How to Tell an ESOP Story
The National Center for Employee Ownership recently sat down with Ken Baker, CEO and former owner of Pennsylvania’s NewAge Industries. Ken recently sold his remaining 51% stake to the company’s ESOP, making NewAge a 100% employee-owned company. In this brief interview, Ken shares his insights on telling ESOP stories.
What works best when communicating employee ownership to newcomers?
Ken: When talking to the selling shareholder, we want to make it a simple building process—meaning we want to give the 30,000 ft. concept of how it works, and more importantly, how it can benefit the company, the employees, the selling shareholder, and the community in both the short- and long-run. And you have to do this in an intuitive and non-technical way.
When talking to those new to the concept, it works best to sprinkle in stories about how this can benefit the selling shareholders, the company, and the employees. They’re powerful and easier to remember than facts and figures.
What sorts of stories do you like to tell?
Ken: I’m sure you know my fork-truck story. It goes a little something like this:
When I’m in the building, I do “MBWA”—managing by wandering around. I go around the building saying good morning, wishing happy birthdays, how about those Eagles, etc., and checking on projects.
One day, I see one of the fork-truck drivers “laying a patch”—spinning the wheels of the fork-truck. Beating up the truck and ruining the floor. So I go up to the driver and I say “why is it that you’re beating up your fork truck?” and he looks at me with big eyes and I then say “even more, why are you beating up Joe’s fork truck? Because he owns it too.” His head goes down and I think to myself it’s an entirely different way of people thinking about the work they do. The people from NewAge own the floor, the truck, everything.
That’s just one example of how employee ownership can provide a new way for workers to relate to the work they do, and the responsibility they then take. Many ESOPs have stories that would also communicate the meaning of establishing legacy, the financial benefits of the ESOP, the ability to maintain independence. They just need to be specific, heartfelt, and have a point to them.
What’s the best way for somebody to get started telling their ESOP story?
Ken: You can team up with the state centers that the EOX are setting up around the country, such as the PaCEO. They are already coordinating speaking engagements, webinars, and seminars with just the right audiences. Their whole purpose is to promote employee ownership, directly from the mouths of those who have lived it.
Any last thoughts you’d like to leave the reader with?
Ken: You have to have a passion for employee ownership. You have to have the best information about how it works. You need to have a refined message. The NCEO can help with these.
Stay away from the technical aspects at the beginning. It will come if the selling shareholder is interested, but generating the interest is the important thing. The technical parts will only bore or deter them.
Don’t mis-represent it. You have to talk about the downsides. For example, selling shareholders will not get top-dollar from an ESOP, they’ll get financial value. And the selling shareholder has to be OK with that.
If the selling shareholder doesn’t care about the legacy, the community, the employees, or just wants maximum value, they’re not a good candidate for an ESOP and you can’t force that. But if they are interested in any of the above, then it’s worth exploring.