ESOP Builders Inc. - Newsletter

An increasing number of companies are implementing wellness programs to promote the health of their employees. One of the challenges of these programs is getting enough employees involved to generate a prompt return on investment.

California-based Vigilent is a privately held company that has approximately three-quarters of its equity owned by employees. The remaining quarter is owned by angel investors and venture capital firms. Vigilent generally allocates options to employees based on how much they will likely contribute to the success of the company. The company's new wellness program was designed to provide another avenue for employee involvement in the company.

The wellness initiative is managed by SlimKinetic, a corporate wellness firm that specializes in proactive programs. Mark Housley, the CEO of Vigilent worked closely with Brenda Given, the CEO of SlimKinetic to develop a program with the realization that the healthier employees are, the harder everyone can work.

Housley said that by rewarding participating employees with stock options, the program demonstrates the company's commitment to wellness, while linking employee ownership and wellness in a meaningful way.

'We want to create an ownership team experience that brings people together to accomplish difficult tasks," he says. "That applies to everything we do at the company, including wellness."

He adds, "wellness is a priority because sick people make less effective employees."

The program includes both individual and group components and is open to all employees. The program starts with a health assessment that used fitness standards adjusted to age and gender to measure healthy weight, aerobic capacity, and strength.

Participants who meet the health standards receive stock options immediately, and again each year for maintaining their health. Those who are not healthy can earn the equity by making measured progress.

Participants who need to improve their health are provided with goals, a training program, quarterly checkups, and support in addition to option incentives. The training program includes classes in fitness, nutrition, and posture.

Every quarter, participating employees meet with a wellness consultant from SlimKinetic to evaluate their progress. The meetings go over challenges and achievements and help provide accountability to keep the process on track.

According to Given of SlimKinetic, in the most recent evaluation all participating employees made positive changes in one or more of the following areas: posture, nutrition, body weight, or exercise. In addition, 50% of participants reported an improvement in stress levels.

Housley says these types of changes are vital to the success of the company. "We have competitors who are literally 10,000 times bigger than us. We outgun them because we dedicate ourselves to our projects, which requires us working unnaturally well together. We need an edge, and wellness is that edge."

SlimKinetic's Given believes that companies that have wellness programs generally benefit from a marked reduction in workers' compensation claims.

"Unhealthy employees may be at work every day," says Given. "But they are not working at 100%. Improving posture, body weight, and fitness levels leads to greater productivity and employees who are working at their full capacity."

Housley agrees. "I've already seen attitudes improve … the support and team building encourages people to support each other."

Vigilent is looking to achieve a 50% improvement in employee health measures. With small companies, that level of improvement will pay for itself very quickly, says Given. Connecting wellness to employee ownership is an approach companies should consider when developing or updating their wellness programs.

- Excerpted from the NCEO Employee Ownership Report

Herman Miller is an iconic employee-owned furniture manufacturer that is almost as well-known for its distinctive company culture as it is for its Aeron chairs.

Chairman of the board at Herman Miller is a man named Max DePree, author of the best-selling book Leadership is an Art. When asked about the most important lesson he has learned on sustaining his company's success, he answered: "We hired managers for technical skills first and assumed we could teach the culture. That was a big mistake and it created major problems. Now we hire for culture first."

Since learning that lesson, the company has instituted an elaborate hiring process. After an initial screening for tech skills, candidates go to the company lodge situated on a lake and filled with Herman Miller furniture.

There they can go through as many as eighth to twelve interviews. They spend days learning the company culture, sometimes just through informal conversations and stories. Interviewers are people from all levels who best exemplify the corporate culture. Once hired, the new employee is assigned a mentor, called a water carrier, who help guide them the rest of the way.

- From the NCEO newsletter

New NCEO Survey of Equity Compensation in Private Companies

The National Center for Employee Ownership has recently completed a new survey of equity compensation practices in private companies. It received 201 completed surveys from companies and 32 from service providers. Respondents represented a broad range of entrepreneurial companies, and unlike other surveys of equity in private companies, this one does not just focus on high-tech companies or pre-IPO companies (in fact, only 10% of the respondents think they may do an IPO). Some highlights include:

- Loren Rogers, National Center for Employee Ownership

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