South Mountain Company

Martha’s Vineyard’s integrated design/build company

The Company We Keep

A Blog About South Mountain, Employee Ownership, and the Business of Community and Place

Categories

Archives

Workplace Democracy

The SMC Equity Journey

I recently attended the Eastern Conference for Workplace Democracy in Worcester MA.  Worker co-ops from around the country were represented.  As I listened to people relate their struggles to align values with business, it made me think of our good fortune with one aspect of our company:  our owners’ equity fund.

In 1987 SMC transitioned from a sole proprietorship to a worker cooperative.   Part of the re-structuring was a commitment to profit sharing – we would distribute 35% of annual net profits as cash bonuses to each employee, based on hours worked.  The purposes: to share the wealth (of which there wasn’t much at the time) and to partially mitigate our hierarchical wage scale.

In addition, our new by-laws called for the distribution of annual dividends to internal capital accounts for each of the co-op owners.  Generally, these distributions were (and are to this day) roughly 50% of the remaining net income after profit sharing.

The internal capital accounts are paper accounts; they do not have cash in them.  They are an obligation – the company owes the money to each owner/employee when that person leaves the company.

Read More about The SMC Equity Journey

Two Pats on the Back

September was a month of recognitions for South Mountain.

I’m always of two minds about awards and prizes. 

They feed the perverse (in my view) competitive impulses of our culture and our education system.  The implication is that there are winners and losers – the worthy and the less so – when our attention should focus on each of us doing the best we can.  All deserve to be recognized for their unique accomplishments.

But some awards have special meaning because they embody learning opportunities and inclusiveness at the same time as they hold some achievers out as particular examples.  During the past month SMC has received two of these.

The Great Place to Work Institute named SMC as one of the 50 Best Small and Medium Workplaces.

And the B-Lab named SMC as one of their “Best for the World” companies for 2014.

The processes that led to these two recognitions are worthy of examination.  I will try to do that in a way that is not overly self-congratulatory, with the knowledge that I am likely to fail.

When Great Places to Work first contacted us two years ago and asked us to go through the application process, we looked at it and went “Whoa.  This is hard.  A ton of work.”  And we declined.

This year we looked at it again.  Two things occurred to us.  The first is that we felt that the work to assemble the information they require would be a useful exercise for us – the introspection demanded would point to new and better ways we can improve who we are and what we do.  A learning opportunity.

The second was our appreciation for the heart of the process –  an anonymous survey they conduct with each of our employees. Submissions go directly to them; we do not see them.  We thought it would be interesting for our employees to have that opportunity to express themselves freely about the company.   We liked that everyone has a voice; it’s inclusive.

So we decided to do it.

The work was useful, and it was nice to be named, but the most rewarding part of the process was that the Institute provided us with a selection of anonymous quotes from the employee survey.

Here are just a few:

“I have never before worked at a place where it seems that 100 percent of the people love their job. Turnover is almost nonexistent, and I felt so lucky when there was an opening for a position. I truly like to spend time with the people I work with every day. “

“The goal is to get your job done the best you can, but family comes first. “

“This company has a great reputation because we give back to the community. It makes it a place where everyone is proud to work.”

“There is a very strong sense of all-for-one and one-for-all. 

“The people that work for the company are what makes it so unusual. When I first started working for the company, everyone was so nice, helpful, genuine and laid back that I thought something must be wrong. After a couple of weeks, I realized that’s just the way everyone is.”

“We have extraordinarily good and generous mental and health benefits, and outstanding opportunities are given to employees to shape and change their job descriptions and roles within the company. “

“We are an employee-owned company. Personally, this makes a big difference! Having worked in ‘corporate America,’ I know that the difference is real and profound. It is so great to have a say in everything, from the big decisions to the small.”

“It is a ‘choose your own adventure’ experience. Dream it and make it happen.”

Here is the full write-up that Great Places did about South Mountain.

B-Lab is very different from Great Places.

 It is a non-profit  that certifies companies as “B Corporations” based on a variety of factors including corporate accountability and transparency, treatment of workers, community practices and environmental practices. Their rigorous process includes in-depth examinations of company practices and documents. SMC received B Corp certification in 2008.  We have been re-certified twice since then, and over 1100 other companies have been certified to date in the U.S. and 34 other countries.

Until now, we have had no real standards to differentiate good work from good marketing.  B-Lab provides exactly that.   B-Corp designation is like LEED Certification among developers and the Fair Trade designation among product suppliers.

The “Best for the World” designation is applied to the highest scoring of the companies that have gone through the certification process.

One of those is SMC.

So there they are.  Two nice recognitions.  Two pats on the back.  We all need them from time to time, whether we like it or not (which we do!).

 

Yes, Indeed, it was a Zinger!

Last week I traveled to Portland Oregon.  It wasn’t only to get a wonderful day of skiing at Mt. Hood with my fine old friend Jonathan Orpin.  It wasn’t only to stay with Jonathan, Maxine, and son Jake River at their beautiful Vermont Street house.   And it wasn’t just to get a dose of Portland culture, hang with the downtown dirtbags, and sample some of the great food from the hundreds of food carts parked around the city (outta- this-world food and teeming with life – it makes you feel like you’re in Kowloon).

All those were good.

But the reason for the trip was to meet with the 19 members of the Partners Group who own the Zingerman’s Community of Businesses in Ann Arbor, MI.  Zingerman’s is one of the great stories of today’s business world, a hopeful harbinger of the Next Economy.  The partners manage nearly 600 employees and the eight distinct businesses have combined annual revenues of $46 million.  They are all food-related (and educational) and they are all in Ann Arbor.

Over time the Zingermans (Paul Saginaw and Ari Weinzweig, the co-founders, and their partners) have steadfastly resisted the temptation to franchise their stellar brand.  Instead they have expanded at home, and they now consist of the following:  the flagship Deli where it all started in 1982, Zingerman’s Bakehouse (bread and pastries), Zingerman’s Creamery (cheese and gelato), Zingerman’s Roadhouse, Zingerman’s Mail Order, Zingerman’s Candy Manufactory, Zingerman’s Coffee, and ZingTrain, the education business which “shares the Zingerman experience with forward-looking organizations around the world.”

For the last 6 months I have been communicating by phone and e-mail with Ari.  He and a small group of partners have been designing a plan to transition Zingerman’s to an employee owned worker co-operative.  When the plan is implemented they will become one of the largest worker co-ops in the U.S.

The partners were gathering in Portland for a three-day offsite retreat, partly to discuss the co-op design.  Ari had asked each of them to read my book, Companies We Keep, and asked me if I would come to react to their governance and business transition plan.

I was thrilled to have the opportunity to meet and think with such an extraordinary collection of people so brimful of honest intelligence.

It was quite a day.  The dialogue was good.  Although I was the only outsider in the room I felt comfortable there.  It was relaxed but productive.  Funny and philosophical.  They work together with remarkable flow – tackling big issues with such passion and commitment to excellence (using first-rate meeting facilitation provided by Fran Alexander of Alexander Resources) that they are able to allow the great and the grungy and the elegant and the messy to all co-exist at once in the service of a greater good.

They’re not only competent and principled; they’re courageous too.  For several decades all policy decision-making has been by consensus – not an easy thing to do in a large dispersed network of businesses.  The two co-founders have veto power, but they have never used it yet.

And now they’re transitioning to a worker co-op.  That takes courage too, or (as in our case when we did it 25 years ago) pure naiveté!  And naïve they are not.

When I asked Ari and Paul if I could write about what they are doing (given that they are still in process and I didn’t know if it was public knowledge) Ari thought it would be fine and queried Paul who said, “Sounds just fine to me. That’s the power of putting the vision out there. It imposes accountability on us all to execute, preform and succeed.”

Now that’s the way to run a business, isn’t it?  Fearless and transparent.

They also have a publishing house, called Zingerman’s Press.  Ari has been writing consistently for at least the last decade.  Two of his most recent books are ZINGERMAN’S GUIDE TO GOOD LEADING, PART 1: A Lapsed Anarchist’s Approach to Building a Great Business and PART 2:  A Lapsed Anarchist’s Approach to Being a Better Leader.  He’s a good one, and these are thoughtful and engaging books that mix humor and wisdom as they introduce the reader to the methods and madness that led to Zingerman’s emergence as a powerful force in progressive business.

Paul reminded me that we had met once before, at a Business Alliance for Living Local Economies (BALLE) conference about five years ago.  I remember that I was immediately impressed when he was talking about principled business and said, “But principles aren’t really principles until they cost something.”

Like everyone else, apparently, I asked Ari where the name came from.  It’s a long story, and a good one, and he gave me the whole thing.  You can hear it from him, but I’ll tell you one good part.  After they had finally decided on the name Zingerman’s, says Ari, “one thing we still weren’t sure about was whether we should spell it the European way, with two ‘n’s or with one.  Paul called his grandfather to ask his opinion.  Didn’t take him but a second to decide:  ‘with one ‘n’, of course, so it’ll be easier for them to write the checks.’  Paul’s grandfather was a very wise man.”

And so are the folks at Zingerman’s, who represent long haul, next economy thinking at its best. We at SMC appreciate this new association.

And we appreciate another one, too.

In December we hosted Blake Jones, CEO of Namaste Solar, – a 100-person worker co-op solar company in Boulder, CO – for several days of information exchange between our two companies.   Namaste is far younger than Zingerman’s, but equally inspiring.  Next post I’ll talk about Blake’s visit.

 

 

Good Year for Worker Co-ops

On the last day of 2012 our 25th year as a worker cooperative (and 37th in business) ended.  It was an extraordinary year – rich, full, profitable, demanding, restorative, and uplifting.

It was a year of many “first-evers”.  On November 1st we welcomed three new owners at SMC – the most ever at one time.  When DonE Turnell, Marc Rosenbaum, and Aaron Beck became owners, it meant that 21 of our 30 full-time employees are now full owners.   DonE worked here for 20 years before taking the buy-in plunge, our longest journey-to-ownership ever.  And it goes back further – I can remember him as a 14 year old skate punk back in the early eighties. He hasn’t changed much.  After his first SMC Board meeting, he said, “It was kind of like a road association meeting but with less stupid people.”  Less stupid people?  Hey DonE, what are you trying to say??

Read More about Good Year for Worker Co-ops

B-Corps on the Move!

On July 31, the last day of this summer’s legislative session, Massachusetts became the 11th state in the country – along with California, New York, South Carolina, Louisiana, and 6 others – to pass legislation enabling businesses to register as a new type of corporate entity:  Benefit Corporations, or B-Corps.  Benefit Corporations are companies which consider the public good – factors such as environmental sustainability and community benefit – in their corporate decisions rather than financial return only.

According to the Boston Globe, “To rein in the excesses of capitalism without losing the dynamism that makes it hum, a variety of thinkers have begun looking for ways to re-imagine the corporation itself, restructuring it to encourage businesses to pursue not only profit, but also positive social impact. One of those innovations will hit Massachusetts December 1st, when companies here will be able to register as a new entity called a ‘benefit corporation.’ ”

Read More about B-Corps on the Move!

Milestone for Mike… and SMC

Last week we had our first official retirement party.  Mike Drezner became the first SMC employee to reach retirement age (and actually retire!). He came to work as a carpenter in 1985 and stayed for 27 years.

I can tell you one thing: when he first came he sure wasn’t a carpenter.  He wasn’t even very handy (if you know what I mean) and he wasn’t young to be just starting out – pushing 40.  He had been a teacher – a damn good one I’ll bet – and had traveled a lot.  But carpentry? None.

So why did we hire him?

I don’t know.  Just a feeling.  He asked, or maybe his wife Liz did, I can’t really remember.  I do remember that I was still on the fence about being in business, and I hadn’t really learned much about saying no.  So I said yes.  It was about who he was not what he was.

He didn’t exactly take to carpentry, not right away anyways.  What size nails did you say for this decking? he would ask, over and over.  8 penny nails Mike, same as last week.  He was dogged and determined, but it came slowly.  He made up for it in so many ways they’re hard to count.

He was as reliable as the tide.  He cared about people.  He was steady.  He was a great member of every crew he worked on.  He was a calming influence for all.  He was a student of the world, and how it works.  Still is.  And he became an excellent carpenter, but so much more as well.

He was an important part of our Personnel Committee.  Later, he was a charter member of our Management Committee.  A closet stock market maven, he stepped up and shouldered the stewardship of our pension fund and our equity fund.  This was huge.

Both funds have prospered under his steady hand.  They dipped in 2008 (like everything else in our madhouse economy) but came back strong (like us).  There is now over $3.5 Million in the two funds, and we are beginning to look at ways to gradually shift from socially responsible investing to socially responsible local investing.

At the party we gave him a beautiful bowl turned by shopper Ken.

And Deirdre  produced a beautiful book signed by each of us called The Drezner Years, with photos of people he worked with, projects he worked on, and a brief tribute.

And he doesn’t know it yet but the ratty old nail apron he wore for years is off getting bronzed at this very moment.

Mike could not have been a better co-owner.  As much as anyone he embraced the concept that we are a group of individuals, all of whom matter, but we are also another entity, The Company, which matters even more.   He gets the true meaning of workplace democracy, through and through.

For me, his counsel was invaluable.  We often disagreed, and still do, but the disagreements are most remarkable and noticeable because we share so many points of view and have so much in common.  I always come away from the resolution of our disagreements wiser than before.  You can’t always say that about people you disagree with, right?

I treasure the work that we did together and I will always honor his influence and value his friendship.

I hope his retirement is just what he wishes it to be and I’m thrilled that he will stay on the SMC board to continue the work we began so long ago.  He will also continue to manage our two funds as he gradually passes that baton to Ryan Bushey (an architect managing a money fund?  Uh oh).

Mike’s retirement is also a reminder that the gradual transition to SMC’s second generation that we refer to so often isn’t just talk – it’s what’s happening,  here and now.  It’s like climate change – not an abstract thing that’s going to happen in some distant future but a set of changes we are living with right now.  I like thinking about SMC’s next generation more than I like thinking about climate change, but the point is that both are becoming more and more a part of our present.

As for Mike, he’s irreplaceable, and he will not be replaced, because he’ll be staying with us in so many ways.