The Executive Brief

New to ESOP - One CEO's Experience

KeyStone Search ESOP, Private Companies, CEO Transition

In 2017, as part of a CEO succession strategy, KeyStone Search had the privilege of recruiting a President & CEO to take over from the founder. Being new to an ESOP, there were some critical learnings that have shaped their leadership. We checked in three years later to see how it is going and what they have learned.

What was it like to take over for someone who previously owned the company? What added challenges did you have to overcome?

Taking over a company from not just the owner, but the founder, is certainly a daunting task. Add in the fact that I was new to the company and the challenge is even greater. The business was a very successful company for over 45 years before I arrived; and I was hired to build on that success. On several occasions, I told the previous owner that I understand and take seriously that the company was his baby, his pride and joy, and that I would always keep that in mind. And I have done just that; not a day goes by that I don’t know and feel the legacy of the company and it deepens my resolve to grow the company stronger every day, adding to the legacy. 

Being an outsider isn’t my only challenge, although it is a significant one. I’m also faced with the challenges that come with change – whether the change in leadership style, the change in culture that focuses on employee ownership, or simply the change in the person leading the company. All these challenges boil down to one word – trust.  Asking employees who have spent their entire career working for the founder, doing things a certain way, and having a sense of comfort in what they know, to trust this new guy; that is a challenge. He doesn’t know us or even much about us, and now he is leading the company? Yeah, trust has been a big challenge. Not that the employees don’t want to trust or that I’m not trustworthy, it’s just that trust is an enigma. Trust takes time, trust takes emotional investment, trust is the foundation for our success going forward. I said many times upon arriving that I have no choice but to extend trust to everyone, but I can only earn trust one person at a time. After almost three years, I believe I’ve earned their trust.   

Being new to an ESOP, what surprises were there?

Prior to coming to the company, I had heard about ESOPs and was quite intrigued about how employee ownership impacted the culture and motivation of the employee owners. I think the biggest surprise I had when joining the company was the relative lack of knowledge about the concept of employee ownership from most employees. I was hoping to learn from various employees about the mechanics and culture of employee ownership, but I soon realized that other than a few people, I knew about as much as everyone else did, which was very little. Later, after networking with other ESOP leaders across the country, I have come to the conclusion that my experience was typical. I don’t say this to disparage anyone, but to rather point out that my idealistic expectation of employee ownership was unfair and unrealistic to be quite blunt. It takes time and quite a bit of effort to educate, inform, and build champions for employee ownership. This was one of the first topics I tackled, once I was aware of the gap between my expectations and the reality of the situation. Developing and supporting employees to become the best person they can be has always been a hallmark of my leadership style. I wanted and needed each employee to believe in their heart that this is exactly what I wanted for them as well. After almost three years of hard work, an amazing employee ownership culture is emerging and I can’t wait to see it flourish and grow in the coming years.

What is unique about your culture that you'd like to highlight?

The company culture was never bad, just not employee ownership focused, which is completely understandable and expected. Employees are trained that on every job we do, what we leave behind is our signature and we want the best looking signature possible. One of the founder’s best and most lasting qualities was how he impressed on everyone the importance of quality; and that trait has literally been passed on from generation to generation. There is not another company in our industry with higher quality. It is a source of pride and accomplishment to look at the work on any job and know that the highest care was taken to make it the best possible.

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