I had a chance to be rich. Instead I went deep into debt, giving my employees ownership in the company. And it was the best career decision I ever made.
Let me explain: After 20 years of working together, my business partner and I were being courted by the top names in the agency world. At this point in his career, my partner, 15 years older than I, was ready to make a deal. Candidly, sure, I wanted to be rich, too. But as negotiations slogged on, my partner finally turned to me, and whispered, "This would be so much easier if I was selling to you." A light bulb went on. Was such a thing even possible?
Something Just Didn't Feel Right
After consulting with lawyers and bankers, I knew I could get the requisite loans to buy the agency outright, on my own. At first, all I could think about was the upside. To own a $15 million-plus company outright would surely have its rewards. I'd be free to make all the big decisions and take home the big paycheck!
Maybe that sounds greedy? But think about this: You work for 20-plus years at the same institution. Not a single one of the colleagues who were there on Day One remain. You've outlasted everybody. You've gone to war for this company. You've spent years of your life away from your family -- in airports and mediocre hotels -- in service to the greater mission of growing the firm. Now, you have an opportunity to own all the marbles. And those marbles have real value! Heck, you've been beating back suitors!
Still, I agonized for days. Something didn't feel right. Yes, I was willing to take a gamble on the debt. Yes, I felt ready for the challenge. Yes, I thought this route would be more attractive to employees than selling out to a big conglomerate. But it still felt too much "about me."
But What About The Staff? Don't They Work Just As Hard As The Boss?
It was my wife who sensed my discomfort and brought me down to earth. The prospect of an employee stock ownership plan had been bandied with the lawyers, and my bride insisted that it was the right course of action. Sure, I was valuable to the firm and, yes, given past sacrifices and my willingness to go into deep personal debt, I deserved the majority of the shares ... but, "Think about all the people who have helped the agency get to this point. These are loyal, great employees. They are your friends. They worked just as hard. They missed family events, too. You guys make such a big commitment to the agency's culture. Wouldn't an ESOP represent the ultimate commitment to your people?"
My wife, you see, is an angel. Who better than an angel to make sure your feet are placed solidly on the ground? I shame-facedly absorbed her words.
I Felt Lighter And Easier About Everything From That Point On
Now this wasn't just my gamble, my reward. It was a gamble that all of our agency's employees would take together, and eventually all would benefit if we stayed on our current, upward trajectory. Ancillary benefits that had not factored in my original thought process started to bubble up: for example, mightn't an ESOP be a recruitment differentiator for prospective employees, and perhaps a means to bolster retention of our current staff?
Yes, this was starting to feel good.
Why I Decided To Give Employees Stock In The Company
There was one final decision to be made, and it was the easiest. You see, there are employee stock option plans and employee stock ownership plans. The former require employees to purchase their equity from the owner: In other words, maybe I could create an ESOP; do right by the employees; and still "get rich."
Making Money Off Employees Felt Wrong
But by this point, the thought of making money off of the staff was anathema to me. There was just no way. I instantly preferred the latter variety of plan: in essence, I gave away a bunch of my newfound, shiny marbles to the employees of SHIFT Communications. No purchase required. Just take it, with my sincere thanks for your loyalty and hard work!
I Know It Was The Right Call
It's been almost a year since we debuted the employee stock ownership plan. I am, of course, still deeply in debt. But we are diligently paying it down, and in any case I really don't care a bit. I know that this was the right call. I look around at this effervescent culture, at these smart, funny, hard-working people I call friends and colleagues, and I know we're in this together. They know it, too. We won't let each other down.
That's a feeling money can't buy.
Todd Defren is CEO of SHIFT Communications, a national $16 million social media PR firm recently named "Small Agency of the Year." He lives in San Francisco and Boston.
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