More Employee Ownership Close to Home!
More and more organizations have stopped asking “What is an ESOP?” or “What does an ESOP stand for?” … and started creating them. In fact, two companies in Excel Legacy Group’s backyard have recently taken significant steps toward employee ownership!
Steinhafels Furniture, an 87-year-old home furnishings company with 16 locations in Wisconsin and northern Illinois, has transitioned to 100 percent employee ownership. The Steinhafel family will continue to lead the company.
“Each time our family has transitioned the business to a new generation, we have tried to balance doing what’s right for our associates with ensuring the long-term health of the company,” said Gary Steinhafel, a company executive. “Steinhafels is … our family legacy. Deciding to move forward as an employee-owned company helps to ensure that that legacy continues into the future.”
Meanwhile, Harley-Davidson Inc., the venerable Milwaukee-based motorcycle manufacturer, announced plans to give stock grants to 4,500 employees. The move was part of a 2021-2025 strategic plan to boost earnings growth and profitability.
“We wanted to align our expectations with those of our shareholders and include our hourly and factory workers,” said Chief Executive Jochen Zeitz.
Seeing the ESOP Light?
Steinhafels is a full-on ESOP company. Harley-Davidson isn’t quite there. Nevertheless, it’s encouraging to see two organizations well-known in southeastern Wisconsin embrace the benefits of an ESOP structure.
Both companies recognize the value of encouraging employee productivity by granting workers skin in the game. Seeing a direct benefit from working harder is an incredible incentive. As the organization succeeds, so do employees.
“The structure and day-to-day operations of our business will remain exactly the same, but as an employee-owned company, the success of Steinhafels is directly tied to the efforts of the employee-owner associates more than ever before,” said Andrew Steinhafel, company President.
Harley-Davidson has suffered declining sales for some time. After many management changes and attempts to revive its market power, could this be the approach that works?
“Everyone contributes to the success of a company. If you don’t have a company culture that’s motivating and positive, you can’t win long term,” Zeitz said.
About That Misperception …
The scenarios of these two businesses, while different, share a commonality: Control of the organization remains vested in a management team. Even Steinhafels, which is granting complete ownership to its workers, will continue to be run by the Steinhafel family.
A common misperception about ESOP companies is that employee ownership blows up the existing management structure. Nothing is further from the truth. An owner can maintain total control while selling stock to an ESOP. If a business has a board of directors, no changes need be made.
Remember, no question is irrelevant. If need be, we’ll start with “What is an ESOP?”… and go from there.