Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.
Issue link: https://www.e-digitaleditions.com/i/567722
in the plan over time. Combining those diversified assets with the stock they hold puts ESOP participants ahead of tradition- al employees in terms of retirement assets. Challenges and Concerns Structuring a company to be partly or whol- ly employee-owned requires long-term plan- ning and a deep understanding of the busi- ness, making it a weighty decision no com- pany should take lightly. Litehouse Foods announced in January the Sandpoint, Idaho, cheese and condiment company would become a full-fledged ESOP. That process took nearly 10 years to complete, particu- larly since it involved setting up a senior leadership structure to carry on the owner's vision and guiding principles, financing and cash flows, and price negotiations. Transitioning to an employee stock ownership plan demands a thorough knowl- edge of the business' strategic goals, as well as a sincere belief in creating and supporting an environment where everyone has a stake in the business, says Kelly Prior, Litehouse's chief financial officer. One of the primary challenges when first shifting a traditional business to an employee-owned structure is to help every- one, from managers to front-line workers, understand what's in it for them, how their roles change, and what their responsibilities will be. In other words, they need to buy into the idea. Just ask Paul Saginaw, one half of the co-founding power behind Zingerman's Community of Businesses, the parent com- pany to Zingerman's Deli in Ann Arbor, Michigan. The deli, founded in 1982, is one of nine companies in the community, which includes a bakery and restaurant. Saginaw and his co-founder, Ari Weinzweig, advo- cate for collective decision-making and share power among 21 partners that all started as Zingerman's staff. But Saginaw and Weinzweig didn't decide to implement their alternative, hybrid employee ownership structure until more than a decade into the company's existence, which had been a more traditional one. Not all of their employees were quick to embrace the idea. When Saginaw first announced it, then-leaders in the business, whose author- ity came from their job titles, bristled at the notion of sharing power with workers from lower in the ranks. But front-line staff saw the gains to be made through ownership and the power now within swatting distance. "You had an accountant, managers uncomfortable initially about the change," Saginaw recalls. "Some people didn't get comfortable and they left. Others stayed and adjusted. You want to go slow enough so the hesitant people can get comfortable and get on board. But you need to move quick enough so people that are excited don't think it's just a f lavor of the month and that it'll change." Employee Education and Setting Expectations With great power comes great responsi- bility, and new employee-owners are not exempt from the rule. One of the biggest challenges companies face is effectively com- municating to employees those new respon- sibilities, says Katie Walker, spokeswoman for King Arthur Flour, and that what is best for the company is best for all staff. Employee-owners of the White River Junction, Vermont, f lour maker (an ESOP since 1996) are taught that beyond day-to- day responsibilities of the job, they must constantly be good stewards of the company through their actions, because all three—job responsibility, actions, and performance— directly affect the value of the company. "There is a greater pride with owner- ship and a sense that we all are working "If you're going to leverage the fact that you have co-workers as owners, they have to understand how the business runs." "You want to go slow enough so the hesitant people can get comfortable and get on board. But you need to move quick enough so people that are excited don't think it's just a favor of the month." With the exception of private HR issues, all meetings at Zingerman's are open to encourage full transparency. PHOTO: ZINGERMAN'S 28 ❘ SPECIALTY FOOD MAGAZINE specialtyfood.com