Mary, what can I do to keep our business private?
This is the question I receive most often from private business owners who are considering their options or who have employee stock ownership plans. With over 30 years Having advised and structured hundreds of ownership transitions, I have a proven answer. It presents an interesting alternative in light of the slowdown in mergers and acquisitions markets and is particularly timely as Employee Ownership Month draws to a close.
But rather than say You leave me to show You. Meet Trey Winthrop, CEO of Bob’s Red Mill Natural Foods. The 45-year-old whole grain food company became 100% employee-owned when founder Bob Moore, now 94 and a brand ambassador, created the ESOP in 2010. Trey, an 18-year company veteran and former CFO, took the reins. from the Portland, Oregon company in early 2022.
According to Trey (and I agree), staying private requires a company to live up to its core values – respect, teamwork, responsibility and determination in the case of Bob’s Red Mill – and emphasize four other ingredients essential. Increase employee satisfaction. Grow the business. Innovate. Strengthen your bench. Together, they create the special sauce that allows a privately held company like Bob’s Red Mill to remain “proudly employee owned,” as it proclaims.
Successful employee ownership plans will change lives, communities, outcomes and create … [+]
Trey explains each recipe ingredient to help you stay private:
Adhere to core values: Bob Moore and his wife Charlee followed these principles from the beginning in 1978 as they sought to provide healthy food around the world and provide financial security for their employees. Three years after the creation of the company, Bob launched a profit-sharing plan so that employees were truly involved in its success. Before the ESOP, employees received a portion of the benefits from each paycheck for nearly three decades. “I’m very proud that we share profits where we can. ” he said. The other fundamental values benefit from the first: respect.
Accentuate employee satisfaction: As the well-known business adage goes: “Culture eats strategy for breakfast.” That partly explains why Bob’s Red Mill retained 85 percent of its employees last year, most of whom produce grain products. This stunning retention rate demonstrates a satisfied workforce. Trey says what helps is a new two-day orientation in which new hires shadow an operations employee, a restaurant cashier and others to grasp the essence of the ESOP.
Also each month, the company closes its doors for a 30-minute live update with employees. During a recent session, 17 different employees from HR and Benefits, the production floor, and the front desk presented questions and answered questions. “The sessions generate more confidence – and more questions,” says Trey.
Another sign of satisfaction: the extent to which employees give back, which is the hallmark of ESOPs. Among other Portland nonprofits, they help the Oregon Food Bank; the Urban Producers Collective led by blacks and women; Emma’s Torch provides culinary training to refugees, asylum seekers and survivors of human trafficking; and the Portland Rescue Mission. A typical volunteer activity: One Saturday, employees helped build a garden installation for the nonprofit Growing Gardens.
Pursue ambitious growth: Bob’s Red Mill has an aggressive growth plan, fueled by product and market advancements. Trey understands that while instilling growth in company culture triggers positive organizational change, employees of different generations respond differently to company ESOP messages. But, he says, “I gain a lot from listening to all our owners.”
Innovate. A common ESOP myth is that inventiveness suffers because owners and employees fear harming their often inflated plan balances (think retirement). But innovative products and operational strategies are essential to staying private. And they describe Bob’s Red Mill’s first protein oat products and powders; the widest assortment of specialty baking flours, baking mixes and baking essentials; vegan meal replacements; and easy-to-prepare appetizers, as examples. The company even operates a popular whole grain store and restaurant in its hometown of Milwaukie, Oregon.
To drive sales growth by better differentiating its customers, the company rented an event center where the entire sales and marketing team played the board game Game of Life. Through lively exploration, they developed in-depth customer segmentation. Among them: the Covert Connoisseur – young, career-oriented suburban men with children who value healthy cooking, simple ingredients and nutrient-dense meals – and the Epicurean Explorer: progressive, slightly older women (40s and more) who are creative experimenters in the field. cuisine, seek out unique foods, favor farmers’ markets and limit processed foods.
Strengthen your bench: A common myth is that ESOP leadership is weaker than that of publicly traded competitors because ESOPs cannot compete for talent with the stock options and other perks that public companies can tout. . Absurdity. Consider how Trey strengthened his bench.
For senior management, he recruited as chief growth officer a 13-year Kellogg Company brand marketing veteran with an MBA from Northwest; as CFO, responsible for financial and organizational management for global companies such as ESCO and Deloitte & Touche; and a Vice President of Human Resources with 15 years of experience creating organizational cultures. The COO since mid-2020 is the company’s former vice president of supply chain and plays an instrumental role in strategic planning and execution of processes and controls.
During and in response to the pandemic, Trey oversaw significant improvements in investing and says he relied on in-house subject matter experts – from material handlers and benefits administrators to accountants, snack experts and factory veterans – to provide their expertise and experience.
As for building his own management capabilities, the former CFO knew operations and finance, but was not heavily infused with direct sales and marketing experience. So, every other week in 2022, starting in March, he flew to a different national sales market, visited the wide range of customer stores and understood how each store differs in strategy and approach . This year, he visited four international sales destinations.
Bob’s Red Mill illustrates why employee ownership should have a seat at the corporate finance table when private business owners think about their future and that of their company. ESOPs like Bob’s Red Mill offer employees jobs they love as well as financial security. And research convincingly shows that ESOPs improve employment, sales, and productivity better than non-ESOPS. During crises like the pandemic, ESOPs do not reduce employee hours or pay, while being more likely to maintain employee health and retirement benefits, compared to non-ESOPs. And they support their communities with these good jobs.
This is the story of Bob’s Red Mill. It’s following the precise recipe with the essential ingredients to stay private. It also highlights my core beliefs and passion after 30 years focused on private business: employee ownership changes lives, communities, bottom lines, and sustainable, evergreen businesses.