How to Build an Employee-Owned Business -- Entrepreneur Magazine

Kim Jordan and Jeff Lebesch wanted to run a more democratic business. Rather than shoulder all the tough decisions themselves, the founders of New Belgium Brewing Company sought their employees’ input early on. This meant cultivating what Jordan calls a “high-involvement culture” of engaged, enthusiastic workers and transparency with staff about all sorts of matters, including company finances.

But employee enthusiasm goes only so far, so in 1996 the pair created a phantom deferred compensation plan, at no cost to the staff of their Fort Collins, Colo.-based craft brewing company. Later, when they started an employee stock ownership plan (ESOP), they honored the original plan until all account-holders’ ESOP balances were larger than their phantom balances.

When Lebesch left New Belgium in 2009, Jordan and the company bought him out, bringing employee-owned shares to 41 percent. After mulling succession plans, Jordan opted for full employee ownership. By early 2013 more than 500 New Belgium employees—Jordan refers to them as “co-workers”—assumed 100 percent ownership of the company. (Shares are awarded based on the recipient’s percentage of the total wage pool.)

The benefits have been plentiful. “We have great retention,” says Jordan, CEO. “Our turnover is under 5 percent.”

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