Employee-owned businesses are still a rarity these days — with fewer than 200 in the state of Colorado — but they’re attracting more attention.
U.S. Rep. Jared Polis drew focus to a local store when he officially announced his candidacy for governor. His campaign stop in Colorado Springs was at Save-A-Lot, the employee-owned grocery on Academy Boulevard.
“I wanted the people of Colorado Springs to know I support employee-owned businesses, and that it’ll work not just for technology companies and breweries but also a grocery store,” Polis said.
Joining Polis that day was Halisi Vinson, executive director of Rocky Mountain Employee Ownership Center.
“It’s interesting to me that employee-owned businesses aren’t a lot more prevalent,” Vinson said. “For most entrepreneurs, it goes against the grain of the top-down management style we’ve all been taught. But employee-owned businesses have about 25 percent more job growth than traditional models.”
Colorado’s Legislature passed House Bill 1214 in the spring, encouraging more employee-owned small businesses.
“It’s important to help workers share in the success of small businesses,” said Polis, who advocates for similar legislation at the national level.
The law requires the state office of economic development to create a revolving loan program to assist transitions of existing businesses to employee-owned businesses. The RMEOC helped educate the economic development staff.
“We helped craft that legislation with District 7 Rep. [James] Coleman [of Denver],” Vinson said. “This is extremely important because of how many businesses are owned by Baby Boomers. We call it the ‘Silver Tsunami’ since Boomers have about $12 trillion in assets that will be for sale in the next decade or so, about $24 billion of that in Colorado.”
She said 51 percent of small businesses will close in the next 11 years.
“We really cannot afford for that to happen,” Vinson said. “Employee ownership can avoid that problem.”
Businesses with employee stock ownership plans are spread throughout the United States. There are 6,717 ESOPs covering 14.1 million participants — although 57 percent of them are for businesses with fewer than 100 employees.
There are different models, but most businesses provide stocks to the employee-owners. As the company prospers, stock typically gains value and everyone benefits.
“I tell business owners that changing to this model won’t save your business, but it will — if you adopt the employee-owned model and give people a piece of the action — make employees more productive.”
She gets no argument from Jesse Claeys, a spokesman for New Belgium Brewing Co., the Fort Collins firm that makes Fat Tire beer and is probably Colorado’s most successful employee-owned business.
“It’s been a great experience working here,” said Claeys, who has been with New Belgium for nearly seven years. “The employees being owners shapes who we are and how we show up for work every day. We have a stake in the success of the company — everybody acts as an owner and has an affinity for the company. We bring 110 percent to work every day.”
New Belgium, which sells beer in all 50 states and has another brewery in Asheville, N.C., has nearly 800 employees, with 414 of those in Fort Collins.
Claeys said being employee-owned brings an “incredible sense of community to the business, like a familial bond.”
Jesus Villa, the ambitious 21-year-old manager of the Save-A-Lot on Academy, has experienced that same feeling at his store.
“It just feels better,” Villa said. “We work harder because we know there’s value. We know the bosses care. The money comes back to us, rather than going to the corporation or the big bosses.”
Save-A-Lot is part of Leevers Supermarkets Inc. of Franktown, which was a family-owned business for 69 years before becoming employee-owned.
Employees must work for Save-A-Lot for a year — and be 21 years old — before being vested in the stock program. Villa worked for the company about two years before turning 21, so he’s a newly minted owner.
“It’s not like a 401(k) plan where a couple bucks are taken out of your check,” Villa said. “You know there’s something for you in the future because of this. I’ve always had that mentality of thinking ahead, and I want to hang onto this.”
The ownership model helped draw him to the company.
“I wanted to work with Save-A-Lot and Leevers, but knowing that it was employee-owned was the clincher,” Villa said. “This is a great place to work because everyone is so invested in the business. I’ve always looked ahead, and I know there’s some retirement money in my future because we’re employee-owned.”
Save-A-Lot owners are 20 percent vested in their stock holdings after one year, and fully vested after five years.
New Belgium is 26 years old, founded in 1991 by Kim Jordan and Jeff Lebesch. It moved to become an ESOP in 2000 with 32 percent of the company owned by employees. That became 42 percent in 2009 and 100 percent in 2012.
It’s not just about the money, though, Claeys said.
“You have to separate finances from the cultural impact,” he said. “It’s fabulous to work for a company that provides retirement like this and lets you reap rewards for your hard work through stock ownership.
“But the people here are highly engaged, and it’s the atmosphere that makes it a great place to work. … They think like entrepreneurs.”
Vinson backs up that theory with statistics. According to a study by the National Center for Employee Ownership, she said employee-owned businesses have 8.8 percent higher sales, 5-12 percent higher wages and are 67 percent more likely to be in business “after the critical first five years.”
“Traditional businesses lay off 9.5 percent of workers, according to the 2014 study,” Vinson said.
“We were 1.3 percent, which saved the federal government $17 billion in unemployment insurance. Employee-owners are more successful, happy and productive.”