Over the last several years, I’ve been hearing a lot more about employee-owned companies.
For those who aren’t familiar with the concept, it’s actually relatively simple to explain: Every year, the company goes through a valuation by a third-party organization and the company’s value is determined. From there, shares are produced, based on the determined value.
Once the value is determined, shares are then given out to all employees. In most employee-owned companies, the number of shares given out is based on the level of pay each employee earns compared to the entire payroll. For example, if there was $1 million in payroll and someone earned $50,000 that year, that employee would earn 5 percent of the available shares. Lastly, there’s typically a vesting period: Employees have to stay with the company for a certain number of years before they can actually cash in the shares.
A few weeks ago, I was on a flight and sat next to someone who happened to work for Eureka Casino Resort, an employee-owned company based in Nevada. I learned that they recently purchased the Seabrook Greyhound Park in Seabrook and have big plans to turn the property into a major entertainment complex. The details are still being worked out, but the company is making major investments in the property and most importantly, the community.
I had a follow up discussion with the company’s chief operating officer, Andre Carrier. Andre happens to be a New Hampshire native and will be responsible for the new Seabrook location. I was curious to learn more about how being employee-owned affects the culture of the company and also how it affects the business, overall.
Andre explained that Eureka made a decision to make the company employee-owned about four years ago. He said most employees weren’t familiar with the concept, but quickly realized that it would have a profound impact on their lives. It meant that every employee would earn shares of the company each year that would continue to grow in value. And the one aspect of an employee-owned business that many people don’t recognize is that each employee is building a secure financial future — without having to contribute a single dollar themselves.
Andre also explained that the company started off as a family-owned business, and the family wanted to share its success with all of the people who helped the business become what it is today. That was the driving force behind their decision to go employee-owned.
The biggest change in operations was in decision making, Andre explained. Instead of the typical pyramid approach that exists in most companies, decisions at Eureka started being made by people who were closest to the customer. People spoke up more. They coached each other more. People made more suggestions on how to make the company better. And the communication from the front lines has had an extremely positive impact on the company’s performance and overall customer experience.
The company has also benefited from drastically lower attrition than most companies in the service industry. We all know the job market is hot right now, and that companies are struggling to hire.
The low unemployment rate has made it more challenging to recruit for certain jobs, but Eureka hasn’t felt the same pain, due in large part to employees recognizing the unique opportunity they have if they stay with the company for the long term.
I’m not aware of many other employee-owned companies in New Hampshire. It will be interesting to see how Eureka Casino Resort’s move to the state will influence the trend. I have a feeling that the more people learn about it, the more we’ll start to see other companies make that move. It’s a major competitive advantage, and the list of benefits for the company and its employees is long.
In 2014, Hypertherm, a manufacturing company based in Hanover, became 100 percent employee-owned, making it the largest employee-owned company in the state. The company ranks No. 90 among the top 100 employee-owned company in the country, with 1,440 employees, according to the National Center for Employee Owership.
Although I’ve never worked for an employee-owned business, it’s clear that when employees have skin in the game and they all benefit financially from the success of the company, they are more engaged, productive and passionate.