Employee Ownership Insights

How Texas Roadhouse turns managers into owners and why it fuels profits and loyalty 𝗚𝗲𝗻𝗲𝗿𝗮𝗹 𝗠𝗮𝗻𝗮𝗴𝗲𝗿𝘀 𝗶𝗻𝘃𝗲𝘀𝘁 $𝟮𝟱𝗞 (loan forgivable after 5 yrs), so they can earn $𝟰𝟱𝗞 𝗯𝗮𝘀𝗲 & 𝟭𝟬% 𝗼𝗳 𝗻𝗲𝘁 𝗽𝗿𝗼𝗳𝗶𝘁 With the average net profit being $663,000, on average, 𝘁𝗵𝗲𝘆 𝗲𝗮𝗿𝗻 𝗼𝘃𝗲𝗿 $𝟭𝟬𝟬𝗞 𝗮𝗻𝗻𝘂𝗮𝗹𝗹𝘆. The psychology backs up this “skin in the game” model.  𝗔 𝗺𝗲𝘁𝗮-𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗼𝗳 𝟭𝟬𝟮 𝘀𝗮𝗺𝗽𝗹𝗲𝘀 (𝗰𝗼𝘃𝗲𝗿𝗶𝗻𝗴 𝗻𝗲𝗮𝗿𝗹𝘆 𝟱𝟳,𝟬𝟬𝟬 𝗳𝗶𝗿𝗺𝘀) 𝘀𝗵𝗼𝘄𝗲𝗱 𝘁𝗵𝗮𝘁 𝗴𝗶𝘃𝗶𝗻𝗴 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀 𝗼𝘄𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝗿𝗲𝘀𝘂𝗹𝘁𝘀 𝗶𝗻: 1. Higher productivity & performance 2. Greater motivation & effort 3. Improved stability & survival 4. Enhanced pay & wealth The same model applies to Market Partners — one level above GMs. 𝗧𝗵𝗲𝘆 𝗶𝗻𝘃𝗲𝘀𝘁 $𝟱𝟬–𝟭𝟮𝟬𝗞 𝗮𝗻𝗱 𝗰𝗼𝗹𝗹𝗲𝗰𝘁 𝗮 𝟳–𝟵% 𝗽𝗿𝗼𝗳𝗶𝘁 𝘀𝗵𝗮𝗿𝗲 𝗮𝗰𝗿𝗼𝘀𝘀 𝟭𝟬–𝟭𝟱 𝘂𝗻𝗶𝘁𝘀. 𝗛𝗼𝘄 𝗧𝗵𝗶𝘀 𝗖𝗼𝗺𝗽𝗮𝗿𝗲𝘀: Most peers cap bonuses at 10–20% of salary. Today, Texas Roadhouse spans 792 restaurants across 49 states, one U.S. territory, and 10 countries. 𝗦𝗶𝗻𝗰𝗲 𝟮𝟬𝟬𝟰, 𝗧𝗫𝗥𝗛 𝘀𝘁𝗼𝗰𝗸 𝗶𝘀 𝘂𝗽 𝟭,𝟱𝟱𝟮% 🚀 Could this be the future of hospitality leadership? Source: Douglas Kruse (2024), “Does employee ownership improve performance?”, IZA World of Labour.

Last year, I visited Minnesota-based Room & Board, which had recently transitioned to something called an ESOP (Employee Stock Ownership Plan); the furniture maker is now 100% owned by its employees. Not many companies have tried to make an ESOP work. But the structure deserves more attention and consideration than it’s getting. An ESOP can give employees a true stake in a company’s success, which yields more than warm, fuzzy feelings — it can lead to increased productivity and dramatically lower turnover. And if their efforts help the business thrive, it can put significant returns into employees’ pockets. (Just ask the so-called Publix Millionaires famously minted by the grocery chain’s ESOP.) Turning employees into shareholders also has the potential to chip away at the growing US wealth gap. Over the last 50 odd years, the top 0.01% has grown its wealth nearly six times as fast as the bottom 50%. One of biggest drivers of this disparity is the fact that some 40% of Americans own no stock. Most companies perpetuate the problem by granting stock only to those at the very top of the org chart; at an ESOP, all employees get shares in the company. Here's my deep dive into Room & Board and ESOPs for Bloomberg Opinion. https://lnkd.in/ePfXpkYz

We spend a lot of time in the corporate world talking about the racial wealth gap. But we usually treat it as an HR problem—focusing on hiring, promotions, and wages. The math tells a different story: you cannot earn your way out of a generational wealth gap through salary alone. True wealth generation requires capital ownership. A landmark new report, Black Employee Ownership: A Pathway to Wealth Building, was just released by Project Equity, Morehouse College, and University of California, Riverside. I was deeply honored to see my research cited in their findings. For decades, minority workers have been systematically locked out of capital markets. This report highlights what we are increasingly seeing in our own data: the most effective structural mechanism for closing this gap isn't just better pay. It is broad-based equity. When a company embraces an employee ownership model, it fundamentally changes the economic equation. It stops treating human capital merely as an operating expense and starts treating frontline workers as true equity partners. This isn't just a social initiative. As this report proves, it is a mathematically rigorous way to build highly resilient companies while simultaneously creating life-changing, generational wealth for communities that need it most. Are we relying too heavily on HR to solve the wealth gap when it should actually be a core mandate for corporate finance and private equity? #EmployeeOwnership #WealthGap #CorporateFinance #HumanCapital #PrivateEquity

I had a call the other day with an owner torn between "taking care of my people" and "getting full value for what I built." This is a false choice. Employee ownership isn't charity and you don't have to give away your business to do this. We aim for fair market value, the same as any other transaction. The difference is who's buying and what happens after. Third party sales offer maximum short-term cash and no control over what happens next. Your people might be fine, but the decision to sell may also be the beginning of the end -- research shows that 47% of employees leave within a year of M&A. Culture and high quality customer service may continue, or it may be reshaped in ways you never would have allowed while you were at the helm. Employee ownership can offer owners fair market value with a gradual transition, and you can rest easy knowing that what you've built will endure in a form that you'll be proud of. Some owners absolutely need 100% cash immediately, and for them, a third party sale probably makes the most sense. But most owners I talk to value continuity, control, and a gradual transition alongside getting a fair value out. You don't have to choose between your people and your payout.

'Ownership in Action' A few days ago, I met with one of our instrument engineers. They were finalizing a set of notes on level transmitter installations. At first, the conversation revolved around why they picked certain materials or mounting configurations - straightforward enough. But as they explained their reasoning, I realized it was more than technical detail. They were crafting something bigger: a foundation that would guide the next project team, help someone else make better choices, and avoid repeating old mistakes. That’s not simply documentation; that’s building something lasting. It stuck with me. Then there’s the process engineer working on a process flow diagram. By adjusting the flow rates in a side stream, they shaved off waste, cut energy costs, and improved production efficiency. These aren’t flashy changes - no groundbreaking innovations here. But they’re real, immediate. The kind of thing you can see reflected in the data and feel in the bottom line. It’s subtle, yet meaningful. The decision didn’t end with the adjustment itself; it echoed forward, showing how a small tweak, well-timed, can shape the trajectory of a project. Beyond these individual efforts, it’s the bigger picture that stands out. Real-time dashboards give people the ability to see how their decisions impact cost, schedule, and technical performance right away. Adjust a parameter, and you’ll notice the ripple effect almost instantly - lower material quantities, fewer delays, a boost in quality. That’s the sort of feedback that transforms routine work into something more deliberate. It makes every choice feel intentional, connected to something larger than a single task or a single shift. And that connection is what defines ownership at Burns & McDonnell. This isn’t about being a cog in the machine; it’s about having a personal stake. When you’re part of an employee ownership model, that sense of pride and responsibility is real. It’s not the title or the paycheck. It’s the knowledge that what you do, however small it might seem, matters. Every note you take, every adjustment you make, every improvement you document - it all adds up to something bigger, something lasting. Which brings me to Severance. In that world, work and self are forcibly separated. What happens at the office doesn’t touch the person who leaves at the end of the day. That’s the opposite of what we have here. Ownership means integration. The decisions we make aren’t isolated from who we are - they reflect us, our pride, our responsibility. Instead of splitting our efforts from their impact, we pull them closer together. Ownership isn’t a superficial badge. It’s the quiet knowledge that what we do matters, that it leaves an imprint, and that it shapes not only the projects we’re working on now, but the path ahead. 𝔸𝕦𝕥𝕙𝕠𝕣: Sean Ross, P.E. Vice President, Burns & McDonnell India #OwnerShipinAction

I'll be honest: I'm not sure where I/we would be without the #ESOP ownership succession option. This is long, but might be worth your time. Early on, I ran my business like I was going to live forever. When I hit my 40's a couple things hit me. First, my company (Sargent & Sargent) bought my grandfather's older, much larger company. Second, 𝘪𝘵 𝘣𝘦𝘤𝘢𝘮𝘦 𝘤𝘭𝘦𝘢𝘳 𝘵𝘰 𝘮𝘦 𝘮𝘺 𝘤𝘩𝘪𝘭𝘥𝘳𝘦𝘯 𝘩𝘢𝘥 𝘥𝘳𝘦𝘢𝘮𝘴 (𝘢𝘯𝘥 𝘨𝘳𝘦𝘢𝘵 𝘴𝘬𝘪𝘭𝘭𝘴) 𝘰𝘶𝘵𝘴𝘪𝘥𝘦 𝘤𝘰𝘯𝘴𝘵𝘳𝘶𝘤𝘵𝘪𝘰𝘯. What's an entrepreneur to do? 𝗜'𝗱 𝗿𝗶𝘀𝗸𝗲𝗱, 𝗹𝗶𝘁𝗲𝗿𝗮𝗹𝗹𝘆, 𝗲𝘃𝗲𝗿𝘆𝘁𝗵𝗶𝗻𝗴 𝗜 𝗼𝘄𝗻𝗲𝗱, 𝗮𝗻𝗱 𝗮𝗳𝘁𝗲𝗿 𝟮𝟬 𝘆𝗲𝗮𝗿𝘀 𝗜 𝘀𝘁𝗶𝗹𝗹 𝗵𝗮𝗱 𝗶𝘁 𝗮𝗹𝗹 𝗼𝗻 𝘁𝗵𝗲 𝘁𝗮𝗯𝗹𝗲 𝗮𝘁 𝟱𝟬 𝘆𝗲𝗮𝗿𝘀 𝗼𝗹𝗱. Something had to change, but how? What? Why? When? I'd been to the requisite seminars, and ownership/management succession of a closely held business can feel REALLY gnarly. 𝗦𝗼 𝗜 𝗱𝗲𝗰𝗶𝗱𝗲𝗱 𝘁𝗼 𝗱𝗲-𝗰𝗼𝘂𝗽𝗹𝗲 𝗼𝘄𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝗳𝗿𝗼𝗺 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁, 𝗮𝗻𝗱 𝗶𝗻 𝟮𝟬𝟭𝟯 𝗦𝗮𝗿𝗴𝗲𝗻𝘁 𝗯𝗲𝗰𝗮𝗺𝗲 𝟭𝟬𝟬% 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲-𝗼𝘄𝗻𝗲𝗱. ESOP checked all the boxes for me. It: • Allowed me to pull some of my chips off the table for my own personal stability. • Kept the company I'd worked hard to build within my/our management and control. • Established an ownership structure that would benefit the employees greatly. • Provided better financial stability for the company, as ESOPs don't pay Federal or State taxes (in most cases). • Allowed a long runway to management succession. ESOP has been a great model for our company, and I've heard many of our employees agree. 𝗜𝗻 𝘄𝗵𝗮𝘁 𝗼𝘁𝗵𝗲𝗿 𝘄𝗼𝗿𝗹𝗱 𝗰𝗮𝗻 𝘁𝗵𝗲𝘆 𝗯𝗲𝗴𝗶𝗻 𝘁𝗼 𝗼𝘄𝗻 𝗮 𝗽𝗮𝗿𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝗮 𝗱𝗶𝗺𝗲? Because so many have reached out to me over the past few years to hear more about ESOP, I'm starting a group for the express purpose for people curious about ESOP to come in and ask questions. To be clear: 𝗜'𝗺 𝗻𝗼𝘁 𝗮 𝗰𝗼𝗻𝘀𝘂𝗹𝘁𝗮𝗻𝘁, 𝗜 𝗱𝗼𝗻'𝘁 𝗵𝗮𝘃𝗲 𝗿𝗲𝘀𝗼𝘂𝗿𝗰𝗲𝘀 𝘁𝗼 𝗵𝗲𝗹𝗽 𝗮𝗻𝘆𝗼𝗻𝗲, 𝗜 𝗱𝗼𝗻'𝘁 𝘄𝗮𝗻𝘁 𝘁𝗼 𝗴𝗶𝘃𝗲 𝗮𝗱𝘃𝗶𝗰𝗲, 𝗮𝗻𝗱 𝗜'𝗺 𝗻𝗼𝘁 𝗹𝗼𝗼𝗸𝗶𝗻𝗴 𝗳𝗼𝗿 𝗮 𝗿𝗲𝗱 𝗽𝗲𝗻𝗻𝘆 𝗼𝗳 𝗮𝗻𝘆𝗼𝗻𝗲'𝘀 𝗺𝗼𝗻𝗲𝘆. 𝗠𝘆 𝗼𝗻𝗹𝘆 𝗼𝗯𝗷𝗲𝗰𝘁𝗶𝘃𝗲 𝗵𝗲𝗿𝗲 𝗶𝘀 𝘁𝗼 𝗽𝗿𝗼𝘃𝗶𝗱𝗲 𝗮 𝗽𝗹𝗮𝗰𝗲 𝗳𝗼𝗿 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗰𝗹𝗼𝘀𝗲𝗹𝘆-𝗵𝗲𝗹𝗱 𝗼𝘄𝗻𝗲𝗿𝘀 𝘁𝗼 𝗮𝘀𝗸 𝗴𝗲𝗻𝗲𝗿𝗮𝗹 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻𝘀, 𝗮𝗻𝗱 𝗳𝗼𝗿 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗘𝗦𝗢𝗣𝘀 𝘁𝗼 𝘁𝗲𝗹𝗹 𝘁𝗵𝗲𝗶𝗿 𝘀𝘁𝗼𝗿𝗶𝗲𝘀. If it goes well, maybe you'll be inspired to join, learn, and consider this as a very viable way to reduce your own risk while setting your folks up for reward. See you on the other side? (link in the comments) #ESOP

What if your exit strategy could create a real win-win? Employee Stock Ownership Programs support exit planning while protecting long term value. You sell ownership to your employees through a trust. Your team builds equity over time. Your company keeps operational stability. This structure aligns incentives across the business. Key founder outcomes • Capital gains tax deferral under qualifying rules • Gradual ownership transition instead of forced timing • Continuity of leadership and customer relationships • Strong alignment with legacy goals Key employee outcomes • Ownership without personal cash investment • Retirement wealth tied to company performance • Higher engagement and retention • Clear connection between daily work and value creation Key company outcomes • Deductible contributions tied to debt repayment • Strong cash flow visibility • Improved productivity through ownership mindset • Long term stability during leadership transition An ESOP trust purchases shares using bank financing or seller notes. Company contributions repay debt. Shares allocate to employee accounts based on compensation and tenure. This model fits owners seeking liquidity without external buyers. This model fits leadership teams focused on continuity and workforce alignment. Exit strategy shapes culture, capital flow, and long term performance. Your structure decides who benefits from future growth.

The magic in startups that really work goes far beyond just an option pool and “skin in the game” - it’s deeply rooted in a culture of employee ownership. When employees feel true ownership in the company's future, they bring discretionary effort, innovation, and grit to help it thrive. This is the defining strategic advantage of a startup. Rather than view people as expendable resources, smart founders cultivate an employee ownership culture that makes every team member feel like an indispensable, strategic partner. This builds an unbeatable competitive advantage no amount of capital or coding can replicate. What does it mean to build employee ownership? Making sure everyone has the knowledge they need to make strategic micro-decisions in a holistic context. What that can look like: - Provide significant equity so everyone has a meaningful financial stake - Educate all employees on how the business works and their role   - Share performance data  - Train people to interpret financials - Embed employee involvement through feedback channels and empowered teams - Align work practices with core values - Co-create personalized career paths, make sure people know they can grow here (and in a timely manner) - Foster open and direct communication that’s treated seriously - Intentionally immerse new hires - Show care for people’s whole lives via work-life balance flexibility, well-rounded benefits, mentoring opportunities, etc. When everything is connected and all employees are treated as insiders through an ownership mindset, it feels less like a multi-headed hydra and more like a unified, tuned-in team. This fusion of business strategy and cultural values is the special sauce for startups that ascend from mundane to magical. Let this be a reminder or (hopefully) an affirmation ✨ Wanna know if your company is walking the walking of ownership culture? If you asked a random employee “why are you doing that?” how quickly their answer gets to something meaningful… is your answer. 

Publix is the largest employee owned business in the United States. Current and former employees own 80% with the remaining 20% held by the founder’s family. Every cashier, stocker, and deli worker owns shares through an employee stock ownership plan at no cost. Research has shown that employee-owned companies grow 2.3-2.4% faster per year and experience lower turnover than competitors.¹ Publix is the proof with $60 billion in revenue, and 255 employees that all own a part of the company. After 6 months and 500 hours of work, employees are eligible. The company allocates shares annually based on compensation, and after 6 years, shares are fully vested. The psychology behind it is that when you own a piece of the outcome, you care about the outcome. When a deli worker knows that better service means higher profits and more valuable shares in their account, they're motivated to take actions that benefit the business. Because of these properly aligned incentives, Publix is now one of the most successful grocery chains in America, with cult-like customer loyalty and notably low turnover. When everyone has skin in the game, everyone rows in the same direction.

The Strategic Advantage of Broad Employee Ownership in Insurance: Stories from the Front Lines After nearly 30 years in the insurance brokerage world, I've seen just about every ownership model there is. But nothing—and I mean nothing—drives sustainable growth and creates a magnetic culture like #employeeownership. At Gibson, employee ownership isn't just a benefit program—it's our competitive advantage. Here's why: 1. The "Owner Mindset" Changes Everything: When a producer or account manager has skin in the game, they approach client conversations differently. They're not just building a book—they're building equity. Our team members think twice about that extra follow-up, go the extra mile on claims advocacy, and push harder on markets. Why? Because owners serve differently than employees. 2. Recruitment and Retention Numbers Don't Lie: While the industry averages 15-20% turnover, employee-owned brokerages consistently outperform. At Gibson, our retention rate of 90%+ speaks for itself. And the stories I hear from our team members about saying "no thanks" to the many recruiters that call, make me proud of what we've built. 3. Client Stability = Better Business: Our clients know that they're being served by an owner, every time. They're not worried about their advisor being recruited away or their service team constantly changing. In an industry built on relationships and trust, this stability is gold. 4. Succession Without Disruption: I've watched too many agencies implode during ownership transitions. A broad employee ownership model creates the smoothest possible succession plan—a gradual transfer that ensures continuity for both clients and employees. No drama, no culture shock. 5. Community Investment: When your agency is owned by your people, it stays rooted in your communities. The decisions aren't made in a distant corporate office but by the same folks who live and work where your clients do. That local connection matters. I recently asked one of our newer producers what surprised them most about working at an employee-owned firm. Their response? "I never realized how much more seriously clients and markets take us when they understand we're owners, not just salespeople." For those considering career moves in our industry: look beyond the initial offer letter. Ask about ownership opportunities. The long-term difference in wealth creation and career satisfaction is profound. Who else has experienced the impact of employee ownership in insurance? Would love to hear your stories. #InsuranceLeadership #EmployeeOwnership #InsuranceCareers #AgencyCulture #WingsUp