In the News: Benefits, Risks, and Challenges of Employee Ownership, Maintaining an Ownership Culture as the Company Grows

Phelps County Bank (Rolla, MO)

When the Tellers Own the Bank, a blog post from the Wall Street Journal's Independent Street blog, contains an interview with the chief executive of Phelps County Bank (one of the five employee-owned companies discussed in In the News: Top Small Workplaces, High Retention Rates, Thinking Entrepreneurially, and Feeling Empowered). One question states that the average account balance is about $311,000 per employee and asks about additional benefits of employee ownership to the business:

"In 1988, we went to 35% ownership, and I think that's when employees started to realize what it meant to them. They see that their efforts — or lack thereof — are either detrimental or really, really positive on the business's financials. In our case, we're fortunate that we have many dedicated employees which made it very positive for our business. They're always asking about what they can do to improve the business or customer service. They want to be really involved, because they see how it can affect their retirement accounts."

Another question asked about the risks and challenges of employee ownership:

"It's a really long process to create an ownership culture in a business. It takes a lot more time from a management standpoint than a company that isn't employee-owned.

We're trying to instill in our employees that when someone walks into the institution that they're talking with the owners. So a bank teller here has to have more information about the business than a typical teller does. That flows across to the customer in front of them — the customer doesn't feel like they need to go talk to someone in a higher position to get quality treatment.

But we spent eight or 10 years on constant education and reinforcement getting to that point. From the time someone joins our institution, they go through an orientation on our ESOP and are assigned a buddy. They get traditional banking education, but they are also take courses on psychology, team-building, leadership and communication –- things that build an ownership mentality.

The risk of employee ownership is if you don't get employees to feel and act like owners. If you don't have committed, involved employees, then I don't think your profits from year to year or the growth and strength of your business is as strong as if you didn't have employee ownership in place."

Restek (Bellefonte, PA)

Restek named top small workplace in U.S. discusses another one of the five employee-owned companies discussed earlier this week, Restek Corp..

"All employees share ownership through the employee stock ownership plan, he said. The company recently was named the 2007 ESOP Company of the Year by the Pennsylvania and Delaware Chapter of the ESOP Association, a trade association for companies with employee stock ownership plans.

Restek has grown from 33 employees when he started in 1990 to more than 250, McCandless said. The challenge is to maintain that same feeling and culture as the company grows, he said.

"You can get results. You can execute a plan and still be successful and show that people like and enjoy going to work," he said.

Listening to the employees, recognizing them for their accomplishments and providing goals has worked for the company, Silvis said.

Restek's employees were rewarded for the company's first $1 million sales month with the Millhouse, a multipurpose facility that contains fitness equipment, a fully equipped kitchen and a game room for employee use.

Each recognition spurs new additions, McCandless said. An outdoor walking trail was added, and a larger fitness facility is planned for 2009 that will roll several milestones into one.

The company will surpass $50 million in sales well before its goal of 2010, he said."