By Denny Scott & Melissa Wood
This year Burns & McDonnell is celebrating its 30th anniversary of being employee-owned, and we have a lot to celebrate. We’ve come a long way in the past 30 years, and we owe much of that to our Employee Stock Ownership Plan (ESOP). To us, employee ownership is more than a tax designation; it’s a way of life.
The Road To Ownership
Back in 1985, Burns & McDonnell faced an uncertain future. At the time, our owners were a steel company that was in financial turmoil and needed to divest some of its most profitable assets in order to keep the core business afloat. We were up for sale and a German manufacturing company wanted to buy us. That’s when our 10-person management team discovered employee-ownership and made it their mission to save the company.
The decision to become employee-owned came down to one thing: people. Our management team wanted to prevent the potential of another buy-out in the future, and they felt strongly that the long-term viability of the firm would be best secured in the hands of current, active employees.
The road to ownership wasn’t an easy one. Like any journey worth taking, there were twists, turns, and dead ends. At one point, it almost looked like we wouldn’t make it, but we eventually finalized a price with our then-owner and obtained financing from a local bank.
The rest, as they say, is history.
S ESOPs Provide Substantial Benefits
Today, Burns & McDonnell is an S-Corporation ESOP (S ESOP). When Congress created S ESOPs in 1998, they wanted to encourage and expand retirement savings by giving more American workers equity in the companies where they worked. From personal experience, it’s been a great success.
With the tax-deferred savings, we’re reinvesting in our company, which is part of why we’re growing and adding jobs.
A Culture Of Ownership
Our S ESOP provides an added sense of retirement security for our employees, but it also drives our culture. Because we all have a financial stake in the company, we determine our success.
The fact that we don’t have any single person who owns more than 1.5 percent of shares in the ESOP means that our company is owned and run by the employees. There’s a sense of pride that’s not common among non-S ESOP companies. Our people have skin in the game, and it shows in the work we do for our clients and in the attitudes of our employee-owners.
Our employee turnover rate is 4 percent — the national average is just over 16 percent — and we believe our ESOP is a big reason for this. The S ESOP model cultivates a genuine sense of ownership that permeates through our entire corporate culture, and encourages long-term thinking by tying our retirement savings to the success of the organization. People stick around to see that come to fruition.
How The S ESOP Has Driven Growth
We attribute much of our growth and success throughout the past 30 years to our ESOP. But being an S ESOP has made us an even stronger company.
From 1986 to 2002, we grew from 600 employees to more than 1,600, and our revenue increased more than 1,100 percent. Since 2002 — when we converted to an S ESOP — we’ve grown to more than 5,100 employees, and our revenue jumped from $525 million to more than $2.6 billion.
Being an S ESOP has helped us ride the tide through two recessions. When many companies were losing business and downsizing staff, we were picking up new business and growing. During the most recent financial downturn, which depleted many retirement accounts, our ESOP remained afloat, and even thrived.
The ESOP is an important part of our history and who we are today. Employee ownership drives performance – our people are successful when the company is successful, and there’s no better motivator.
Burns & McDonnell is a company made up of more than 5,300 engineers, architects, construction professionals, scientists, consultants and entrepreneurs with offices across the country and throughout the world. We strive to create amazing success for our clients and amazing careers for our employee-owners. Burns & McDonnell is 100 percent employee-owned and is proud to be No. 16 on Fortune’s 2016 list of 100 Best Companies to Work For. You can learn more at www.burnsmcd.com.
Denny Scott is Chief Financial Officer at Burns & McDonnell. He began his career at Burns & McDonnell as a tax manager in 1991 and held roles as Director of Human Resources and Chief Administrative Officer before landing in his current role. Denny oversees the details of managing Burns & McDonnell’s ESOP. He’s been on ESCA’s executive committee for 7 years and is currently the incoming chair.
Melissa Wood is Chief Administrative Officer at Burns & McDonnell. She joined Burns & McDonnell in 1993 as a Human Resources assistant and spent 22 years in various HR roles at Burns & McDonnell. She assumed her current role in 2014. Melissa leads the way on championing Burns & McDonnell’s employee-owner culture and is focused on continuing to maintain Burns & McDonnell’s status as one of Fortune’s 100 Best Companies to Work For.