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"Employee Owned and Governed" The Carris Community of Companies

Published by The ESOP Association
The ESOP Report, March, 2001, p. 3
by Loren Rodgers
Ownership Associates, Inc., Cambridge, MA


The Carris Community of Companies makes reels: large hardwood reels for cable, small plastic reels for light-gauge wiring, and just about any other kind of reel you can imagine. They also make furniture, pallets, and other products.

It’s hard work-the kind of work that makes your hands rough, your muscles sore, and your body tired. They’ve been told that employee-ownership doesn’t make sense at a company like theirs. People say that better-educated and better-paid employees are more likely to think and act like owners.

But now, five years into employee ownership, Carris is making substantial progress towards their corporate goal to become “employee owned and employee governed.” Their leaders are in demand as conference speakers, and audiences pepper them with questions about “exactly how they do all that.”

Headquartered in Rutland, Vermont, Carris now employs over 1,100 people and has sales around $100 million. About half the work force is in Vermont, but major facilities are located in nine other states, from North Carolina to California, as well as Mexico.

Carris Reels was founded by Henry Carris 50 years ago. His son Bill Carris took over as President and sole owner in 1980. In 1995, Bill began transferring stock to an ESOP, which now owns 43% of company shares and will continue to acquire shares until it owns 100% of the company.

This article shares some of the lessons that Carris has learned about putting ideas about employee ownership into practice.

Ask “Why Not?”

The company has a tradition of questioning conventional wisdom. For example, when the company was drafting the ESOP documents, Bill Carris knew which features of plan design he wanted to specify himself. He decided to let the employees figure out the rest. “Why not have employees design as much of the ESOP as possible? I don’t care what the allocation formula is, and they’re the ones who are going to have to live with it,” says Bill.

An employee-management committee worked out a plan, which itself challenges standard ESOP procedure by considering more than wages and salaries in determining stock allocation. They knew they wanted a ratio based on wages, years of services, and an equal allocation. The committee did not feel comfortable deciding how to balance those elements, and eventually developed three different proposals. They left the choice of which proposal to a company-wide, one-person-one-vote election.

The company continues to find voting a valuable tool. When changes were needed in the health benefits plan, it was suggested that employees should vote on which of four options best met their needs. “Why not?” said Karin McGrath, director of Human Resources at Carris. “Now we’ve got a plan that most people want and almost everybody understands.”

Write it Down

In 1994, before the transaction was finalized, Bill Carris put together a booklet with his vision of where the company was headed. The Long Term Plan for the Carris Community of Companies emphasizes humanist goals like self-governance and sharing wealth: the company’s stated goal is “to upgrade employees’ health, wealth and happiness.” The plan also acknowledges the importance of customer satisfaction: “Without satisfied customers, there can be no profit, and without profit there can be no business.” Everybody who is interested knows why the ESOP was adopted and what their company may look like in the future.

Take Risks

Every employee at Carris votes for a representative, one for every 50 employees. Together with corporate and plant management, the representatives constitute the company’s Steering Committee. The Steering Committee meets twice a year in Vermont to guide corporate policy, hear employee proposals, and plan training and communications. Putting such power into the hands of elected employees was a big risk, and one that the company is committed to staying with, convinced that the group is essential to the company’s vision and its success.

Follow Through

Many of the most difficult problems resulted from employees having unrealistic expectations about how the company would change-and how fast. Company leaders believe that a major stumbling block is over-promising. Leaders should be sure they can follow through before committing. For example, employees are invited to submit petitions to the Steering Committee through their representatives. The committee could not respond to all the suggestions, and many people were disappointed. “In retrospect,” says Karin McGrath, “I wish we had warned people that it might not be realistic to expect more than 5 or 10 percent of suggestions to be acted on right away.”

When You Gather Input, Provide Feedback

Carris has asked employees to fill out surveys, including ones designed by researcher Cecile Betit, and used the information to guide its process. Last year, employees filled out the Ownership Culture Survey™, an attitude survey design by my firm, Ownership Associates, for employee-ownership companies. About three weeks later, employees saw the survey results as part of a training program which built directly on the data. The quick turnaround gave employees the sense that their voices were heard, and the results were integrated into the content of the training. Such customized feedback helped expand and challenge employee perceptions of themselves and their company.

Be a Good Citizen

The Carris Community contributes 7% of profits each year to charity, and employees help determine who will receive these contributions. An article in the Boston Globe described another citizenship initiative at Carris-each year, 5 to 10 employees are selected to participate in the “Full Circle” travel program. They go to third world countries and meet people from all walks of life. Participating employees often say that the program gives them a new perspective on their lives. But does it benefit the company? Bill Carris thinks so: “when people come back, they’re not only better citizens of the world--they’re also better citizens of the Carris Community.”

Plan Ahead

Becoming an “employee owned and employee governed” company is a long-term process. The company is currently planning how it wants its governance structures to evolve over the upcoming years. They have been working with us on an influence allocation chart that will help employees productively participate in making decisions. They are planning the concrete steps-including training, gathering input, legal documentation, and lots of committee work-with the goal to build a management and governance structure that is durable, inclusive, and business-savvy.

Is it working? The Carris Community of Companies is on a long road, but they are clearly making progress. The Steering Committee will meet again this month, and they have a full three-day agenda. The survey data shows that not all employees feel like owners yet, but they overwhelmingly think that ownership is important. There are many obstacles left, but the company’s leadership and its work force are working hard to build a company where everyone is proud to be an owner.

For questions about the Carris Community of Companies, contact Karin McGrath at 802-773-9111, or by email at karin.mcgrath@carris.net.

Loren Rodgers is a consultant at Ownership Associates, a consulting firm with an exclusive focus on employee-ownership. For more information, see www.ownershipassociates.com.

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