Reshaping the Post-Pandemic Workplace: Employee Owned Businesses, Part 4 with Jennifer Lowe

welcome everybody to the enlightened entrepreneur podcast and thank you for joining us here to build livelihoods that matter be your own boss and make the world an even better place i'm your host julie sampson director of the sheinfeld center welcoming you to this fourth of five podcast series in which we're exploring how the workplace can be redesigned to drive equity and be more rewarding and engaging for workers given the great resignation and reshuffle can employee-owned companies be part of the reset to create a transformative impact for employees and businesses alike joining us to break it down is jennifer lowe who is the founder and president of montecito estate management a boutique company located in montecito california jennifer was selected as the 2021 contingent grant recipient by the santa barbara county economic growth accelerator for her employee ownership trust project so under jennifer's leadership montecito estate management will soon be the very first employee-owned trust company in santa barbara county but what does that mean for employees her company and for our community and how can businesses best navigate this process of transitioning to an eot well jennifer welcome and thanks so much for joining us here to enlighten us thanks julie it's great to be here to give our audience a quick definition of employee ownership before we get going we could say employee ownership is where a company's employees are full or part owners of a business and there are different types of employee ownership one type is the employee ownership trust or it's called eot for short and it's a trust that holds some or all of the shares of a company for the purpose of providing financial benefits and governance rights to employees and if you'd like to take a deeper dive into employee ownership check below the video there are links there to other videos we've created that'll help you do just that montecito estate management is an example of a company that's currently transitioning to an eot so jennifer while this eot form of employee ownership is predominant in the uk by some estimates there's only 30 eot companies in the us so what motivated you to create an employee-owned trust company and why was eminem a montecito estate management a good candidate for this form of ownership yeah that's that's a great question um i think what really kind of started the basis for this was wanting to attract and retain local talent um so much of what we do is community-based so wanting you know our workers here and whatnot so so just really trying to create that business environment for that and so many of my employees are already acting as owners so it was kind of looking at it from that aspect as well and that that kind of was the launch for us looking into the eot so by some estimates it can take anywhere to six to 18 months in order to go through the process of forming the eot where are you in that process what milestones have you attained and what are the next ones coming up yeah so we started this probably the summer of last year so um you know hopefully about halfway through we're looking about 11 or 12 months to completion so that's pretty excited exciting um a lot of the the milestones that we've hit and i'm particularly excited about this is the procedures that we've set up for our owners our employee owners to be successful so just really kind of nailing all of those down um to set everyone up for success let's let's get into how the company is kind of transitioning into that so for you as you're currently president and founder so what will be your role once you transition fully to the eot so i'll still be on board for at least a couple years you know supporting um helping with the back end finances um you know anything that may be needed in addition to you know kind of things maybe we didn't think about in the procedures and and just being able to pass that knowledge off to the employees okay great and how will your role be taken up by the company then the role that that you'll be playing you know after you already transitioned but you're still there right so i think what we're already putting in place is is setting individual employees up to take on roles and tasks that i've been doing and also just kind of being really transparent about what each of those roles looks looks like we're also trying to form a more really cohesive culture with having other people being able to step in so it's always just a really smooth you know if somebody needs to step out somebody else can step in and really strengthen the team that we have okay great and then the way you're setting up your eot um it's going to be 100 employee owner the trust will own 100 of all of the shares right correct and so what are the primary benefits that your employees are going to experience as you know from the transition to eot yeah so i think i think a biggie that they're going to is is the financial side of it um you know kind of again going back to retaining talent here it's it's just the longevity of the employee and they're they're getting a financial benefit as well with that for our audience who is maybe not that familiar with an eot instead of the shares earning dividends for the shareholders and stakeholders who hold shares the the profit that the company makes the employees will benefit um from that on a regular basis like will they get bonuses in their checks or how how will that happen have you identified that yet yeah so absolutely the employees will get bonuses um we're still working on the timeline of how that will look whether it's twice a year or once a year um so all of those details are still being worked out but they they will definitely be the ones reaping the benefits from from the profit that's so amazing you know this is taking a lot of the boxes you know when we hear about the great resignation and great reshuffle you know people being workers being dissatisfied with their wages you know with the investment of the company you know in the employee growth and um career planning um you know wanting more flexibility it's interesting because i think the eot address seems to address a lot of those um dissatisfactions you know so to bring that into to bring the eot into a community i think is a really um amazing transition to make and a give to the community you know to bring about new thought and maybe new ways of uh doing business in accounting so can any employee benefit from the eot you know like right from the get-go when they're hired do they move right into that benefit or is there going to be some kind of uh requirements that they need to meet before they'll experience that right right well with like a lot of benefit programs there there will be a qualification period but not only will full-time employees be able to benefit but part-time employees will too um you know i really i really value employees whether it's full-time or part-time and just want to honor that so that will definitely be built into our eot amazing so how many employees does uh montecito estate management have we currently have seven and we are looking at hiring two more that's exciting super cool so how did you uh you had seven on board tell us about how you announced this transition that was going to be coming up because i i think that would have a big impact in terms of how it's received by the workers right so how did you go about that so i actually chose to announce it a little bit before the thanksgiving holiday and part of my decision with that was holidays are very very busy time for us and everybody is just pouring 110 into work so i wanted to step back and and really recognize that and hope to encourage and and to be able to say like hey this is on the horizon and we're setting this up um and again you know so many of them already acting you know essentially as owners it's like a business within a business um you know for them i think there was a lot of excitement a lot of thankfulness um and it was it was received really well and of course a lot of questions but but overall it was a very positive um you know feedback from them how are they engaged in the process like during the you know as you transition and you're getting everything set up legally and financially you know doing all that you know you make the announcement but then it's kind of important to keep the workers kind of on board and moving towards this new reality so what kinds of things uh have you been doing in order to keep the employees engaged and a part of the transition process yeah that's a that's a really great point um so a lot of it has already been kind of like those procedures that we're putting into place and having the opportunity to go to each employee and say hey this is what we're working on can i get your feedback on this what has and hasn't worked for you so it's really the engagement in that process um also keeping them informed of like hey i'd love to have a team meeting you know let's let's just kind of get updated on on where we are in the process so it's you know not something that was just announced once and kind of out there somewhere so you mentioned something that um we heard uh rick clinton of optimax we had him on as a guest and he talked about his company optimax where they had an employee-owned type of culture before they even did the eot and you mentioned that same type of thing can you speak to uh how what kinds of things do you have in place that that encourages that because i think a lot of the complaint that i hear you know from students is you know they want to have a sense of ownership but i think a traditional with the traditional ways that business is run um you know it can be kind of hard for employees to get that experience so can you identify some things that you have in place that really helped to create that employee ownership culture like even before you were in elt you know i think one of the biggies or the very first thing that comes to mind for me with that is letting the employee know right from the get-go that they are in charge of their own schedule so it's kind of immediately removing somebody else you know managing a schedule for them and i think that gives them the freedom but also the drive to really step in and you know hey i want to get this done or do that um and another thing i think is just how we communicate again just kind of um the team setting and um inviting you know everyone into conversations and and just keeping um everyone up to date so we can support one another i hear a lot from students actually when they first hear about employee-owned companies a question about well am i going to be involved in the day-to-day decision making of the company um you know how does my role change of course you have the functional operational roles you know that the employees will have to continue um fulfilling but how how does the governance work like how does the voice of the employee how will it be heard you know in the eot setup that you're going to have well with that you know we're still working through the specifics you know having an attorney draft the all that um but as far as as the employees we will have a company board and you know we're looking at having you know probably at least a third of the employees be part of that board so their voices will really be heard and you know validated with whatever their concerns and or questions are interesting so as you think of hiring you said that you're uh that you will soon hire into two more positions because you're moving into being an eot are there any particular considerations um that you have now you know now with this new form of ownership that you'll be looking for from job candidates that will kind of indicate to you that they would be a good fit you know for uh being an employee owner you know i think the biggie is just kind of that entrepreneurial type spirit and and really the drive to um want to do it but then also um a team aspect of it um because i really feel like that's that's what's driven a lot of our success so you talked about uh in your business it's almost like uh the employees run their own business within a business this is such an excellent example of entrepreneurial skills being you know having an application within a business sometimes people call this entrepreneurship but this is a really great example of how that can work so like you have uh accounts with different estate owners and is it that the employees have their own accounts that they look after is that the way it works exactly so um each employee is assigned you know two and sometimes a little bit more estates and you know they have to be able to manage the day-to-day operations at each estate you know and um oversee you know the vendors so there's an awful lot of moving parts within each property that that employee is responsible for i'm imagining that you know as we look at workplace changes you know like we talked about given the great resignation and reshuffle and employers find new ways of setting up their business you know for greater worker satisfaction part of what will need to happen is um transitioning new employees effectively in that new environment you know the eots like we talked about are not that predominant yet in the us um there are other forms of employee ownership that have been more popular historically here for various reasons but i i think that there is a real role for our colleges and universities to help prepare students you know for working in that type of environment i think entrepreneurship programs can definitely help that but i'm also thinking that internship programs are going to be super important so that for instance if you took on interns they would be able to get a feel for the company and the differences have you considered taking on interns with montecito estate management absolutely i i think one that would be really great exposure to the eot like you said you know there aren't a whole lot um so would love to get the word out and you know especially here within our community and then the other side is is just to really be able to introduce you know somebody and an intern to what it looks like to run your own business or the business within the business so that would be a really exciting part to be able to to partake in and for business owners out there who might be considering forming an eot i would encourage you because i'm director of the entrepreneurship center here at santa barbara city college you know i encourage you to reach out to your local entrepreneurship centers your community colleges because they may be able to help you find candidates you know for internships that then they can you know come in and intern and you can get a feel for them as a potential employee but also they can get the experience of uh applying their entrepreneurial skills within a company and sometimes that's a nice transition you know uh to learn entrepreneurial skills without having to start your business initially one's own business initially which is the way we typically think about entrepreneurship skills so i think that's awesome that you i mean that's part of the with you forming an eot that's part of the opportunity that you'll be cultivating in our community which i think is amazing so um le it might be good to take a look at audience questions here so i think i heard one come in um okay so here's a question why do you think employee-owned companies are so unusual in the us um and that is a really good question um maybe uh just lack of exposure here in the us you know i i certainly hadn't heard of it until um i kind of started to reach out to to mentors and whatnot about options that were out there and so for me i think that's the biggie and i would assume that that could be kind of broader when we look at our country right yes i i know that um you know there's different types of employee ownership and i know that the esop employee stock ownership plan is the form of employee ownership that took off predominantly in the u.s and that is a form where essentially employees receive uh stock in a company and then when they leave the company they sell it back and it's it's a type of retirement plan and i think there was something in um just the way uh there were advocates of that particular type of employee ownership and it just grew it became the predominant form once some kind of companies were doing it other companies started doing it and it just kind of took off that way um whereas the eot was more uh predominant in in the uk in europe so i think it has to do with who the advocates were you know and the businesses that got involved early you know in in different countries that kind of influenced which type of employee ownership came to the forefront so yeah good great question um there's another question here yeah so we kind of touched on this one um maybe we can add to it are there any different qualities that your business will look for in employees now that you'll be in eot um to cultivate employee ownership we talked about entrepreneurial skills but maybe we could drill down in that a little bit more you know like the new things that employees will need to do like for instance there's more of a direct line for them between their performance and how the company is doing right and being able to understand employee or uh goals of the companies um strategies for getting there how their job plays into that being able to read financial statements i would think and you know decipher be able to assess well how is the company doing this quarter that kind of thing so i i would think is is that the when i hear i haven't worked in an uh eot or an employee ownership company though it sounds amazing but i'm imagining that those would be kind of the more specific skills i don't know what are your thoughts as you're kind of parsing through that jennifer right right so part of that definitely is you know transparency and the direct connection to um you know the employee can see you know what they're doing and what it's producing overall um but also somebody's drive to want to learn um to you know what it is that they like to study um you know it's it's just a more kind of comprehensive how do they work with a team and all of that that that plays into it um you know for for that culture okay let's see uh another one uh what community impact do you hope to create through establishing your eot and how can our community best support montecito estate management in your church thank you well my dream is to to really get this out in our community and um it's it's just so exciting to be on the forefront of this here um so i would love to be a role model and a leader to really get the word out there and you know hopefully see more businesses want to transition into employee ownership i always get into like the administrative end of how this works and are there any as you're going along and kind of setting up how things are going to be are there any uh kind of tools that you're going to be bringing on board or any certain operations that you'll be incorporating into how you do business that are going to assist the employees in the roles yeah so i think i touched on that a little bit with the the operating procedures and bringing the employees into that as well um and and really having it defined for the eot um we want to develop training um and just always kind of have that open continuously for our employees both you know kind of what it is they want to learn but then industry specific and then just kind of uh generally too like reading the financial statement you know that you had mentioned there um and then just having open communication and transparency those i think you know those are the biggest tools i think that'll really set us up for continued success so is there anything that you have learned thus far that um that you felt like oh i wish i would have known that when i first started out like any kind of nugget of insight that would be helpful to other business owners who are thinking about going through eot formation or are in the process yeah you know i think it's um the amount of time you know having a realistic expectation for for what it takes um and it's also as silly as it sounds it's been fun to work with the employees too to bring them into this so to have the time set aside and kind of carved out for them as well yeah yeah okay great what i've learned from working with other employees employers who have transitioned to eot and are running eots is uh it's it's kind of a close-knit community you know that we it seems like they're so willing to help each other out and to help each other understand how to navigate through so if other people want to follow what's going on with your transition or you know get in touch with you what's the best way to do that um either through my website uh montecito estate management or linkedin also okay great and i think we included those links down below the video so uh great jennifer well i want to thank you so much for uh being our podcast guest here today i i think this movement towards employee ownership really seems to uh be growing in the u.s uh you know especially since uh we're come we're transitioning through the pandemic and you know with worker dissatisfaction and it's just super exciting that you're at the forefront of um this new wave you know and uh supporting our community and that so thank you for taking the time to share your experience with us and we've really appreciated your insight thank you julie yeah and to our guests we hope that this podcast has inspired you in learning more about employee ownership either as a worker or if you are an entrepreneur or business owner uh thinking to transition to employee ownership be sure and like subscribe and share this podcast series so that other businesses and and workers can learn more about employee ownership and be sure to tune in next week we're going to have a panel of employees from uh employee ownership trust businesses who are going to talk about their experience of working within the company as such as opposed to other companies that they work for that are not employee owned so join us for that thanks again jennifer i so appreciate your participation and thank you everybody we'll see you next week