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When you should let your employees own your company

When you should let your employees own your company

Beau’s Brewery is celebrating its tenth birthday by selling the company to its employees starting next month.

When Steve Beauchesne and his father Tim launched the Vankleek Hill, Ont. brewery in 2006, there were 86 breweries across Canada. Today there are more than 500, according to Beer Canada. And while some of those breweries that have started out as independent have been snapped up by mega-brewers like Toronto’s Mill Street Brewery which was bought by Labatt (which is part of beer giant Anheuser-Busch InBev), Beau’s wants to keep its independence.

“Our success during this time is strongly rooted in the support of our employees and fans, who have always believed in our promise,” said Beauchesne in a press release announcing the Employee Share Ownership Plan (ESOP). “By handing the reins over to our employees we are saying this changes everything, because this change is everything – we look forward to our expansion and success across Canada, with the help of our new company stewards.”

Employees will be able to spend up to two per cent of their salary on shares, with between four and five per cent of the business being sold the first year. They’ll also be entitled to any dividends declared by the company’s board of directors, which could be lucrative with the company boasting growth at a compounded rate of 45 per cent year-over-year.

Camille Jensen, vice-president of ESOP Builders, a Toronto-based company that develops employee share plans, says the move will help with transition later down the road, if Beauchesne is looking to step away from the company he’s built.

“What is really great in the Beau’s example is the owners knew their values and were able to match their values to their ideal succession option, selling to the employees,” says Jensen. “Values and legacy are two very important parts of succession planning but are often missed in traditional exit plans.”

She points out that while succession planning is one of the core benefits, ESOPs can also be an asset to employee culture.

“(Beau’s) really wants to engage, recruit and retain talent so by offering ownership that’s a competitive advantage that other companies just don’t have and its a lucrative one,” says Jensen. “You’re going to see increased engagement which results in increased productivity, profitability – happier employees and employee-owned companies tend to be more resilient.”

The concept isn’t new, and it isn’t restricted to smaller companies looking to remain independent. 

WestJet is a prime example with the airline having one of the most lucrative employee share plans in the country. Once employees have passed a three month probationary period, they’re entitled to contribute up to 20 per cent of their salary towards the employee share purchase pan, with the company matching dollar per dollar.

“WestJet is probably the most well known but there’s also PCL construction and (consulting, design and construction firm) Golder Associates, which has more than 9,000 employees and is [one] hundred per cent employee owned,” says Jensen adding that there’s no one-size-fits-all model.

Mountain Equipment Co-op, on the other hand extends ownership beyond employees to customers themselves. Customers buy a $5 membership subscription share, with each member having the right to vote on how MEC is governed.

However, pulling off a successful employee sharing plan or co-op is not without its challenges.

“It’s about good communication and trust between the owners and employees – you just want to make sure that all of that is there,” says Jensen.

But putting a employee ownership plan in place can pay dividends – both financially and culturally.

“It keeps businesses locally rooted,” she says. “You’re helping on the individual basis, a lot of people build wealth in a way that they normally wouldn’t be able to do by owning shares in the company they work for.”