Sudbury-based engineering firm BESTECH is for sale—but not in the sense you may think.
This year, BESTECH introduced an Employee Stock Ownership Plan (ESOP), a rare move for a small- to medium-sized business, in an effort to reward and retain employees for their service. Under the plan, eligible employees can purchase shares of the company and reap the benefits along the way.
Pat Dubreuil, BESTECH’s vice-president of operations for sales and marketing, said the reasoning behind the move is twofold. After watching the company grow at an impressive 30 per cent per year over the last five years, owners Marc Boudreau and Denis Pitre wanted to reward employees by letting them buy in to the company.
“They’re seeing this company grow and it’s building well and they want to share this wealth with their employees,” Dubreuil said. “They’re saying, ‘We’re being successful and it’s because of the employees, and we want to make sure that you guys benefit in our growth.’”
They also regard the ESOP as a smart retention strategy. As stakeholders, employees have a vested interest in the company’s success, so by fostering a sense of responsibility and ownership, the employees will continue to work hard for success because they want to, not because they have to, Dubreuil said.
In this inaugural year, five per cent of the company was up for grabs, and another five per cent will go up for sale next year. Dubreuil said the program was an overwhelming success.
“We sold all of the shares that were issued in this first offering,” he said. “We had a 54 per cent participation rate from our employees. That’s phenomenal when you think about it. It shows that we’re doing the right thing because people are responding like we hoped they would.”
Only seven per cent of privately owned companies choose to go this route, but those that do see “exponential growth,” Dubreuil said.
Behind the decision to introduce an ESOP is the belief that, after an employer’s basic needs are met—a good wage and good quality of life—employees crave a higher level of motivation and satisfaction from their work.
BESTECH believes that satisfaction can come from working for oneself and contributing to a vibrant organization that’s generating interest in the industry. BESTECH was named one of the top 50 Canadian small to medium companies to work for in 2012.
According to the criteria, employees are eligible to enrol in the ESOP after completing one year of service (an exception was made for the first round, however, and employees with six months’ employment were eligible). Their suitability is then weighed around tenure and salary. So, an employee who has been there a long time can purchase more shares, for example, while an employee who hasn’t been there as long, but who makes a higher salary, based on expectations in their role at the company, can also purchase more shares.
Stock and cash dividends are issued to shareholders on a regular basis, and a profit-share program is also in place, which disseminates profits throughout the company.
Already, the plan is having the desired effect, Dubreuil said. Immediately after being introduced, the ESOP was generating buzz amongst employees and the ownership mentality kicked in. The company is now trying to increase transparency and improve communication to foster a sense of stability.
Innovative thinking has raised the company’s profile, Dubreuil said, and as the company is awarded high-profile Sudbury contracts for projects like Xstrata Nickel’s Fraser Morgan Mine and Vale’s Totten Mine, the result has been a host of good-quality applicants vying to work for BESTECH.
Once the success of the ESOP program is known, Dubreuil believes other similarly sized companies may follow suit. And he views that as a good thing.
“In the end, we realize that if we help other companies in the area, it brings up the talent pool, because it attracts more people to Sudbury and creates a better quality of life for everybody,” he said. “That affects our employees, so that’s a very focused approach.”
