The Power of Employee Ownership

Twenty years ago, Point B was just an idea in the minds of three friends looking to create better options for consulting clients and genuine quality of life for consultants. Some said it couldnt be done.

Today, Point B is a $120 million management consulting and venture investment firm with practices in seven major markets across the country. And as of March, its

100 percent owned by its 500 employees who have not just bought the company; theyve fully bought into our founding idea.

Achieving 100 percent employee-ownership is the latest milestone in the evolution of an ownership culture thats been part of Point B since we launched in 1995. Growing a firm where employees are encouraged to think and act like owners has been essential to Point Bs success since Day One. We always intended for the firm to be owned by the people who ran it.

We began transitioning ownership in 2008, when my two co-founders and I sold 20 percent of the firms equity to employees via an Employee Stock Ownership Plan (ESOP). It took five years for the 20 percent purchase to be fully paid off. During this time, we learned a lot about employee-ownership and realized there was an even greater opportunity if we could get to 100 percent employee-ownership sooner rather than later.

Why the rush? We learned the advantages of employee-ownership can be very significant:

Employee-owners are personally invested in the growth and well-being of the firm. All the work, hours, energy and ideas that employees put into Point B make the firm more valuable, and this value will now flow back to them through their ESOP accounts. Our employee-owners have a clear stake in the fortunes of the firm, and they make day-to-day decisions accordingly.

An ownership mindset comes through every day, in ways large and small, throughout the firm. Now more than ever, when a client meets with a Point B consultant, theyre meeting with an owner, someone with an owners pride and a vested interest in delivering our award-winning client service.

Long-term strength and stability are deeply embedded throughout the firm. Employee ownership ensures that the things we love about this companyour purpose, our mission, our culturewill endure. We know that the values we care aboutputting our clients interests first, taking care of each other, and making a real impact in our communitieswill forever be at the heart of our firm. For the founders, employee ownership offers a healthy succession plan that gives us the opportunity to stay engaged in the firm for the long haul, while ensuring that the firm endures with or without us. In short, Point B is built to last.

Employee ownership provides significant tax advantages to the firm and, potentially, our employees. S corporations that are 100 percent owned by a non-taxable entity, such as an ESOP, do not pay income tax. The money that we used to pay out in tax distributions42.5 percent of the firms income at last countwill now flow back into the business and will help pay off all of our employee owners when they retire.

FInally, as I look ahead to Point Bs next 20 years, employee ownership is a clear, compelling and ongoing competitive advantage in a world where the demand for top talent is intense and growing. Point Bs product is our talent, and our ability to attract and keep the best people is a competitive necessity.

We are not alone in discovering the power of employee-ownership. In fact, three of the five national best consulting firms to work for (Point B, Bain & Company and North Highland) are fully owned by their employees. I expect well see more companies in talent-intensive industries make a move to employee-ownership. This trend will accelerate as thousands of privately held businesses owned by baby boomers begin planning the transition of ownership to a new generation.

Each company that transitions to employee ownership puts pressure on companies whose employees dont have a full stake in the game. After all, why spend your career at a company whose profits bypass you when another firm offers the respect, recognition and financial rewards of ownership? Its a question that will be shaping many careers and companies in the years ahead.

For Point B, employee ownership is the right move. It confirms what weve believed all along: that taking care of our people will always be the best way to serve our clients.