MANAGEMENT by Madeleine Pryor Leading through change to build purpose and legacy with employee ownership If you attended this year’s Enterprising Women Conference, you may have heard our CEO Betsy Bassan describe employee ownership as a win-win-win: for the selling owner, for employees, and for the business and its community. The ESOP (employee stock ownership plan) model allocates company stock to employees as a retirement benefit at no cost to them. It is a powerful way to plan for legacy, succession, build employee wealth, and foster the kind of engagement that drives growth. In many ways, it represents a more inclusive form of capitalism—one that works better for all parties—owners, employees, and the broader economy. The transition to employee ownership can feel like a significant shift. Because ESOP transactions are typically confidential until finalized, employees often receive the news all at once: they are now co-owners. That can be a lot to process. However, with aligned leadership and a strong communications approach focused on building an ownership culture, this change can become transformative for your company. At Panagora Group, we have navigated major change throughout our 15-year history: rapid growth, the shift to remote and hybrid work during COVID-19, becoming employee-owned, and most recently, an existential shock to our industry following the dismantling of our primary client, the U.S. Agency for International Development (USAID). Resistance to change often stems from fear of the unknown, fear of failure, and lack of trust. Through proactive communication and a deep commitment to our ownership culture, we navigated these challenges and built a resilient company while living our values. Panagora founder and CEO Betsy Bassan built her career in global health and development before launching the company in 2011. From the beginning, she envisioned a triple-bottom-line business model focused on profit, people, and planet—and hoped to transition to employee ownership if the company succeeded. Which it did: in the 14 years before USAID was dismantled, Panagora grew to a $32M business with a global team of 500 working in 69 countries. Among our industry recognition, we were most proud of being named USAID Small Business of the Year in 2018. This sealed Betsy’s plan to become an ESOP at our ten-year milestone and realize her vision for inclusive capitalism, legacy, and succession. In 2021, Betsy transitioned Panagora to an ESOP and sold 49% of the company to employees with help from ESOP Services Inc., while retaining 51% to preserve our woman-owned small business status—an important feature in government contracting. In an ESOP transaction, an owner sells all or some shares at fair market value to an ESOP trustee, which holds those shares for distribution to employeeowners in a third party administered retirement account. Employees don’t pay for shares; they earn them on a vesting schedule. The result is that employees benefit directly from company success, with earnings over 2.5 times more than 401(k) accounts. We approached the ESOP transition with intentionality. With limited ability to prepare staff in advance, we focused on clear, transparent communication immediately following the announcement. We built both a short-term rollout plan and a longer-term strategy grounded in strategic communications and change management best practices, recognizing that understanding and trust would be critical to success. Best Practice 1: Develop and articulate a vision To build understanding and buy-in, we articulated the “why” of the change and explained the meaning behind it. We framed employee ownership as a natural extension of our mission and values, reinforcing our commitment to a deep ownership culture and shared success. We explained how the ESOP helps employees build wealth at no cost to them, while making the company stronger. In our messaging, we explained how the ESOP connects to our mission of “making our world a better place for good,” specifically by giving employees a better deal. Best Practice 2: Communicate proactively and often We were intentional in pulling our “why” narrative into our overall messaging internally and externally. We prioritized transparency and repetition of key information. We integrated ESOP messaging into regular communications, shared business performance openly, and further developed opportunities for dialogue. This consistent, two-way 3rdtimeluckystudio / Shutterstock.com 78 enterprising Women
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