Leaders of employee-owned firms must focus on people, transparency, and vision to achieve long-term success.
Those of us leading employee-owned companies – about 10 percent of U.S. companies and more than 50 percent among AEC businesses – are passionate about the unique opportunities this business model has to offer both employees and management. Our priorities are different than our counterparts’ in sole proprietorship, limited partnership, LLCs, and publicly held organizations.
Leaders of employee-owned companies have to operate with a more hyper-generational viewpoint, making decisions that will prioritize the long-term over the short-term. That’s why at VHB we are constantly guided by our “generational company” philosophy and core values that keep us focused on company stewardship. When I stepped into the role of president and CEO of VHB, I knew I had been handed a tremendous responsibility to carry on the founders’ legacy to protect the future of employees they valued as family.
Being diligent to generational stewardship has paid off. Year over year, we’ve seen related and measurable returns, having exceeded industry growth rates from 2015 to 2019 with increasing profitability for the past five years. Additionally, we’ve enjoyed a highly stable and productive employee base with a substantially lower than average industry voluntary turnover at 5.2 percent, the successful recruiting of top talent, and double-digit stock growth/CAGR for employee owners in the past 20 years.
Here are the top five foundational management priorities I have learned foster the best potential in employee-owned companies:
- Balance your focus on business performance with a focus on your people. Resist a short-term gain management mentality. Pushing too hard for a record quarterly return reinforces short-term thinking and generates misalignment with the most important behaviors needed for long-term success.
- Build, embrace, and enliven a sincere company vision and strategic plan. Know what you are striving to become and include your people in shaping both your vision and strategic plan.
- Align your day-to-day decision-making and position the company to ensure it succeeds in moving toward your vision.
- Be fully transparent with company strategies, goals, and performance. Doing this builds trust with employees, inspires commitment and a sense of pride, and instills accountability throughout the team.
- Create a fulfilling employee experience, continually investing in your people and driving rewards to people who are helping the company succeed in a manner consistent with your core values.
As I considered the recent U.S. Business Roundtable’s statement, I reflected on VHB’s 40 years of values-based leadership, our generational company model, and the strong foundation our founders gave us. Our values continue to drive us to focus on delivering results for our clients, creating benefits for our communities, and ensuring a successful and sustainable organization for future generations.
When you use stewardship as a guiding light, good things happen, tough times are navigable, and you are able to feel proud every day knowing you are always focused on doing the “right” things. Strong employee-owned companies have been the backbone of our industry in the past. Let’s make sure we continue to deliver as exceptional companies in the future.
Michael Carragher, P.E., is president and CEO of VHB. Contact him at firstname.lastname@example.org.