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2008 Employee Ownership Conference Oveview
DAY 3
Friday, April 4, 2008
As the conference is coming to a close, right now attendees are getting a final bit of information at the last conference breakout sessions, seeking out new and longtime contacts to share some thoughts or say goodbye, and getting ready to take all their new ideas home with them.
This morning we heard from keynote speaker Dr. Dean Schroeder, who shared a simple yet extremely powerful concept: ideas from front-line employees can make the difference between stagnation and growth, efficiency and waste, success and failure. He gave compelling examples of companies who encourage idea sharing and have seen amazing results. A textile factory in Denmark, an unlikely place for success in that industry, is thriving because the factory workers consistently come up with innovative ideas to speed production and improve the product. An electronics retailer in the United Kingdom set a quota for the number of ideas all employees must contribute, and it now holds the title of “company with the most profits per square foot of retail space” in the Guinness Book of World Records. An employee at a chain of furniture stores in the Denver area suggested the delivery truck drivers be trained in interior design just as the salespeople are, considering they often have more interaction with customers. It turns out that customers not only had a more positive experience when the drivers could provide some design assistance, but it presented the opportunity for drivers to suggest tying the look together with a few additional purchases. His message: the people who are directly involved with a product, service or customer are the real innovators, and their suggestions produce far better results than traditional improvement initiatives from management.
Schroeder also provided concrete advice on encouraging the generation of ideas among employees. Something as simple as creating an idea submission form can uncover many unknown deficiencies and great opportunities. Of course, this concept ties in very well with employee ownership. Effective employee-owned companies are already engaging their employees in business operations, but after this conference I know many of them will specifically focus on prompting employee-owners to share their unique understanding of the real operations of their company. Learn more in Schroeder’s book “Ideas are Free.”
This has been the best conference yet. We had record-breaking attendance and welcomed many new people to the field. As more and more companies find that sharing equity is the best way to develop and sustain their ventures, this event will continue to grow and provide the foremost in employee ownership thought leadership, technical information, inspiration and assistance.
DAY 2
Thursday, April 3, 2008
With the conference in full swing and many new acquaintances being made, today offered great opportunities to network. In addition to many more breakout sessions, today’s program included topic-specific discussions led by experts over lunch, industry-specific roundtable discussions in the afternoon, and a chance to meet one-on-one with experts at the close of the day. In the evening, attendees were treated to a posh reception at the Art Institute of Chicago courtesy of La Salle Bank/Bank of America, where they enjoyed some great food, conversation, and fine art.
But one of the biggest highlights of the day was the announcement of this year’s Innovations in Employee Ownership Award.
… and the winners are:
Cedarwood School (Grand Prize), Mandeville,
Louisiana
ATA Engineering, San Diego, California
HCSS, Houston, Texas.
That’s right, an employee-owned school won the grand prize for its innovative and successful model for a private K-7 school – one in which teachers care so much about their school that they worked to reopen just two weeks after hurricane Katrina hit, long before other schools in the New Orleans area. Employee Ownership wasn’t really part of the plan when principal/president Kathy LeBlanc and her husband opened the school. Instead, the idea occurred to the LeBlancs as they started to make retirement plans. They weren’t interested in selling the business, and their own children had followed other career paths. At an annual meeting Kathy announced to the faculty and staff that they would be the school’s new owners. “You wouldn’t believe the shock on their faces,” said Kathy in her acceptance speech. Cedarwood’s 32 faculty and staff members now participate in an ESOP which owns 100 percent of the company. “Teachers make countless decisions that affect the quality of education; it only made sense for them to take ownership, literally, of their own school.” To ensure that the power of ownership was fully communicated and to encourage participation, faculty and staff receive extensive business literacy training and the board of directors hold a “fishbowl” board meeting: an actual board meeting held on stage, with employee-owners watching the discussion and the decisions.
In April 2000, just after it spun off from its parent company, ATA Engineering’s 28 founding employees, from the engineers to the receptionist, owned the company through a combination of direct ownership and stock options. Not content with that system, the company crafted a complex transaction involving recapitalization, cancellation of options, and issuance of new options. The result was an S-corporation with 100 percent ESOP ownership and an active, broad-based options program. To preserve S-corporation status, the company offers a commitment to buy back options before exercise at their “in the money” value. ATA’s management is project-focused; the company president may sometimes report to a project director with two years of tenure, so the company takes recruitment seriously. ATA hires new employee-owners only when a broad-based interview team reaches a consensus decision that they are “too good to pass up.” To preserve the sense of a company-wide team, the compensation of every engineer, including the entire senior management team, is driven by a single formula. ATA does not have a separate executive compensation system.
HCSS is a fast-growing, industry-leading software company that serves the construction industry. HCSS works hard to make sure that employees do their jobs with an awareness of how they influence success in the business. The results are fiercely loyal customers and employee who provide a level of service unique in their industry because they learn, act and work with the passion of owners. That passion comes from extensive open-book management and business literacy training at HCSS University, and it also depends on a three-tier reward system that gives employees a wide-spectrum ownership interest. The short-term incentive is a cash bonus program. Stock appreciation rights (SARs) cover the medium-term, and the ESOP rounds out the picture. Recognizing the ownership culture, HCSS invested heavily in management training, with a 50-hour 12-week course for managers representing over a quarter of the company’s employees. Additionally, every employee participated in a two-day personal development leadership course.
Tomorrow we look forward to hearing from keynote speaker Dean Schroeder, co-author of “Ideas are Free,” so be sure to check back and find out how his research and advice apply to employee-owned companies.
DAY 1
Wednesday, April 2, 2008
This morning, the leaders of three very different companies sat down with Beyster Institute Executive Director Ray Smilor for a frank and inspiring panel conversation about the ins, outs and rewards of leading an employee-owned company. As a brand-new CEO many years ago, Cecil Urspring of Reflexite turned down five buyout offers from 3M and managed to convince the company’s board that remaining independent and implementing an employee ownership program was the better option. Today the company enjoys great success, but struggles to build employee-ownership cultures in some of its far-flung locales such as China. In Frieda Takaki’s small physical therapy business, Chart Rehabilitation of Hawaii, employee-owners go out of their way to find solutions and cost savings to build and sustain their company. Martin Babinec founded his human resources outsourcing company TriNet when he couldn’t get the Silicon Valley jobs he wanted – and is now a recipient of the Silicon Valley Entrepreneur of the Year Award. Although these three companies’ employee-ownership plans varied widely and each have unique company cultures, all three shared the characteristics of enthusiastic employees and very low turnover.
Today’s 23 breakout sessions covered a lot of territory, including sessions on building financial literacy among employee-owners, valuation of stock for sale to an ESOP, and corporate governance in ESOP companies.
At one session titled “Employee Ownership, Social Responsibility and Being a Great Place to Work,” Susan Schor, Chief Culture Officer of the designer clothing company Eileen Fisher, Inc. and the company’s employee ownership consultant Virginia Vanderslice of Praxis Consulting Group discussed how employee ownership fit into the company’s very non-traditional culture. Susan shared how many aspects of an employee-ownership culture were already in place long before becoming an ESOP company, such as encouraging participation in all areas of the company and working in collaborative teams. Employees do not focus on financial goals; instead they work to find success by striving toward their mission: “To inspire simplicity, creativity and delight through connection and great design.” As if that wasn’t non-traditional enough considering this is a company which logged $254 million in sales last year and hasn’t recorded a sales downturn in recent years, a description of company’s culture and generous benefits caused visible astonishment among some session attendees. Beyond traditional benefits and the ESOP, perks included in-house yoga and Pilates class offerings, an employee clothing allowance, annual $1,000 bonuses to each employee for wellness expenses including massages and manicures, and another $1,000 for any leisure classes or activities – not including career-related continuing education expenses, which are also covered. Susan explained that full and healthy personal lives are incredibly important at the company. The company’s persistent success, even in the current tough times for the retail clothing industry, has received significant media attention recently, as has founder Eileen Fisher’s decision to transition ownership to the company’s employees. Obviously, this company has found its balance, and employee ownership will play an important role in its future.
Come back to learn more about the conference happenings tomorrow, including the announcement of the winners of the 20008 Innovations in Employee Ownership Award.
April 1, 2008
About 800 enthusiasts of the equity sharing strategy are gathering in Chicago tonight in anticipation of the kick-off of the 2008 Employee Ownership Conference tomorrow morning. Among them are some of the foremost experts, service providers, authors and researchers on this topic, as well as representatives from many successful and inspiring employee-owned companies. Many attend the conference to learn more about employee ownership and how it can work for their company, to enhance existing ownership programs, or to get the scoop on the latest practices and technical issues.
First thing tomorrow morning, leaders from three successful employee-owned companies will share their expertise during a panel discussion moderated by Beyster Institute Executive Director Ray Smilor. Like many of the conference’s offerings, this opening event allows attendees to get relevant and straightforward information and advice right from the source. The panelists will discuss their personal experiences in managing employee-owned companies. Over 50 other conference sessions over the next three days will give attendees opportunities to learn from the experts. They’ll get tax and accounting tips from specialists, effective employee communication ideas from company leaders, and insightful case studies from consultants, service providers and researchers.
Employee-owned companies range from small to large and represent a wide variety of industries, but they’re tied together by the idea that when employees are owners, their actions reflect the pride of ownership and they help their company thrive, which makes everyone involved a “happy camper.” In other words, this is not your average boring business conference! These people are passionate about the employee ownership strategy and have lots to share and learn from each other.
Visit again tomorrow for a review of day one.
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