating in management consulting, advertising, design, public relations and by the increasing separation between ownership, control and production arising from the flotation of many of these companies.