When Margo Baldwin started the independent publishing company Chelsea Green in 1984, she had plans to eventually sell her ownership. But 28 years later, rather than sell to a venture capitalist and risk the potential for the company to lose its independent integrity or to be moved from its home in Vermont, Baldwin moved the company ownership from the employer to the employed.
On July 2, in a step that more and more companies have been taking, Chelsea Green joined the ranks of companies turning ownership over to their employees in a new business model.
“I think the reason you don’t see more companies moving this direction is because they take the traditional model for granted or they want more money,” said Baldwin. “For us, it came down to how do we keep our company independent and in Vermont? We already had some of that shared ownership culture so it wasn’t a big stretch. Becoming employee-owned goes along with a democratic workplace.”
The democratic workplace of Chelsea Green is comprised of 21 employees, just one worker more than the recommended 20 employees to start an ESOP (employee stock ownership plan), and Baldwin said her former employees have been “very pleased” about the change.
“I’m pretty proud of our founders for transitioning to this new business model” said Joni Praded, senior editor. We’re a pretty driven staff, so we’ve always been focused on doing well and giving it our all. Having a stake in the outcome, though, makes it even more worthwhile.”
Their investment in the company comes at no cost to the employees, Baldwin emphasized.
“The employees don’t contribute a dime,” she said, adding the switch in ownership is designed for the betterment of the company and its employees, without creating financial strain on them. Baldwin considered not only her employees’ finances, but also the feelings of her original investors, those closest to her.
“There were people, family and friends, who said that they wanted to get their money out, but we didn’t have any way to do that yet,” said Baldwin. Fortunately they were able to find a way to finally free up that money. “Doing the ESOP solved a lot of problems all at one time, and it was affordable.”
An ESOP is an employee benefit plan that makes the employees of a company owners of stock in that company. And oftentimes, according to the ESOP Association, an ESOP is used as a technique to finance a corporation because, unlike most other employee benefit plans, an ESOP allows participants to borrow money.
“From the employee’s point of view, what’s not to like? she asked. “They’re being given something that is in addition to their regular compensation and which doesn’t really require them to do much but share in the outcome.”
With the transfer of ownership complete, Baldwin is now focusing on integrating the new policy into the workplace.
Fortunately, she noted, the outcome of Chelsea Green’s new challenge is likely to be a good one because the company is flourishing at a time when many publishers are not. It’s leading the industry in books on sustainable living, an area it prides itself on diving into before many other publishers. The editorial strategy is to keep ahead of the curve, and Baldwin predicted what she thinks is on the horizon now that the rest of the world seems to have caught up on topics of organic food and sustainability.
It’s clear the titles Chelsea Green is putting on shelves are reflecting this cutting-edge strategy as the company joins the 11,000 other employee-owned companies representing about 12 percent of the workforce in America in 2010.
“Permaculture is beginning to make an impact, as is agroecology,” she said. Permaculture refers to agricultural systems modeled from natural ecosystems, while agroecology brings to bear ecological principles in agricultural production. And, as a good salesperson, Baldwin added: “We have some books coming out on building a locally based economy and self reliance.”
“We’re a mission-driven company, so those of us who work at Chelsea Green do so because we believe in the books we produce,” said Praded. “We’re working for change on many fronts, and we do that by publishing books that stimulate new ideas and spread solutions to the slew of social, political, financial, agricultural, and ecological crises that we all face today. Employee ownership allows that mission to carry into the future – which is perhaps the most personally rewarding aspect of the ownership change.”
Gar Alperovitz, one of Chelsea Green’s foremost authors, has written extensively on how employee ownership will revolutionize the country and world. “Chelsea Green walks the walk as well as talks the talk. It’s a place of integrity and commitment,” he said. One of my best publishing experiences got better this year with the move to employee ownership!”
It’s now been over four months since the switch officially happened, and Baldwin is pleased.
“Overall, the morale is very good, sales are up for the company 30 percent, and we’ve just had our fourth New York Times bestseller, The Art of Fermentation, by Sandor Katz,” said Baldwin. “Our authors, too, seem pleased to be working with a company that is so mission-oriented, and I think we’ll see more authors coming our way because we’re employee-owned.” She added an observation: “I think the shift to employee ownership has resulted in staff taking on more responsibility and commitment to the future, and people seem excited to be working here.”
At the start of the change, Baldwin had expressed concern at the process of building the new ownership into their workplace. “I think the hard part is going to be getting everyone involved in creating an employee-owned company, but the upside is now people get to see the results of their efforts more clearly through the sharing of financial information and an understanding of cost structures and other things on the business aspects of running a publishing company.”
But months later, the company has managed to implement the new ownership with little disturbance, and it is still flourishing.
“There hasn’t been a change in management or organization,” Praded said. “But, we’ve hired a few new positions as we continue to grow.”
Said Shay Totten, communications director, “The ESOP was about vesting employees in the ownership of the company, but we still have our same jobs/roles, and the work has been as rewarding as ever. With the move to employee ownership, I think we all feel more vested in the company’s own future and sustainability, and that will only grow over time as we each take our leadership role as employee owners to ensure that our mission remains vibrant and our bottom line healthy.”