2008 AACE Award Winning Video: The Little ESOP That Did

The Employee Ownership Blog has posted a link to The Little ESOP That Did, the winner of the 2008 AACE Award, Category 3 - Audio Visual, by Harrell Remodeling, Inc. (Mountain View, CA):

The winning video by Harrell Remodeling, Inc. of Mountain View California, impressed judges with its practicality, fun attitude, and clear ESOP message. It showcases the company's teamwork, dedication, and never give up attitude.

The file will take a long time to load, so I recommend that you right click on the file and save it to your hard drive. The video was very well done and worth taking the time to watch, particularly if you are looking for some creative ways to inspire your team.

10 Communication Techniques

While the ten communication techniques discussed in Ten techniques for communicating about retirement plans are geared towards 401(k) participation, they are also applicable to ESOP communication:

Getting better attendance

1. Provide food
   
2. Offer giveaways
   
3. Make meetings mandatory
   
4. Use multimedia formats
   

Understanding the concepts

1. Make it personal
   
2. Use props
   
3. Get the retirees to speak
   
4. Shift the focus to income, rather than accumulation
   

Taking Action

1. Get management buy-in
   
2. Measure it
   

Considering the Repurchase Obligation in the Stock Valuation and Recommended Reading

The May 1, 2008 Employee Ownership Update is online and discusses the following:

• NCEO Launches Survey of Equity Compensation Practices in Private Companies
  
• Make Messages Stick
  
• The ESOP Repurchase Obligation and Stock Value
  

The Update discusses the debate about whether or not the repurchased obligation should affect stock value, including the NCEO's position:

More and more trustees believe it should. Not to reflect this value means the ESOP is arguably overpaying for shares of departing employees because the company's projected earnings do not reflect the emerging obligation. That means most participants end up worse off in the long run. But some other advisors argue that an outside buyer would make the obligation go away, and it is the outside buyer who is the theoretical buyer in calculating fair market value. Valuation consultants are also split on the matter. At the NCEO, we strongly believe, and have for years, that the repurchase obligation should normally be reflected in value (although there are some exceptions), but, in any event, ESOP fiduciaries need to look at this issue carefully.

Recommended Reading

The Update recommends Why Some Ideas Survive and Others Die....MADE to STICK as a book to help your internal communications process:

The book posits six key principles of sticky messages. They should be:

1. Simple
   
2. Unexpected
   
3. Concrete
   
4. Credible
   
5. Emotional
   
6. Stories
   

For instance, to communicate the potential benefit of an ESOP, have a former employee (or one with another company) come tell her story about how the ESOP distribution helped her put a child through college. The message is a story, is emotional, is concrete, is credible (because the source is not management or a lawyer), is not something people would expect, and is simple.

The authors also maintain the MADE to STICK Blog

Finally, the Update discusses how the NCEO is conducting an equity practices survey.

In the News: 2008 Innovations Award Winner, Three-Tier Reward System, 600 Hours of Management Training, and Two-Day Personal-Development Leadership Training

HCSS (Houston, TX)

HCSS Receives National Award for Employee Ownership announces that HCSS, a Houston software company serving the construction industry, is a winner of the 2008 Innovations in Employee Ownership Award:

HCSS has been an employee-owned company since 1998. At that time, Rydin sold 25 percent of the company to the employees via an ESOP (Employee Stock Ownership Plan) with the idea of getting HCSS employees to think and act like owners. HCSS now has a three-tier approach to employee ownership with annual cash profit sharing, Stock Appreciation Rights (SARS), and ESOP. Through these tools employees are rewarded financially for the positive impact they have on the company and are able to see how their work affects company performance. For the past 10 years, employees have received substantial profit sharing, both in cash and ESOP stock.

"Having ownership in HCSS is a constant source of motivation for me not only in my specific job, but in any area that will help our company grow," said Blake Driskill, who has worked at HCSS since 1998. "Knowing that my co-workers are also owners means that we all have a shared interest in working together for the benefit of HCSS."

The NCEO website also describes the winner:

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 result is fiercely loyal customers and employees 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 key role that management plays in nurturing an 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.

The Innovations in Employee Ownership Award is defined as “an annual award recognizing creative ideas that help make employee ownership stronger, and publicizing those ideas so others can learn from them. Innovations can deal with employee participation, entrepreneurship, communication programs, education, plan design, or other ideas that strengthen employee ownership.”

We discussed some of the 2007 winners in Immediately Focusing on Building an Ownership Culture and Should You Consider An ESOP?

Five Training Points: Ownership, Participation, Open Books, Holistic Wellness, and Lean Enterprise

Steve Sheppard's latest blog post, Five Degrees of Connection, discusses his upcoming trip to Nicaragua and some training topics:

I'll be visiting communities and organizations that week, as is normally the case in my travels, which seek to strengthen themselves economically, socially and sustainably. What some hope to access through the Foundation is a methodology or mindset to employ for this developmental process. So consider the potential topics that I will be sharing with the disenfranchised poor as possible training topics: Ownership- The fundamentally different mindset in people when they own something as opposed to leasing, renting, borrowing or any other relationship; Participation- The importance of having involvement from every participant is that each person possesses a piece of the puzzle; Open Books- How can anyone truly understand their survival when they aren't provided with the rules of their game?; Holistic Wellness- Every organization is made up of dimensions that define its health and sustainability, including intellectual, social, emotional, spiritual occupational and physical components; Lean Enterprise- Every human undertaking is made up of processes, and every process has the opportunity to be improved.

Whether we are talking about our companies or our countries, he notes that we all have the same needs:

The need to be part of something bigger than ourselves, the need to contribute, to be regarded as having value, to recognize all the facets of our being, to be able to work for success in something: these are attributes that connect us. It's true within our companies, our nations, our world. The sooner we recognize and accept this fundamental truth, the sooner we begin to unlock the potential and magic that resides in us, individually and collectively.

As you ponder his post and how it affects you and your ESOP, here are some discussions of how the five topics relate to ESOPs:

• Ownership - Employee Motivation
• Participation - Participative Management is a Key Driver to Exceptional Business Performance
• Open Books - Open-Book Management
• Holistic Wellness - Eudaimonic Well-Being and Factors in Happiness
• Lean Enterprise - Standardized Work and Developing Best Practices

The Benefits of Accumulating and Implementing Small Ideas

The April 10, 2008 Employee Ownership Update is online and discusses the following:

• AECOM Continues Commitment to Broad Employee Ownership
  
• It's Small Ideas That Matter
  
• Employee Ownership and Section 8(a) Minority Business Qualification
  

The Update discusses the keynote speaker of the recent NCEO/Beyster Institute 2008 Employee Ownership Conference, Dean M. Schroeder, one of the authors of "Ideas Are Free: How the Idea Revolution Is Liberating People and Transforming Organizations". It discusses the value of accumulating and implementing small ideas and uses VATEX as an example of a company that has benefited from implementing small ideas:

Big ideas, Schroder said, can be easily copied by the competition, so they do not provide a sustainable advantage, necessary as they are to keep pace. Companies where employees generate hundreds or thousands of small ideas, however, create an edge that cannot be copied very easily…While some small ideas may end up having a big impact like this one, Schroeder said, two other benefits flow. First, the accumulation of small ideas can add up to substantial savings or new revenues. Second, cultures in which people are constantly coming up with small ideas create environments where big ideas are more likely to be generated as well, including from seemingly unlikely sources.

The key is not just to encourage people to come up with ideas (the suggestion box is at best a waste of time, he said) but to establish structures in which people are expected to generate ideas, a topic we have also discussed extensively in our publications.

The Update also discusses AECOM Technology Corp., a Los Angeles-based architecture and engineering company with 41,000 employees. The company went public in 2007 and has an ESOP that owns about 15% of the company:

"Employees get a 10% match for their purchases of AECOM shares. To minimize administrative and tax costs, the plan is operated through an offshore trust on the Isle of Jersey."

It concludes with a discussion of whether an ESOP-owned company can qualify for minority ownership status for federal contract purposes.

Eudaimonic Well-Being and Factors in Happiness

Happiness and Employee Ownership discusses factors in happiness to an entrepreneur, focusing on eudaimonic well-being:

This comes from the Greek eu for "good" and daimon for "spirit." It means always striving toward excellence based on our unique talent and potential and always working toward achieving worthwhile purposes.

Richard Davidson, a University of Wisconsin-Madison professor, says that eudaimonic well-being results in "the positive emotion accompanying thoughts that are directed toward meaningful goals."

The article discusses three participants in the opening segment of the NCEO/Beyster Institute 2008 Employee Ownership Conference and how they have "increased happiness – through eudaimonic well-being for themselves and their employee owners."

• Cecil Ursprung of Reflexite Corporation – "Cecil helped build the company by using employee ownership to shift from control to commitment in shaping the culture of the organization. He linked an innovative quality improvement process to broad-based employee ownership. Consequently, the company almost never loses a customer! Those results are a huge source of pride and satisfaction, i.e. increased happiness among those who work there."
  
  
• Martin Babinec of TriNet – "Martin used equity incentives to identify and develop "critical performers" at all levels of the organization. Utilizing techniques like open-book management, he has promoted financial literacy in the organization, rewarded employees with a stake in the company, and built a tenured management team…leading to higher levels of happiness for those who help the company to grow."
  
  
• Frieda Takaki of Chart Rehabilitation – "She had helped build the company and did not want it sold to an outside party. More important for her was maintaining the close family culture that she had worked to develop. Her 60 employees now show their commitment in a variety of ways from participation in ownership committees to saving money by turning off the lights and shampooing the carpets themselves. The result is a prosperous enterprise, nearly 100 percent retention of staff, and happier people."

Increasing the Perceived Value of Employee Ownership, Bear Stearns, Employee Ownership and the Best Companies to Work For

The March 28, 2008 Employee Ownership Update is online and discusses the following:

• Bear Stearns and Employee Ownership
• Why Sharing Ownership Could Be More Painful to You then Valuable to Participants
• Nominate Your Company for the Fortune 100 Best Companies to Work For List
• Great Game of Business Conference April 30-May 2

The Update discusses the differences between behavioral economics and classical economics, and how a dollar given to employees in ownership has a lesser perceived value. It also suggests what a company can do to make ownership feel more real:

When a company grants a stock option that won't vest for several years, and, if it is a private company, has no specific way to become liquid, employees will discount the present value of the option by well over half of what an accountant would say the present value is. When employers set up an ESOP that also vests over time and does not pay out until some time after termination, employees may not see it as real money.

So what can companies do? Part of the answer is to understand that people are not just being dense. They are just being people and probably responding in much the same way that business owners would if they were in a similar situation. Sharing ownership still can be a very valuable tool; just don't expect employees to view it the same way a someone who is sharing the ownership will. Second, spend a lot of time educating people about issues like the risk/reward ratio, the time value of money, and what kinds of guarantees are in place for their ownership to be liquid. Finally, get people who have benefited from you plan (or another plan if yours is too young) to come talk about what they did with the money, making the ownership more concrete.

The Update discusses Bear Stearns and employee ownership. As discussed in Countering Negative ESOP Coverage with the Facts, the Update reiterates that the Bear Stearns situation is different than Enron:

There is no way to know just know many other employees were defined as "key" or how much ownership they had, but it is safe to say few of these people will be in the situation of many Enron workers who were left unable to retire even in modest circumstances. So while the situation is indeed very painful for Bear Stearns employees, it is quite different from the numerous "stock-drop" problems that left workers with severely depleted 401(k) accounts.

As we discussed in 2008 Great Place to Work Trends – Employee Ownership and Workplace Flexibility, the Update notes that "Employee ownership companies again comprised over half the stock corporations on the Fortune 100 Best Companies to Work For list."

Employee Ownership Vision

While I am Chicago for the NCEO/Beyster Institute 2008 Employee Ownership Conference, I thought I would share Employee Ownership: It’s Good for Business – and for the Soul, an article that discusses the four previous keynote speakers and their employee ownership vision:

• Frederica Thode of Hot Dog on a Stick – "her belief that as an employee owned enterprise, the company could provide a rare opportunity to own a piece of something important and to achieve an increased level of dignity that would speak to the aspirations of even the very young people who make up the workforce of this quick-service food business."
  
  
• Bob Stiller of Green Mountain Coffee Roasters – "the employee-owners – who as a group are the company's largest shareholders – are treated as vital partners who share the vision of a company that is making a positive difference."
  
  
• Richard Hassel of Lifetouch, Inc. – "the dynamic growth that the company has experienced is a direct result of employee ownership. "The kind of creativity you see in our work doesn't come from someone standing over employees with a whip," says Hassel. "It comes from allowing employees the freedom to be creative and work hard."
  
  
• Bob Beyster of Science Applications International Corporation (SAIC) – "He made clear that his vision for SAIC had always been to create a company that was committed to two things above all else: delivering the highest quality technological services and deliverables to the nation; and being fair to those who did the work to increase the company's value."
  

Open-Book Management

The latest Employee Ownership Blog post, Open Book Management – Does Your Company Practice?, discusses open-book management (OBM):

The theory behind OBM is that all employees are provided information on the financials so they can and, hopefully, will make better and more informed decisions as workers and in the case of an ESOP company, as owners. The employees are also provided with training so they can properly read and understand the financial information and then provided with a forum to discuss the information.

Each ESOP company is different in terms of what information is shared and how much. There are no hard and fast rules as to the right amount but most people in the employee ownership community can agree that the sharing of some information is important for an ESOP company to fully develop an ownership culture and mindset.

The Wikipedia open-book management page discusses the Jack Stack/SRC Holdings management technique:

The technique is to give employees all relevant financial information about the company so they can make better decisions as workers. This information includes, but is not limited to, revenue, profit, cost of goods, cash flow and expenses.

The basic rules for Open-Book Management are as follows:

• Give employees training to understand the financial information
• Give employees all relevant financial information
• Give employees responsibility for the numbers under their control.
• Give employees a financial stake in how the company performs.

In a company fully employing Open-Book Management employees at all levels are very knowledgeable about how their job fits into the financial plan for the company. However taking a company from "normal" to open is not as easy as just starting training classes on income statements and balance sheets. Employees rarely find it compelling to understand these numbers. In order to overcome this problem Open-Book Management focuses on a "Critical Number". The number is different for every company but it is a number that represents a prime indicator of profitability or break-even point. Discovering this Critical Number is a key component of creating an open-book company. Once discovered then a "Scoreboard" is developed that brings together all the numbers needed to calculate the critical number. The Scoreboard is open for all to see and meetings take place to discuss how individuals can influence the direction of the "Score" and therefore, ultimately, the direction of the Critical Number. Finally a Stake in the Outcome is provided which can be a bonus plan that is tied to Critical Number performance or it can include Equity sharing or both.

Open Book Management How-to-Guide

This Open-Book Management How-to-Guide discusses the origins of open-book management:

"The beauty of open-book management is that it really works. It helps companies compete in today's mercurial marketplace by getting everybody on the payroll thinking and acting like a businessperson, an owner, rather than like a traditional hired hand." So wrote John Case, who was a senior writer at Inc. magazine in 1995 when he coined the phrase "open-book management."

Now, years later, companies are still debating the merits of opening their books to employees and vendors alike. Many tout the benefits, such as improved bottom-line results and employee retention. Still others warn of open-book pitfalls, such as employees using their newfound knowledge against the owners.

To help you learn more about the pros and cons, we've created this guide to the best resources available on Inc.com that relate to open-book management. Learn from the experiences of other entrepreneurs before you decide what's best for you and your company.

The How-to-Guide also contains various open-book management links, grouped in the following categories:

• The Origins of Open-Book Management
• Helping Employees Understand the Financials
• The Risks in Sharing Financials
• From Hired Hand to Businessperson: Changing Employee Perception
• Further Reading

Updates/Related Blog Posts:

• Participative Management is a Key Driver to Exceptional Business Performance (3/10/08)
  Moving from a traditional hierarchal leadership model to an open-book management program for managing financial results is a significant cultural and practical change. Participative management requires….
  
  
• More LaRue, Global Equity Survey, Open-Book Management (3/5/08)
  Open-book management transforms organizations and gives them a major advantage over others who keep employees in the dark. It's not just about generating profits, cash and wealth but also about distributing it for the good of everyone involved – giving those who embrace open-book management a spirit of generosity and a willingness to openly spread the word to help each other succeed.
  
  
• Sharing Financial Information (2/20/08)
  If a company is planning on sharing financial information with employee owners, it's very important to provide the information in the proper context.
  
  
• The Connection between Employee Engagement and the Bottom Line (10/15/07)
  Of the 18 winners, 17 Bosses practice "open-book management" and are teaching employees how to read and understand financial documents.
  
  
• ESOP Companies are More Productive (4/10/07)
  ESOP companies can increase the level of participation by embracing an open-book management style and actively involving the employees (both individually and in workgroups) in the decision-making process.
  

In the News: Maintain the Culture and Say Involved in the Business/ESOPs as an Exit Strategy/On Track for Continued Growth/Strong Management-Employee Relations

Unique Home Solutions (Indianapolis, IN); Koester Cos. (Evansville, IN); Herff Jones (Indianapolis, IN); Wood-Mizer Products Inc. (Indianapolis, IN)

Employee-ownership plans increasingly common tells the ESOP story of Unique Home Solutions, an Indianapolis-based employer of 125, and cites other Indiana-based ESOP companies as examples.

Transition Plan

As the owner started planning for retirement, he knew he wasn’t just looking for the highest price. He wanted to maintain the culture he helped build and stay involved in the business. As a result, he is selling one-third of the company to the ESOP, with plans to eventually sell the rest of the company:

After all, he and his 125 employees worked hard to establish a corporate culture that has helped the service firm triple revenue in recent years—and win the Better Business Bureau's Torch Award for marketplace ethics four times…"The ultimate goal is to make [the company] completely employee-owned," said Dillon, 53. He expects to stay involved for at least 10 more years and wants to increase annual revenue from more than $18 million to $25 million by 2012.

Promoting ESOPs as an Exit Strategy

The article discusses how Indiana State Treasurer Richard Mourdock has first-hand ESOP experience that provided him the means to pursue his political career. He plans to heavily promote ESOPs as an exit strategy:

"Literally, I wouldn't be sitting here [in the treasurer's office] if it weren't for my involvement in an ESOP company," Mourdock said.

As state treasurer, Mourdock hopes to help Indiana become a leader in employee ownership plans. By the end of the month, he said, his office will roll out a "tool box" of literature to help business owners learn more about the exit strategy.

"There's a unique opportunity in the marketplace right now simply because there are so many retiring baby boomers who have the wonderful characteristic of altruism," Mourdock said, saying business owners want to repay the employees who've helped make their business.

Businesses Considering an ESOP Should Be On Track for Continued Growth and Have Strong Management-Employee Relations

The article cites Indianapolis-based Herff Jones (Indianapolis, IN), named the 2007 ESOP Company of the Year by the Indiana Chapter of The ESOP Association, as a success story. The company stresses the importance of communication, teamwork, and trust:

A successful ESOP needs "a lot of communication, some sense of history as an organization, and … some track record of success so employees are not frightened at the prospect" of owning their own company, said Mike Cheek, chief financial officer for Herff Jones. "All of those are true of our situation."

Teamwork and trust, Cheek said, also are pivotal.

"There clearly is an understanding that everyone has a part to play, and everyone is accountable for that part," he said.

The article also cites Indianapolis-based Wood-Mizer Products Inc. as “the archetype of a successful ESOP”, and stresses the importance of having a diversified retirement portfolio.

Employee Decisions Increase Profits/Large Private Company Equity Plans

The March 14, 2008 Employee Ownership Update is online and discusses the following:

• Study Shows Investors Largely Ignoring Options Impact on Accounting in Tech Sector
• The Power of Ten
• Employee Ownership Growing in Europe
• Survey of Large Private Companies Explores Equity Plan Use
  

VATEX (Richmond, VA)

The Update discusses how VATEX, an ESOP-owned supplier of promotional materials, involved employees in the decision making process and ultimately increased profits. The industry has historically used the dozen as their standard shipping unit. Using dozens was creating errors in box counts and causing a high rate of returns. Employees decided to ship by tens instead. This decision reduced errors and increased profits.

This example builds on our discussion earlier this week on the relationship between employee ownership and corporate performance in Participative Management is a Key Driver to Exceptional Business Performance. The Update shared the Vatex example to highlight the relationship between employee ownership and corporate performance:

"Getting people to work harder (trying to work faster with fewer distractions on counting by dozens, for instance) adds only a little to the bottom line; giving people the tools, incentives, and structures to make smarter decisions adds a lot."

Employee Ownership Growing in Europe

The Update discusses the number of employee owners (8.2 million) and employee owned assets (260 billion Euros or $406 billion) owned by the largest 2,500 European countries stated in the latest European Federation of Employee Share Ownership (EFES) Newsletter.

Survey of Large Private Companies Indicates More Reliance on Short-Term Incentives

The Update discusses the results of Private Company Incentive Pay Practices, an October 2007 survey and research report by WorldatWork and Vivient Consulting. The purpose was to answer "how do private companies use short and long-term incentives to motivate, retain and reward their people?":

Respondents use short-term incentives (STIs) extensively, with nearly 80 percent reporting an STI plan at their private companies. In contrast, only about one-third of respondents report having a long-term incentive (LTI) plan in place, which reflects the cost and complexity of implementing such a plan for a private company.

The large size of companies surveyed may make the results less relevant to smaller ESOP companies:

The size of responding organizations ranges from more than $5 billion in revenue to less than $100 million in revenue. The corporate status of responding organizations was primarily C Corp. (37 percent), LLC (26 percent) and S Corp. (20 percent), with a small number of subsidiaries (4 percent) and partnerships (3 percent) also participating.

The research report discusses short-term incentives, bonus plans, long-term incentives, and deferred compensation and summarizes the results as follows:

Private companies rely more heavily on short-term incentives, such as bonuses, than long-term incentives to reward and motivate employees. Where long-term incentives are used, they are reserved for the upper levels of the organization.

Private companies with LTI plans favor stock options and long-term performance awards over other vehicles. In fact, restricted stock—an increasingly popular vehicle at public companies—is used by only 14 percent of the survey respondents that report LTI plans. This indicates that private companies prefer not to grant real ownership and instead favor cash-based plans or stock options that provide liquidity under limited circumstances, such as a change of control.

Study Indicates Stock Options Accounting Reforms are Having Little Impact on Investors

The Update discusses an October study that indicates that the stock option accounting reforms are "having less impact than was expected when they were implemented":

'The Weisel report indicates that many investors are not even bothering to look at the information. Ironically, it is still common to hear advisors urging companies to find ways to minimize the apparent impact of equity plans on their income statements, even though there is not much reason to think it has any effect on share prices."

Employee Motivation

The latest Employee Ownership Blog post, How Do You Motivate Employee Owners?, discusses motivational techniques:

"Some companies offer prizes and gifts, and in the case of one company, a flat screen television for the person who suggested an improvement in a manufacturing process that saved the company money. Some companies recognize the work and contributions of employee owners at meetings, in company newsletters, or through company wide email announcements. Suggestion boxes are a popular tool at companies that want to keep the lines of communication open. In fact, some companies provide more than just a suggestion "box" to allow employee owners to ask questions and voice concerns; they hold regular meetings and have Q&A sessions with company leaders and anyone in the company can ask a question and have it answered. These companies feel these open meetings are a way for employee owners to have a say and knowing there is a venue for questions and concerns, are motivated to make sure the company stays the course."

Here are some additional things to consider:

• Communications and motivational techniques may be more effective if the Motivational Buttons of each generation are targeted.
  
• Encouraging employees to take ownership will help Create a Motivated Workforce.
  
• Companies with engaged employees understand The Connection between Employee Engagement and the Bottom Line.
  
• An ESOP Communications Committee can help develop and implement motivational techniques and can help develop and maintain an ownership culture.
  
• Dealing with Cynics is essential building an ownership culture.

Motivational Buttons

In our Tribune Shareholders Approve Deal/Exit Strategy post, we talked about how baby boomers will be looking for an exit strategy in the next twenty years. This Retirement Plan Blog post expands the discussion on generations by suggesting that 401(k) communication would be more effective if we targeted the motivational buttons of each generation:

"It has everything to do with the retirement plans, particularly 401(k) being designed and managed for today's workforce. A workforce which also has four dimensions. But these are generational dimensions, the four generations of employees in the work force for the first time in our history. In purely demographic terms, they are:

• Veterans: 1922-1945
• Baby Boomers: 1946-1964
• Generation X: 1965-1980
• Generation Y: 1981-2000

And based on their generational backgrounds, each employee has different attitudes, behaviors, and expectations. If we're interested in using the right motivational buttons in making our 401(k) plans more effective, then we have to communicate accordingly. Let's not take the easy way out by simply using automatic enrollment and qualified default investments."

While the post refers to 401(k) communication, understanding motivational buttons is even more important for initial and ongoing ESOP education and communication.

In the News: Corporate Restructuring/The Value of Employee Ownership/Providing Quality Service/Voting for Board of Directors/Union Negotiations

Salem Distributing Co. (Winston-Salem, NC)

Salem Distributing Co., a 100%-owned ESOP, was recognized as the Company of the Year for the Carolinas Chapter of the National Employee Stock Ownership Plan (ESOP) Association. Their corporate website contains more details:

"Only into the third year of 100% employee ownership, Salem has made great strides in a corporate restructuring initiative, which included reinventing its corporate culture to focus on empowering, inspiring and challenging its employee-owners. The bottom lines of this initiative were to better serve and grow its customer base. The results yielded an impressive 15 percent growth in the first half of 2006 that yielded Salem's recognition as one of the Triad area's FAST 50 a business growth competition sponsored by THE BUSINESS JOURNAL."

M. Dyer & Sons, Inc. (Pearl City, HI)

A biography of the President and CEO of M. Dyer & Sons, Inc. includes the company's ESOP story:

"In 1996, Medford and Masu Dyer after 30 years in business sold 100% of the company stock to the employees in an Employee Stock Ownership Plan (ESOP). The success over the past ten years is the result of educating the employees to the value of employee ownership. We instill a sense of pride in providing quality service and pleasing clients which results in an increase in their employee stock value as well as pride in company ownership."

Shelton Turnbull Printers (Eugene, OR)

Shelton Turnbull Printers, a printer in Oregon with 90 employees, was sold to the employees in January 2002. The employees are participating in the decision making process:

"In March, all ESOP plan participants voted for Shelton Turnbull's seven-member board of directors, which is more representative of the overall company than the previous board….Another change under employee ownership is that departmental decisions are made by the department that's affected, rather than by a single owner…Involving the group takes advantage of "their expertise and experience and their practical knowledge of what they do every single day,""

The article also discusses how employee ownership has impacted "spoiled work" and its impact on union negotiations:

"Employee ownership added a new twist to recent labor negotiations at Shelton Turnbull. Roughly half of the company's employees are covered by the Graphic Communications Conference of the International Brotherhood of Teamsters. In its first three-year contract since Shelton Turnbull became employee owned, the union agreed to a 7 percent raise over three years, said shop steward Bill Babcock. "We would have been a little more demanding if we hadn't been employee owned," he said. Employee ownership "tempers your reaction," Babcock said "because you realize ... that actions you might have taken against a sole proprietor, now if you do them, you're really in essence doing it to yourself. You have to consider what you're asking for - how that affects the ability of the company to survive," he said. "

Prior In the News segments can be found here:

In the News: Constant Comprehensive Communication and Education/Long-Term Objectives/More Than 100 Millionaires

In The News: Sharing Ownership and Creating a Market / Producing a Competitive Advantage / Leaving a Legacy

More ESOPs in the News

In The News

In the News: Constant Comprehensive Communication and Education/Long-Term Objectives/More Than 100 Millionaires

It's time for another installment of ESOPs In the News. If you are looking for more ESOP stories, here are some links to previous "In the News" blog posts:

In The News: Sharing Ownership and Creating a Market / Producing a Competitive Advantage / Leaving a Legacy

More ESOPs in the News

In The News

Ulteig Engineering (Fargo, ND)

Power to the people tells the story of 350 employee engineering firm Ulteig Engineering. The article identifies communication as one of the key challenges:

"Marlys Meier, chair of ESOP communications committee with Ulteig and in charge of accounting at Ulteig Bismarck office, said not only is initial communication necessary, but constant comprehensive communication and education is vital.…So the communications committee organized brown bag lunches and other educational efforts. Through those, Olson said, the "light comes on."…As well as educating their employees, the board and trust committee members are still educating themselves."

The article states that of the 104 members of the Minnesota/Dakotas Chapter of the ESOP Association, 97% are privately held and the average company has 159 employees. The article also discusses growth and production of ESOP companies compares to their non-ESOP counterparts:

"Companies that have employee ownership grow about 2 percent to 3 percent better than without it, he said. Combined with a degree of employee involvement in day-to-day activities, that production increases to 6 percent to 11 percent over non-employee-owned companies.

Ultimately, the goal of a company changing to an ESOP model is to get the workers to start thinking like owners, said Olson with Ulteig Engineers. It's an attitude of "we're all in this together,"Olson said."

Northwest Aluminum Specialties (The Dalles, OR)

NW Specialties celebrates independence discusses Northwest Aluminum Specialties and how "the employees bought the Specialties business from the debtholders who took over the larger Golden Northwest Aluminum Holding Company following its 2004 bankruptcy." It discusses how they started working with their Bank on April 18 and closed by May 30. The financing allowed them to pay off the hedge fund obligations and "provided a comfortable line of credit that would allow the company to expand its operation, buy new equipment, and hire more people. That could include expanded foreign trade." The article ended by emphasizing one of the most important benefits of an ESOP: "Now we can focus on longer term objectives and run the business in a more efficient manner."

ChemTreat Inc. (Glen Allen, VA)

We learn about Virginia -based ChemTreat Inc. in Buyout enriches workers. The ESOP owned 85% of ChemTreat, a maker of water-treatment products, at the time