EP29 - A View from the Inside: Interview with Kimberly McCourtney of the NCEO

In this episode we explore what life is really like for leadership after a company becomes employee owned. Guest Kimberly McCourtney, former HR Executive of an ESOP company and currently the Peer Networking Manager at NCEO, shares her firsthand experience navigating the cultural and organizational shifts that follow the transition. Together, we discuss how leadership roles evolve when everyone has a stake, what an “ownership mindset” looks like in day-to-day operations, and why transparency and trust become the foundation for long-term growth. This thoughtful conversation offers a genuine look at the human side of employee ownership and is a must-listen for leaders in newly or soon-to-be employee-owned companies. 

Transcript

[0:11] Welcome to the third of our 4-part series on exploring employee ownership. We're glad that you're here and today's uh installment is the inside view of the life. Of an ESOP company. We've explored what employee ownership is in its various forms and we've also heard directly from owners and today we're going to talk about what an ESOP transition and what an ESOP living in an ESOP company. Uh an employee owned company feels like for the leaders that are responsible for taking on the torch from the the former shareholders and with me today I have a very special guest uh and Kimberly if you would like to introduce yourself that would be fantastic.

[1:02] Perfect thank you Jason thank you for having me today in this unique setting um my name is Kimberly mccourtney my current role is with the nceo the national Center for employee ownership. Um as our peer network manager so that means that I got the honor of bringing all sorts of stakeholders together to continue to learn and create resources for employee owned. Businesses and it's very excitingand I'm privileged to be in that role based on previous experience so before taking on this role I was with an employee-owned company in the far north reaches in Alaska uh for over 15 years and as part of that I a senior leader within the company um I.

[1:52] Was a part of that transition from the founding second generation familyto our 100% employee owned. Journeyyou are going to offer a great perspective to our our listeners uh and highlighting some of the the concerns and some of the the myths and misconceptions about uh something that they they don't know yet as they're exploring employee ownership um and your your voice as a senior leader within an employee owned company I hope will resonate with uh dispelling some of those myths and fears uh and to give them some some traction uh on what life is going to look like uh after that they make the leap uh to to employee ownership.

[2:40] So with that and from from your uh your leadership perspective uh Kimberly if you would uh frame up for us uh how you just just walk us through what happened uh before and during and after and how you were feeling um and what what occurred thereso. We had been the company was formed in 1950 as family-owned company um and we hit about 2,000 1314 and our current CEO um was thinking about his retirement right what he wanted to do and being a generational business in Alaska it wasn't necessarily just about the city that we were in and the employees that the community as a whole because the state was so closely tied together and there was this great history and Heritage and they wanted the business to continue right we had customer relationships that where generational as well their kids would come in you could travel anywhere and everybody would say oh I love the mill and I would go there as a kid.

[3:55] And that was really important for the family to find a path forward for that so they did the normal things right they went out to the market they looked at different options and after years of research it came back to the best path forward was this idea of employee ownership.

[4:20] And so that was the road that they went down admittedly I wasn't involved in that process as a leader until that decision had been made.

[4:32] And then it was full-on learning right right I think that I was told maybe a few months before we were to announce it to the employees I remember being handed the plan document. And a couple of books from the nceo I think an introduction to esops maybe the communications committee guide um and then access to the website and just said. Kimberly you're going to be in charge of education and communicating internally and externally and I thought. Okay how did you feel about that in that moment. Uh you know when I sat down with a technical plan document in a highlighter an uh a cup of coffee I thought wow what are we going to doand then as I started to piece together the education the nuts and bolts the technical pieces of. Of the plan document I really remember getting excitedright like this is going to be a changing event for our companykind of understanding the why and the different options that we said no to for selling the company and why we picked the route of employee ownership.

[6:00] I already had a firm grasp on the Heritage and history of the company and loved it alright I loved my job I loved the connection that we had to our employees always and to our customers and the community that we served. The thing that got really exciting to me was taking that Legacyand creating a path for the future.

[6:24] And how exciting that was and what that meant for employees for the long term that was what I really dug into the nuts and bolts of how the esap operated um you know you can educate yourself on that and it takes a little bit of time but really connecting the why for the employees was something that I loved immersing myself in and so you're you're saying that wi with the technical plan document a highlighter in a cup of coffee that you were able to uh extract from that the the purpose the why and then connect that to the culture that that had already been built by the family and and other leaders and those are the only tools necessary for that moment to tie it together for you. For that for that moment right you have to understand the technical pieces because those will be the heavy questions right and the execution piece of your plan but I think that the bigger connection was the culture and the people and the why we were going down this road rightthat that's the big piece.

[7:39] And after uh. It digesting that during this this stage of just a couple months before the announcement to to the employees I imagine that there was a decent amount of of trepidation or or worry anxiety that that may may have crept in in in some way shape or form um can you share what what some of those might have been from your perspective.

[8:04] Yeah we had had a pretty healthy um profit sharing plan for the employees before we got to that point and the beautiful thing about our company was the longevity of employees that we already had so kind of the big concern wasyou know the nuts and bolts that everybody goes through how is it going to change who are reporting to what does this you know what does this mean for me taking senior level employees that had had this really long term healthy profit sharing plan.

[8:39] And at that point telling them it was going to go away right because the ESOP. And the retirement plan was going to replace thatso those were handled with with care and discretion and 1-on-1 right to build confidence to address fears um but we also made it's celebratory when we told the employees we did a companywide breakfast right that was mandatory and it was paid and brought everybody in had breakfast um explained that our founder was going to retire and instead of going this other route right of selling the company to somebody that didn't understand it to private Equity or some of these other routes that this was his gift to the employees and to the Future and sort of talking about the basics of the transaction how the trust was set up right the annual release of shares that would go in value to retirement accounts that nobody was fronting their own money you know and that this was just a continuation to provide for them for the futureand then.

[9:59] And then we did external Communications as well right because our business was such an integral part of the local and state economy so we wanted the public not to have.

[10:12] A misconception about what was going on with their beloved company so those things were handled. Had a time but with a lot of thought and a lot of care um and in a very positive way that everybody immediately connected with. And could get behindthose sound like really powerful moments uh and that theintention and forethought uh to communicate those to the the right audiences was was really the the most critical component of conveying the heart behind the the the trans the ESOP transaction for for the company. Yeah I'm sure on our founder and at our time our presidents um side that they probably had a lot of fears and a lot of trepidation right and I know that ESOP transactions can be very expensive out of the gate um but talking with the executive team you know again keeping that positive.

[11:16] Forward-looking mindset um and then the message from there just became simple right being an employee owner meant that every day you were giving employees an opportunity to impact the success of the company we focused on that we we focused on that the long-term benefit for employees being in an ESOP was to provide this wealth changing event for their retirement.

[11:44] And then from a community perspective communicating that becoming employee owned much like being a local company provided stability and Longevity for the the historical aspect of the business and the community as a whole so those were sort of the points that we really latched on to you the fear the financial aspect of it you can work through those in a logistical non-emotional manner on the backside but this forward facing. You know communication was really important to us to get rightI imagine as for being new to you when you were brought into into the know um and then uh thinking about the employees it it would be new to them when the announcement CA came out when when you issued that announcement with with all of uh that care and forethought that he put into it uh 1 of the common questions that we often receive is we know that not everybody immediately gets it.

[12:48] Uh talk talk to us a little about uh how the. How long you think that it took for the remaining employees to understand the magnitude of of really what what had occurred um and when they started putting the pieces together and the importance of continual communication uh after the transaction in in that effort. Absolutely I think that initial announcement is just like the first wave. Right on on the ocean andit.

[13:20] You have you can't just announced it and then set it in the back burner like another benefit right in order for employee ownership to really take rootit is something that needs to be. Built into your culture and talked about at every opportunity in so many different ways you have the ability to do that so. Education we used a lot of different markers right and again you're building everything from scratch as a new employee owned company. And there's a lot of great resources out there and the community is fantastic at sharing. Things that they've already built um and I think that that's the beautiful thing about the nceo specifically the resources that they provide but breaking them down into smaller pieces. So I created education that was really modular based right like what is an ESOP how does an ESOP work. Who governs the ESOP right just 2 or 3 little slides on each of those topics when will I become a participant right when will I become vested how is the company valued when you try to do all of that at once it's extremely overwhelming.

[14:38] When you break it into small pieces and you communicate it regularly and at intervals it becomes. Just part of your language right the same way that you would say hi my name is Kimberly I work hereand you build it in at every step right new hire interviewing orientation you know interviews. Company surveys right it just always you have this ability to connect back to what it means to be an ownerum.

[15:13] That sounds like uh a a significant change that takes place over a long period of time and isn't just a flash in the pan uh and you're constantly educating right like you get new employees and the and you have another way and you reach another milestone in your employee ownership journey and you have to learn something new right or the business you acquire another business and how you integrate that and that and it just continues in waves of learning and repeated learning.

[15:52] Apart from uh that that continual education and communication uh what else changed uh for for you and other senior leaders in in the company that weren't selling shareholders. Sure I was reflecting uh on that as well like did the the governance or reporting or accountability change within the organizationand. My simple answer is it didn't change immediatelythe Caps are board of directors.

[16:26] Um our founder stayed for 2 or 3 years after the transaction um our current president who had been with the company for 30 years was his successor. Um so you didn't have immediate change and I think that that goes a long way to calm anybody's. Fears right that this is going to be vastly different and then changes were soft and subtle. We added an external trustee to manage the ESOP right and that person we. Introduced him right away he was so wonderful for education and expertise and Technical reliability if we didn't have the answer we engaged our trustee and he was so responsive to us and then over time um we added different board members as you know they retired or rolled out and things that added benefit to the the employee owners like a board member that had ESOP experience or complex Financial experience so you just kind of move.

[17:35] Gradually oh over time we created this beautiful pathway to promote people within the company at all levels and looking for the people that understood what an owner meant that embodied core values that we never walked away from in our 60 plus years of business and that we're really excited about bringing ideas to the ForefrontI think a lot of uh.

[18:05] Owners who are exploring the idea of an ESOP to have uh a a deep-seated fear of not being able to build what you're describing and utilize what I call the imposed governance of the ESOP with the makeup of the board uh and then the the reporting structure for management as tools to do exactly what you described happen with within your companyand. That that fear doesn't often get addressed ahead of time it's it trust trusts the community and that this this does happen and that you employ ownership mindset and ownership mindset does form oh overtime and that that's what you're describing uh with the the use of the board as as a toolum how how long did did that process take and where there's separate intentional steps that that you took to to generate that um that kind of stepping stone to future success for for the company.

[19:12] No I think everybody faces that same fear right and everybody kind of goes like oh this is a big change of our business and we need to. You know enact all of these things all at once and it's overwhelming and then you don't know where to go um and for sure you have those fears I mean your legacy company and you don't want it to change and owners especially you know it's their livelihood it's their life's work you know and and there's a fear of that of of letting go but I think something magical happens when you open yourself up in this environment and you move and intentional and slow ways right.

[19:57] And you and your thoughtful about it and because you're off you know you're open you have this ability to be authentic in your communication and build trust organizationally um which I think are really important in any kind of business transformationum. I think I got a little Sideways from your your top initial question there but it takes. It takes time and everybody's journey is a little bit different you know most of the things I'm talking about are sort of within that first.

[20:33] 3 to 5 years because it'll take you a full year before you have your first valuation and then. You know another year before anybody starts seeing statements and usually that first stock price isn't anything. Terribly exciting and it takes a couple years 3 to 5 years of getting statements before people really start to understand and see the value and where they fit in right it's not an overnight light switchsituation. And it takes the same kind of care and commitment that it did to build the businessthat's a really great point and that that period of time a after the the ownership transition occurs to to the ESOP and what what you're describing is kind of a no man's land of uh the how are we tying a direct benefit to something that that doesn't feel substantial in in the moment can can you share how EU and the rest of the internal leadership team focused on addressing that deliberately during that time until kind of the magic caught up to uh to to what what you were doing.

[21:47] Um I think that we didn't necessarily focus on. The retirement aspect of it right and what that would do when the stock price you know in those first 3 years because again it wasn't extremely tangible um and if if that's all that it is is again like just a benefit for you then I think you're missing an opportunity.

[22:13] So we went back to culture right and engagement and buy in in the aspect of um creating learning opportunities growth opportunities for people within the company thinking about retention um as a tool uh engagement idea Generation Um how to get more people involved in voice their ideas that's that's a big mindset right you show up to work and you do your job versus you come in and you're energized and you want to be there and you understand how your job connects to the bigger picture of what the company is trying to achieve that's the lightbulb moment if you as a leadercan communicate how your corporate goals.

[23:13] Impact everybody and how they show up every daythat's Magic.

[23:19] That's magic for a warehouse guy a retail clerk uh production worker to show up and know that how they perform their job. The care the consistency the quality how they train and engage their co-workers their new hires matters.

[23:43] That's the magic of being an employee owner and having an ownership mindset it brings a brand new dimension to uh and purpose to to work and meaning to work that wasn't there before yes. I I imagine that uh throughout the process both being being in the know before and then going through the um the roll out of of the the the ESOP for for the company as a whole and then getting through what I just termed this no man's land uh that be beyond that uh there there was further Evolution um to your leadership team um give our uh our Watchers our listeners some insight into what the future of leadership inside an ESOP company could look like for them and their team.

[24:44] Yeah uh I.

[24:49] I think that that's an interesting question umI think as your ESOP develops.

[24:58] There are a lot of growth opportunities there's a lot of learning opportunities the technical side the execution of the ESOP the plan um every year you know you've hit a new milestone. Looking through all of. The valuation right the technical things of employee statistics and reporting to your TPA every year I sat down with a ruler and highlighter and then you're walking through the you know the logistics of that like okay this person's. X age and they've been here x amount of time and their higher date and they entered the plan and you know making sure that you're following all those nuts and bolts that gets more complicated over time repurchase obligation and what that means and all the levers that you can pull but from a leadership perspectiveI think that the number 1 thing that I learned. As we went through this process right was Employee ownership wasn't a top-down.

[26:00] Thing it wasn't just a benefit that we offered right it. It was Grassrootsit was an emotion it was a mentality and how people showed up for our company it was a sense of Pride that when we nurtured it correctly it impacted every level of the company and inspired me as a leader and changed.

[26:26] How I showed up for my employees right leadership wasn't a position it was an action I was there to make sure that my employees had everything that they could do need to do their job the bestso that they could show up and like their job and be happy and see their see their value right. That was a a shift mentally for me in that process. I read recently a quote that stuck with me and that's a a worker's responsibility is to show up to work and give their best every dayand a a manager or a Leader's responsibility. Uh is to give the worker a reason to show up tomorrow.

[27:16] Well I like thatuh and I I've seen that proven out in employee owned companies uh all throughout their life cycle and it's 1 extra reason uh for the every worker to show up and give their best every day um because of that tie-in that uh that that you mentioned um 1 thing I I want to point out and you've you've mentioned it throughout your your responses to to my questions is um.

[27:44] Yes there there's technicalities and yes there are specifics and yes there is a a benefit and yes there is a a financial rewardum and that that becomes part of. Uh the the responsibility. And it may feel daunting in in the beginning to someone who's never read through a plan document or been exposed to to something like like an ESOP um but I I really value the the way that that is really lesser of a concern than maintaining the Integrity of the communication of the culture the Legacy and the family of of employee ownership in a company. Would you agree to thatI do yeah and I think that umeven as you go further along in employee ownership Journey you know once you move past the 5-year Mark the 10-year Mark your your mature ESOP you know for decadesit's really important to hold on to where you came from.

[28:47] Right to teach new employees about their legacy and why that decision was made I um know several companies that move away from that and you tend towards then just becoming a a benefit level. Right for employees but it's part of who you are it's part of your company and your history and just like you should celebrate the Day you become 100% employee owned you should celebrate where you came from and remember thatI've got a handful of questions for you Kimberly and I'm ready uh I I I'm gonna just fra frame these as uh common questions whether we want to say that they are concerned or or myths um or some somewhere in between where they should be concerning or they really are mythical uh to to give uh the the listeners uh the insight again from your perspective on on these these questions and so the first 1 uh comes up very often and the way that I'll I'll phrase it is does leadership uh lose all control uh in a in a majority ESOP transaction.

[30:07] My simple answer to that is no. Because as I've said at the beginning you know initially nothing really changes your structure your reporting structure employees chain of command none of that really changes. My more thoughtful answer to that is uh overtime it shoulduh not in the like. The technicalities of the business the expertise but you should as a leader Foster an environment where you want to delegate and give people more responsibility as employee owners. And I think that that should be.

[30:50] That should change over time right you should make sure that you're communicating when things are good and when they're not good being honest about challenges involving employees and solutions right. That's really hard for a lot of leaders to go I'm a bit of a like. Process control like you know kind of a person but to involve the people that are doing the job. And get their honest feedback and be honest about growth opportunities and challenges.

[31:25] You get blown away by what people come to you with and their level of Engagement and if they own the idea and the solution. They want to succeed. And they try even harder and so I don't think leadership loses control but I think that you should widen the circle.

[31:47] It sounds like. It maintains the Integrity of the vision during what really is or what could be a turbulent time change is is always um uh risky to an extent uh we we don't want to disrupt the success or or the status quo um what what I hear you saying is you don't need your leadership doesn't lose control but should embrace the the structure and the opportunity of incorporating more people into the process in into that that ownership mindset uh so that they can uh guide the company into the future without them still on their own terms yes. That leads us to something that you've you've mentioned um in in passing or as a connected to to some of your answers and this is another concern that many owners have when exploring employee ownership uh is does everything change overnight.

[32:49] Uh no no I'm happy for us a little bitand in fact I would say likeit's a journey right it's really slow um it takes time you need to be patient um you have to repeat lessons. For yourself and for employees over and over again I like the wave analogy right that I used it just it's perpetual motion and repetitiveness write a new employee uh Company employee owned company. Man it's It's A Hard 3 to 5 years out of the gate right a lot of lot of repetition a lot of Education um and then just when you think that everybody is on board you have a new group of employees that comes on board behind so you're you're constantly in a learning and teaching. Pathwayand uh. It it doesn't change immediately overnight and you need to be kind to yourself with that Journey as an owner and um making that transition.

[34:07] This is also another 1 that we we hear about uh normally afterward in the the that no man's land of uh okay great we're we're an employee owned company now what what is this mean and uh employees start hearing uh terms like beneficial ownership uh for the first time uh as as the the concept of of the ESOP and the allocation gets explained to them and 1 of the questions that comes up is well is the ownership only on paper.

[34:43] I think that thatdepends right on what your culture and your company looks like and. And are you using it just as an additional benefit or are you engaging with it and nurturing it right so I don't believe from my experience that ownership only exists on paper.

[35:08] I think that um the ESOP stock has an opportunity to be life-changing Building Wealth right it's a phenomenal long-term benefit um but. I believe that the greater benefit of employee ownership is taking care of your peoplethat they'll take care of each other and the customers and the business and by working together everyone feels the value and success. Um being employee um I think on so many levels. Um ownership can mean so many different things like we talked about showing up how you show up to work how you train new people how you educate um I think a big part of that you know everybody talks about open book management but creating business literacy.

[36:01] In connecting it to personal financial literacy. Shows up in how you make that connection for employee owners and how they do their job and the things that they can impact.

[36:14] And that's that's something that's really tricky and really takes time and thought and nuanced um but um. Ownership isn't just on paper it's not just another benefit that your HR team can offer when recruiting it truly done well immerses at every level of the business.

[36:41] My last question uh in in in this segment is uh and related to something owners often ask when exploring employee ownership for themselves and for the the technical details of handling. Uh the structure of the transaction afterward and burdening the company with the the new the new debt that's associated with the ESOP transaction. What I wanted to hear from from you and your unique perspective as a leader inside the company and not an owner of the company prior to the transaction in in your experience and when you describe that before and at and after and then in into successwhere could it have gone wrong.

[37:29] And were there was there a moment or were there a couple of times when you as a leadership team had to to come back together and say here's something that we we needed to do or we need to change so that that that we can continue on uh growing the the the ownership mindset.

[37:50] Think that there's a I don't want to say that there's a lot of ways that it could have gone wrong but I think that there's. As many opportunities to do it right there's opportunities to have a misstep. Right um whether that's the initial communication the ongoing education um.

[38:11] Governance uh of your company right I think that it's really tricky. Um for Founders to step out of the picture off their board of directors allow the next. Team of leaders to come in with their Vision um and care. I think that that's sometimes really hard and can provide a lot of opportunities umfor friction.

[38:40] But I think if you're you're thoughtful and you're engaged and. You know as a Founder you remember why you're doing thisyou know and what that ultimate outcome is um.

[38:53] Trust trust and communication they walk hand in hand and when they separate you have opportunities for things to go around.

[39:04] My last question for you today Kimberly is um if there was 1 Thing. That you would say to owners exploring employee ownership haven't quite made the the decision yet.

[39:21] And uh I'm gonna have you represent all internal key leaders at at at companies for for for your answer oh gosh what's the 1 thing that you would want to say to them about where they are on start starting this journey of exploring employee ownership that you would want them to know.

[39:42] From from your leadership perspective I thinkI would give somebody a pat on the back right maybe a hug because I'm that kind of person and tell them that they're already headed in the right direction by having this initial thought and then I would encourage them to go to an and CEO conference and. Talk to people right to network with people that have made that transaction or their peers other Founders listened to some of the content right and during the Kool-Aid I think it's a wonderful opportunity to immerse yourself if you were on the fence about making a decision about going employee owned and went to a conferenceI am 100% sure you would walk out of there overwhelmed with a ton of contacts with a ton of information to read and an energy and a passion and a belief that you were about to impact. All of your employees lives for the better and be excited about the future.

[40:57] That's amazing uh and I I wholeheartedly agree with you uh in the just the energy that can be derived from being part of the community and and exploring thatand for for our listeners.

[41:11] Umwe're very excited to present Kimberly's view to you uh so that you can get an accurate picture of someone who's been in the shoes of your most trusted peopleuh and what she experienced and what they will be experiencing in the potential of all the things that you hope for as you explore employee ownership for your culture and for your legacy and for your people. And you can see and hear uh from her that they faced this change uh with. Excitement uh and gained great confidence over the the years uh and committed to seeing the the vision of.

[41:56] The selling shareholders come through for the employees in the future of the company by maintaining that Legacy that you are looking to to preserve in in your exploration of employee ownership so With that uh we thank you uh we're going to finish this 4-part series uh in the next installment with a conversation about how employee ownership can be a growth engine and not just a succession plan and with that thank you for listening in uh Kimberly thank you for your candidness uh and for for sharing with all of our listeners about this very important topic as they consider their leaders and we will see you next time. Thank you.