Kim Jordan and Jeff Lebesch wanted to run a more democratic business. Rather than shoulder all the tough decisions themselves, the founders of New Belgium Brewing Company sought their employees’ input early on. This meant cultivating what Jordan calls a “high-involvement culture” of engaged, enthusiastic workers and transparency with staff about all sorts of matters, including company finances.
But employee enthusiasm goes only so far, so in 1996, the pair created a phantom deferred compensation plan, at no cost to the staff of their Fort Collins, Colorado–based craft brewing company. Later, when they started an employee stock ownership plan (ESOP), they honored the original plan until all account-holders’ ESOP balances were larger than their phantom balances.
When Lebesch left New Belgium in 2009, Jordan and the company bought him out, bringing employee-owned shares to 41 percent. After mulling succession plans, Jordan opted for full employee ownership. By early 2013 more than 500 New Belgium employees — Jordan refers to them as “co-workers” — assumed 100 percent ownership of the company. (Shares are awarded based on the recipient’s percentage of the total wage pool.)
The benefits have been plentiful. “We have great retention,” says Jordan, CEO. “Our turnover is under 5 percent.”
The employee-owners are not only happy at work, she says, but are also a regular source of bright ideas. Business is hopping, too. New Belgium, maker of Fat Tire ale, is the third-largest craft brewer in the U.S. and the eighth-largest brewer overall.
New Belgium isn’t the only business thriving under employee ownership. “If you look at the numbers, on average, ESOPs improve performance,” says Loren Rodgers, executive director of the National Center for Employee Ownership (NCEO), a nonprofit organization with more than 3,000 members. Three decades of research show that ESOP companies enjoy higher sales growth, higher employee productivity, more job creation and fewer layoffs, he adds.
If you’re interested in running a more egalitarian company, here are four steps you need to consider.
Read more at: Transitioning to Employee Ownership #FinanceYourBusiness