The Executive Brief

Evaluating and Hiring Leaders For Your ESOP

Mike Frommelt Culture, ESOP, Evaluation, Hiring

At KeyStone, we have a particular appreciation for ESOP companies. They have an innate understanding of the importance of cultural fit and alignment to things we have built our practice upon. I am very excited to be attending and speaking at the 2017 NCEO annual conference in Denver, Colorado next month.  

Because ESOPs are unique and special, it makes sense that it takes a special type of leader to be effective in an ESOP. So what types of qualities fit best with an ESOP and how do you know if a particular leader will not only fit the ESOP but also fit your organization’s culture and values? Here are some tips for evaluating and hiring leaders who will help take your ESOP to the next level.

What Sets ESOPs Apart From Other Businesses?

If there is true engagement with your ESOP culture, your employee owners should be:

  • More accountable than average employees
  • More willing to share opinions and ideas for the betterment of company
  • Better stewards of company resources
  • More collaborative and team-oriented

While all of these things make ESOPs great, there can be another side to the coin.  At times the ESOP culture can create a sense of entitlement. Some employee owners may not want to make necessary changes and may feel they don’t have to, because they are owners. This is something a great ESOP leader must be aware of, and address as it comes up.

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Three Tiers of Evaluation

In our experience, we have found it useful to utilize a 3 tier framework for evaluating ESOP Leadership candidates.

  • Skills and Competence
  • ESOP Leadership Qualities
  • Unique Culture and Core Values Profile

Let’s break these down and take a more in-depth look.

Skills and Competence

This is really pretty straightforward:

Can they really do the job?

Does this person have the technical skill and competencies to handle the given role? Additionally, does their industry experience, overall years of experience and scope fit the job and the company?

Generally, we have seen that interviewers get this piece correct, it’s pretty evident on the resume and easy to parse out. However, we have seen two common mistakes when it comes to skills and competence.

  1.   Looking for a clone  

While the skillsets of the last CEO, CFO etc. may have been an excellent fit for the company when they started, the skillsets required may be different this time around. The role must be developed according to the strategic plan of the business, not solely upon the previous occupant.

  1.   Focusing only on inside candidates

While it is always preferable to hire an inside candidate versus an outside one, it’s important to stay objective on whether or not the insider can truly handle the role. If there is question here, it’s advisable to conduct a search process including both insiders and outsiders to make sure the best hire is made.

ESOP Leadership Qualities


As mentioned, ESOPs have very different needs than the average company. You need to find a leader who will embrace the differences and be comfortable leading in the ESOP environment.

ESOP leadership candidates must exhibit high self-esteem and self awareness without crossing the line into being cocky. A high level of confidence is necessary, but big egos do not survive in ESOPs. (Remember, everyone is an owner!) The right person for the job will be a thoughtful leader with the ability to admit mistakes and evaluate both themselves and others.

Consistent and constant communication is key to leading an ESOP. It’s not enough to lead town hall meetings once a quarter; employee owners expect and deserve to know how the company is doing and where it’s heading at all times.

A candidate with excellent listening skills is vital; they should listen with an open mind to others’ thoughts and ideas, and actively pursue feedback. However, to head off any entitlement issues, they cannot be paralyzed by indecision— they should listen to the feedback, but make a decision and move forward without becoming bogged down.

Finally, the right leader for your ESOP will be a people developer with a great track record of coaching and mentoring. ESOPs drive more loyalty and commitment than other companies, which is a wonderful thing. Because of this, it’s important that employee owners are continually developing skills/competencies to ensure the company does not fall behind.

Unique Culture and Core Values Profile


While there are commonalities from ESOP to ESOP, every company also has its own unique personality, driven by its core values. Identifying leaders who inherently share these core values is also critical. Unfortunately, core values cannot be taught. If a leader operates with a different set of core values than the rest of the team, it can create havoc.

Be very clear about your core values and build interview questions and evaluation tools around them.  This is the area we see most often missed in hiring.

Are you interested in finding the right leader for your ESOP? We’d love to help your organization grow with the right leadership.  Talk with our ESOP experts to build the profile of an ideal candidate, and then work with us to find the candidate to match your specifications.

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