March 30, 2023

Employee ownership for all: an alternative to the ESOP

Davies

When you think about an employee-owned firm in the AEC industry, you might picture an employee stock ownership plan (ESOP). But that is not the only way. With creativity and careful planning, you can create another business model that affords ownership opportunities to all employees.

Enter the founders of BHC Consultants — Gary Bourne, Martin Harper and Craig Chambers — who, in 2006, were inspired to create a locally owned and managed consulting engineering firm after the company that they had been working for was acquired by an international conglomerate. At the time, plenty of new firms were entering the scene, but being locally owned meant something different to Bourne, Harper and Chambers. They believed that ownership should be easily attainable for any employee of the firm, not just those at the most senior level or with long tenures.

Photo courtesy of BHC Consultants [enlarge]

Staff meetings are used to share updates, build comradery and have fun together.

The firm was set up as a limited liability company and — after being with the company for about one year — any employee may buy ownership units, up to a maximum of 15%. This truly means ANY employee — from the senior project manager to business services, and marketing and administration to the CAD technician and the first-year engineer just out of college. The 15% maximum ownership stake means that no single person ever has a majority share of the company. This important factor means that decisions are made in the best interest of each and every employee and client. By prioritizing people over profits and creating an environment of empowerment for our staff, BHC Consultants has seen a consistent 10% year-over-year growth since the founding of the firm.

RECRUITMENT AND RETENTION

In this ultra-competitive job market, BHC’s unique ownership structure has contributed to positive effects on recruitment and retention. Project engineer Madison McCrosky joined BHC in 2021, and ownership was a major factor in her decision.

“The ability to become an owner after one year of employment is one of the many reasons that I chose to come work for BHC. I especially like that ownership is offered to all employees, regardless of whether you are an engineer or not. We are all working towards a common goal of providing great service to clients, and I believe everyone should be able to share in the benefits of employee ownership.”

Of our 84 employees, 55% have opted to become owners and it has led to longer tenure with the firm. According to the Bureau of Labor Statistics, the median tenure for employees in professional and business services is 3.7 years. At BHC, the median tenure of staff who are owners is seven years compared with five years for those who have not opted to become an owner. Twenty-nine percent of employees have been at BHC over 10 years, including 12% since the firm’s inception in 2006. Voluntary turnover is also very low, with just 3.7% in the last year as many other firms in the region were experiencing much higher turnover coupled with the tight labor market to fill open positions.

“We hire to retire from BHC. We support the professional development and growth of our staff through continuing education and the opportunity to work on a variety of project assignments,” explains president emeritus Ron Dorn.

MANAGEMENT STRUCTURE

The company is overseen by a seven-person board of directors that enables timely, local decision-making. The board includes the permanent positions of president, executive vice president and business operations manager, and four managers who are elected by the employee-owners to serve staggered three-year terms so that there is always fresh input on the board. In fact, any employee of the firm can be voted into a board management position; ownership in the company is not a prerequisite.

As the company has grown over the years, BHC recognized that the board of directors needed additional resources to support informed decision-making. This was accomplished through the creation of five committees that include strategic planning, governance and nominating, finance, risk management and compensation. The committees research their respective topic areas and make recommendations to the board for the final decision.

Because BHC was created in reaction to an acquisition that removed local ownership and management, it was important to the founders that the firm not be easily “acquirable.” The operating agreement was crafted to require a 60% super majority of the voting shares to approve an acquisition. That ethos of independence has continued to be important as the firm enters its fourth presidency, with the ownership group united in the belief that this operating principle creates certainty for the future of the firm and the clients served.

“After being with BHC for almost two years, I decided to become an owner of the company. Every day I get the opportunity to work with optimistic, driven and passionate folks who make BHC a positive workplace. Our collaborative culture and emphasis on building relationships with our clients and with one another are key determinants in driving the success of the company. As an owner, I feel more empowered in my work as I know that my efforts, together with everyone else’s, lead to meaningful solutions for our clients and ultimately our communities,” said staff engineer Kevin Garcia.

In January, then-president Ron Dorn announced his planned retirement. As president emeritus, Dorn will work full time until mid-year, and then part time through the end of the year. He fostered a culture that was open and welcoming, providing steady leadership that was critical to the success and growth of BHC. With Dorn’s retirement, Jim Gross was elected president of the company, and Cameron Ochiltree was elected executive vice president and director of engineering.

Gross’ career includes 33 years as a consulting engineer, working on drinking water and wastewater projects from planning though design and construction. Ochiltree’s background includes over 26 years in consulting engineering with an emphasis in water and wastewater treatment facility design and construction. “BHC is a very successful company built on a strong foundation. Together with Cameron, our goals are to continue that success and honor the BHC culture, while maintaining a high level of service to clients and providing for continued growth of the firm,” said Gross.

CLIENT BENEFITS

BHC believes that clients benefit from a company culture and local ownership that is deliberately cultivated. For over 17 years, our structure has led to steady and sustainable growth, which has allowed us to hire exceptional talent who are supported and valued. With thoughtful planning and strategy during the formation of the company, BHC has created a stable, talented workforce with low turnover and high morale.

“Because we are intentional and united in our vision for the firm, we don’t see uncertainty in our future,” explained Gross. “With the company stability we have created, we can focus on working on the projects we’re passionate about with clients we’re aligned with, including water districts, sewer districts and municipalities, while providing the high-quality service they need and deserve.”

Jon Davies is the director of client services for BHC Consultants, a member of the board of directors and an employee-owner.

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