Victor Aspengren, Dr. Randy Spencer, Shane and Tom Harms
(This episode was recorded in October of 2021.)
Key Episode Take-Aways:
1. When people can see a true stake in the outcome, they are more likely to put their best effort forward and own their work. (click to jump to this topic below) But if I could show them, the importance of it, you know, show them the value of owning it. They might be near, hit every deadline that we set out there because the team knew what this individual had to do to make this individual successful and so on and so forth. Because everybody realized, you know, like my dad alluded to the stake in outcome, they owned it, they truly own it. So, they either you know, lay down not give their best effort, but the outcome would suffer because they didn't own it,
2. Having great culture within your company can help you navigate through tough times, and also help to attract and retain employees. (click to jump to this topic below) that stickiness that you talk about is incredibly important to us and having the culture put us at a great advantage during this time because we don't lose many, and we do attract the best and the brightest out there. We still could hire 100 people tomorrow and probably put them to work. But having said that, the culture is able to help us really attract we, I mean, at the last emergency doctor convention, they were offering $100,000, signing bonuses for emergency veterinarians, they were offering new cars. I mean, this is bribery up and down. And we just don't do that. We just say, look at us what we have, what your future will be what it's like here.
3. Different ways to get new employees to engage and buy into ESOP. (click to jump to this topic below) One, we talk about it in that opening interview, we want them to be interested in that that's part of whether they join us or not. But then in our onboarding process, we start right off talking about the Great Game of Business and now ESOP's. I mean, we have a video that we show about ESOP's telling them about it. And then I mean, right away, they know that they're expected to be to our weekly huddles, to our monthly huddles, monthly huddles are absolutely required.
Continue scrolling to read the full episode transcription.
Welcome to the "Change the Game" Podcast. We share stories of open-book management and highlight capitalism at its best. Thank you for tuning in to this episode of the "Change the Game" Podcast. This episode was recorded at a live roundtable event discussing the benefits and pitfalls of being an ESOP company. It is not required to be an ESOP company to enjoy the benefits of the Great Game of Businesses practice the principles, but they definitely pair well together. For more information on ESOP's, download our new white paper, Five Rules For Building A True Ownership Culture Inside An Employee-Owned Company, at greatgame.com/ownershipculture.
Victor Aspengren 0:44
Well, welcome everybody to this is the third ESOP roundtable and this series of the Great Game has been putting together my name is Victor Aspengren. They've asked me to facilitate this one again. So, this will be my third facilitation. So, this is ESOP as a legacy. So, we've got some guest panelists here, and welcome, everybody. We've got the chat down there. If you have any questions, or any thoughts as we go along today, feel free to put those in there, we can address those questions and or thoughts. So, to get started today, let's do introductions. So, we'll go with into the room into the view with two people. So, I'll go with Shane first. Shane, would you like to introduce yourself and give us your background?
Shane Harms 1:30
So, my name is Shane harms. I'm a supervisor at new stream enterprises sister company of SRC started with News Stream, essentially right out of high school, I went to SBU for a year and came back to Springfield got a job, flex time at new stream when I was 19. And so been working with news stream ever since. And then actually, Sunday was my 11-year anniversary. So, I've been with news stream for 11 years, essentially held just about every operational position that you can hold. And currently, I'm a supervisor of about a 35 person team.
Victor Aspengren 2:18
Tom Harms 2:22
Yes, my name is Tom Harms. I'm a Shane's father. I spent 30 plus years I'm now retired from SRC, but I spent 30 plus years with them all in production. I started out in 86 3 shifts are now automotive engines for GM. And through my travels, I was a team leader, group leader supervisor, and ended up as production manager at the heavy-duty division. So, I spent my total career given projections, putting numbers together, and all that was in production.
Victor Aspengren 3:05
And so, and you are now when did you leave SRC?
Tom Harms 3:10
I retired in 2016. So, I've been retired now for close to five years.
Victor Aspengren 3:16
So that's why you look so young, five years of retirement age goes backwards from that. Did you know that that’s?
Tom Harms 3:24
A good place to live in Victor.
Victor Aspengren 3:25
Yeah, that's right. There you go. That's right. Randy, please go ahead.
Randy Spencer 3:31
Yeah, my name is Randy Spencer. I am a veterinarian have been for over 30 years, bought veterinary practice that I had worked at shortly after I started there and have watched it grow helped it grow from one man practice now, we have what's called first pet veterinary centers, 3-24 Hour Emergency general practice specialty hospitals. We have just over 300 team members have just over 40 veterinarians, like about 44 now. So, things have become different than I ever knew. I mean, it's one of those things where you just sort of feel guided along the way. It's been a great experience. Tried always to do take really good care of our patients and our clients and our team along the way. And so just recently, two months ago, we finished the process of becoming an ESOP. So, on August 16, that happened. Very, very exciting. Our team is super excited about it. We've celebrated it and now we're getting to work it seems like there's a lot of work involved.
Victor Aspengren 4:59
Congratulations on becoming an ESOP. Good for you. So let me I'll just kind of preface this and then we can launch into some stories and thoughts and everything. But one of the things well, maybe I should give a little background on myself. I'm a recovering CEO of an ESOP. I'm a recovering HR director of an Aesop, I've held about every position you can hold within a company inventory warehouse manager, office manager, but at the same time, I'm a bit of a hybrid or some people would say Mutt in the fact that I've also worked for an investment banking company in Chicago on the service side, I've worked in ESOP administration for RSM McGladrey accounting firms. So, I've been on both sides of the equation when it comes to employee ownership and specifically ESOP's. And one of the things over the years I've been in this space since 1999. That's when I joined the company where I learned about ESOP’s, but it was also the company where I learned about Great Game of Business. I went to my first two-day session back in 1999, when I met Jack and Rich and the whole Great Game crew, so I've been hanging around with them for a few years. I'm currently the Vice Chair for the National Center for employee ownership. I've been a board member of the ESOP Association. I've been part of the board of the state Center's employee owner expansion network and I'm also part of a group called the cooperative charitable trust. It's a think tank on employee ownership and more specifically aligned with worker cooperatives, which is another variation of employee ownership. But the one thing I just say you know, ESOP is a legacy and I'll just kind of preferences and Randy you could probably speak to this because you just went through it but I say there's kind of a three legged stool when you think of an owner of a company on you know, they get ready to transition so there's kind of three things that I say are really critical one everybody's got a number you know, when you go to sell your company or quite frankly Tom and Shane when you go to retire there's a number that we're working towards so that we can retire and there's a number that's telling shareholders look at when they sell their business so once the financial to is what I call relevancy. It's how do you stay relevant once you're out of your career is in yours case, Tom, or Randy in your case, how do you stay relevant once you step out of the business because you've been living and breathing this thing forever? And that relevancy is really important. And Tom you've probably found relevancy obviously in retirement you've had for years you know, they it's a process when you go from work to retirement, so that relevancy is a is the second leg and then the third leg is really that legacy. It's what's the legacy Do you want to leave for yourself for the people in your company for your coworkers and the community and everything else so I look at it as a three legged stool when you talk about that so with that, Randy maybe I can launch it to you because this is all fresh for you the emotion of the transaction, all the fun jovial things of putting together the ESOP but you've just went through this emotional and what's your perspective on you know, specifically the legacy because that's what this webinars about?
Randy Spencer 8:19
You bet thanks, Victor. Yeah, quite a process. I don't remember a whole lot fun or jovial, but we made it fun along the way. There was just lots of paperwork. in veterinary medicine, one of the things that's been happening is the buyout of veterinary hospitals I mean, you see it in a lot of industries like human hospitals is just talking even dentists I mean, there's just a lot of groups medical, non-medical, where you have large corporations buying out and so there is truly a heart to veterinary medicine there's reasons why we become veterinarians and that nurses are technicians or CSRS, I mean, whenever people come to be hired on they say, I want to do this because I love animals and they find out not too long afterwards that there's always a person a client closely least of that animal that, that's not what they signed up for. But you have to work with the people too, but for the love of animals and for serving people and so that heart pushes what we do and the people there I mean you have to have money to live but that's not the reason they do it. They do it because they love animals, they love serving and all of that and so bring in corporations and all of a sudden there's a different priority the priority is to the shareholders to profit doing whatever it takes to make money and that means changes in the way that veterinary medicine is done and it to me that's the problem. That's it's changing the heart of what veterinary medicine has been and, if anything, I guess that's at the center of what I want our legacy to be. I mean, one, we want to take the very best care of our patients and to those great clients, we want them to have a wonderful experience and our team along the way our employees, we want them to be successful, and to be self-reliant, and all the things that we've done Great Game the ESOP are intended to get there for them. So that's a, at least a start to the conversation of why we're doing that. I mean, there's a lot of other pieces involved. I can go through a lot of that, but I want to take all the time, Victor.
Victor Aspengren 10:44
No, no that's great. And just for the audience, when did you became an ESOP here just an August, when did you start practicing the Game?
Randy Spencer 10:53
So, the Great Game of Business, we started in January of 2019, we actually visited that very room that say the war room, which I love that name, Steve Baker and that group back in, I think it was November of 2018, and joined in 2019. And we did that intentionally with the idea of creating the culture, first the ownership, employee ownership culture, and preparing ourselves so that we could go into employee ownership, we thought an ESOP, we didn't know that until we went through and looked at everything, and it was the best answer for us. And so, we made the jump. So, we were about what is that? Two to three years in preparation, and then we just pulled the trigger on August 16. This year.
Victor Aspengren 11:46
Great. So, the game was kind of your prerequisite to your ESOP journey is getting that ownership mindset. So, with that, Tom, I'm going to go to you so let's go back to the, quote, beginning of your career, I believe, you know, back in those days, there wasn't an ESOP right, when you first started was there? Or was there?
Tom Harms 12:08
I think there was okay, if it wasn't right when I started vectored was shortly thereafter.
Victor Aspengren 12:14
So right at the same basically, you were playing the Game, and the ESOP all kind of happened at once.
Tom Harms 12:21
Yep, yes, sir. Yeah, I remember. You know, it really caught my attention. That's when SRC was still under just one roof. It was like, where the heavy-duty division is now. So, we really became dependent, we have a huge debt to equity. So, our company had a huge dependent on each other, to do their job. And I can remember, Jack Stack was given our departmental meetings at that time, and he was talking about the ESOP and how if we stuck with it, and, you know, played our part in the, in the game, you know, that by the time we retired, we wouldn't probably be able to afford a new purchase a new home. And, you know, I was a little older Victor, when I started, I was in the 30s. So, I had done construction work and heavy labor work. And for somebody to say, hey, you can have a stake in the outcome here, we'll teach you the rules and teach you the numbers. And hopefully, we can set you can help set yourself up for a great retirement.
Victor Aspengren 13:25
Yeah. So, when you join the company, you had no idea about ESOP's, I would assume is that fair?
Tom Harms 13:31
Victor Aspengren 13:32
Yeah. And so, you said jack talked about it. So, I can, just going back because you guys have lived that journey for many, many years. How critical was it that the leader was talking about the legacy? Because, you know, back then I remember when I was young, oh, you're talking about legacy and long term? It's like, yada, yada, yada. Here's the money in my hand, what's this legacy stuff? You know, where were you at back in those young days when you first started?
Tom Harms 14:04
Well, again, back to when I started, I was 34. When he started talking about the legacy and creating wealth and ownership and whatnot, you know, in hit home with me, you know, I can make the effort with more with my mind as well as my back to help this company succeed. And here's where we're going to be, you know, at the end of the journey,
Victor Aspengren 14:27
Okay. Well, I mean, Shane, you said you've been there 11 years. So, when you first started, did you because your dad worked there. Did you know ESOP's? Did you know this legacy thing or when did it kick in for you? Or was it right when you walked in the door because you came from quote, employee ownership family?
Shane Harms 14:49
Right. You know, I, it took me some time, I think to figure it out, because, you know, I'm still a young kid. I'm getting a job because it's time to grow up. You got to grow up. It's on time, you know, you can't live at home forever. And so, I as you know, my journey through news stream, you start seeing things and it starts making sense and things that, you know, my dad had done through just everyday life based off the teachings that have the Great Game of Business, you started looking back and realizing that, you know, based off what my dad had done, I was already had tendencies of thinking like an owner. And you know, I think the ESOP really hit home for me whenever, you know, I decided probably about three or so years into my career and news stream to go to shareholders meeting to see what this you know, ESOP with the stock price, that sort of thing was all about and my dad's there, his buddies are there, you know, people I look up to people I know through him through my years at news stream, and a number of the stock price comes across, you know, the big screen and I see you know, people they lose their minds over it, and there's cheering there's high fiving You know, we're, we're having a good time and when I see that number, it kind of hit home in that moment that this is this is a major deal. And this is a value to me that maybe I haven't really quiet, you know, bought into yet. And I think from that moment, just knowing what it meant to so many people who have been with the company for so long, it really hit home, and it hit home How fortunate you know, I was to be able to partake in an ESOP. Okay.
Victor Aspengren 16:43
So, Tom, when you look at your legacy, because now you can reflect back on it, you know, as you reflect back on your journey with SRC, and everything. I mean, there's probably some words of wisdom or some moments in there where you had like the aha, and this would even go for Randy because Randy is just starting the journey now with the ESOP and with his whole 300-person team. There's probably some lessons learned that we could all learn from you as you went through it of maybe some pre misconceptions you had is like, oh, I was thinking about it wrong. And then this happened or just when did it really trigger? Like when did that number? Was it in the first year was 10 years down the road? Was it 25 years down the road? when all of a sudden, the actual ESOP account balance you went, I got something really cool here.
Tom Harms 17:32
Well, it was it was really hitting home when I was about 25 years down the road that accumulated some shares, but I would say has as you're going through the process of getting your seven-year verification, or what do I what word? Am I thinking they're saying?
Victor Aspengren 17:56
Tom Harms 17:57
Yeah, when I had my seven-year vesting, thank you, Victor. And you can see that hey, if I quit today, you know, I'd have this X amount of dollars that they take to the bank and invest somewhere else or whatnot. So, I think that's when it really, really hit home for me. And, you know, through that process, I started understanding that the card that the ESOP contribution, the more shares that you can start accumulating for your journey through SRC the better off you are going to be in the long run. I wasn't sold so much interested and looking vector at that next year, profit or loss or whatnot. I was thinking, Man if I if we can keep doing well, and the contribution from the company keeps going into your ESOP or whatnot. And, you know, 1520 years from now I'm going to have X number of shares. And if the stock grows, you know, what's, we're going to have something special here.
Victor Aspengren 18:56
So also, Tom as you think about what why you think, because obviously, you've got the benefit of you know, you're retired from it, it was a big chunk of your retirement, does it do you ponder why there's not more companies that don't do this for their people now that you've left and kind of completed the quote ESOP journey
Tom Harms 19:16
I absolutely do Victor because to me the success of a company is based on their employees and the more stake in the outcome that you give your employees or teaching your employees of the rules teaching your employees how to keep score you know it did can do nothing but benefit the company I mean, if you've got a workforce out there that are running blind, you know, don't know what the bottom line is, or don't know where your expenses are, you know, what your warranty is or your we work is things like that, then how can they help better that situation? Okay,
Victor Aspengren 19:59
So Randy, you've been Doing your 30 years you said right when you started your company. And when you started, when did you hear about ESOP's and employee ownership? Was this something that was part of your DNA for 30 years? Or when did that? When did that come into your thought process?
Randy Spencer 20:19
So, ownership thinking was around for much of that time. I mean, there's books that you read along the path that help you to understand better. But I mean, looking at some very successful companies, I read books on Mayo Clinic on Nordstrom on Disney and seeing what they did for their people. And seeing, and for Mayo Clinic, for example, the goal of the mayo brothers in 1890s, was to have 100-year company and I love that thought that sort of set some things in motion for me. I came across a book called ownership thinking just because that was my thinking, by Brad Hams who had association with the Great Game and a lot of the principles were there. And I actually started trying to apply the principles I started talking about ahead does a first place I ever heard of an ESOP. And so, I joined NCEO right away and learned a little bit about that. But I presented an ESOP clear back in February of 2018. I mean, I started reading about it in 2017 or so presented it at one of our all-team meetings. I mean, I've had quite a few of our team members that came up afterwards and gave me a hug. I don't remember that happening, but looking at the future, and that they had a chance to have a piece of this, they were just completely excited about that thought. So that's when it started and then NCO pointed me to this crazy book called a great game of business. And that's where we jumped in headfirst. And it's been wonderful. Yeah,
Victor Aspengren 22:03
Well, so you, you kind of had it in ya. Shane and Tom, you guys walked into a company where you had a leader that believed in it, kind of like Randy, jack believed that from the very beginning, Randy did there, and he had his journey to get there. So, one of the things that I find interesting, because you said it, Randy, and it kind of goes contradictory. You said, we have a group of people that love to help animals and the people that own those animals. And so and so it wasn't about the dollars, it was about the mission and the values and the purpose. And what I always hear from SRC, and you got Shane and Tom, you correct me. It's always I always hear about the ownership thinking. I don't always I don't hear from employee-owned companies, like we made a gazillion dollars, or we got we got to hit all these numbers. Yes, you practice the game, and there are numbers you hit to drive value. But it's kind of a result of a belief or thinking versus it's all about the money. And then we figure out the culture. It's we kind of have this culture, belief, and what's really important, knowing because we practice the Great Game of Business that we have to have a positive bottom line. Is that do I? Am I thinking about that wrong? Or does that resonate with all three of you?
Randy Spencer 23:21
Yeah, what I've told people for years is, I mean, profit is essential. It's like the blood, you have to have it, or you die. And so, but it's not our focus. And you talked about three pillars. Our three pillars are what I mentioned, patient care, client service, and the team. That's, that's, you get those three, right, and you're successful, and that's what's driven our culture and things for many, many years. But profit is important, but not the central part of what we do.
Victor Aspengren 23:55
Shane Harms 23:58
Yeah, I mean, I agree completely. I learned, the first thing I did in leadership as a group lead, I learned the importance of knowing what my portion of the ownership was, and my team's portion, because just going out and telling the team, hey, here's, here's how many we have to produce, it's got to be done by this time, you know, that doesn't benefit them. That doesn't benefit me, I can almost promise you, we wouldn't hit that number.
1. When people can see a true stake in the outcome, they are more likely to put their best effort forward and own their work.
But if I could show them, the importance of it, you know, show them the value of owning it. They might be near, hit every deadline that we set out there because the team knew what this individual had to do to make this individual successful and so on and so forth. Because everybody realized, you know, like my dad alluded to the stake in outcome, they owned it, they truly own it. So, they either you know, lay down not give their best effort, but the outcome would suffer because they didn't own it, so ownership Yeah, for me, through SRC through the Great Game of Business, it's always been there, and it's been a big focus on how I attack each day.
Victor Aspengren 25:14
Okay, Tom, anything to add or you just nod your head so
Tom Harms 25:18
I mean, I agree with that, you know, a lot of our goals, not that heavy duty but division was based on profit in within each subsection of the income statement, you know, you got your overhead spending, you're behind schedule, your non-operating expenses, you know, your taxes, all this, you know, all these little subdivisions here, thinking out of that income statement, you start with $3 million. By the time you get to the bottom of the profit before tax, you know, you're at a couple 100,000 and you don't teach the employees Where is your contribution Now, can we improve that number, and only you can improve it through less overtime, better warranty, better customer service, you know, utilize on your core better, etc., etc., and so and with the Great Game of Business, a lot of our goals and in mini games were based, you know, based on positive numbers. They're all absolutely so if you're if you're having good numbers or putting forth the effort to help that profit before tax, then more than likely your bonus programs or mini games weren't going to be very successful.
Victor Aspengren 26:31
Well, one of the thoughts as I was thinking about all this, you know, I have this conversation with you guys is one thing is here in the US. I mean, ESOP's didn't really start till 1976 is when they pass the ERISA law. That's when the law got passed. But Aesop's really didn't start getting created till it was well into the 80s. So, it's not like Aesop's have been around forever. I mean, you could say ESOP's have been around for maybe 30-40 years. But really, it's been the last 30 years where we've really started to create this ESOP, employee ownership. There's other there's other types of employee ownership, worker cooperatives, or trusts, or just Phantom stock, or whatever you want to call it. But one of my thoughts is and I learned this because I told you as part of that cooperative, Charitable Trust, so I've been fortunate to be able to travel abroad to other forms of employee ownership. And I was in Italy, this was back in 2005, I believe. And their model over there is worker cooperatives. But worker cooperatives have been around for generations. So, we went and visited this manufacturing plant. And we got and we had the opportunity to go visit somebody who was retired just like you, Tom. So, we went to the gentleman's house. And he was a single older gentleman, he lived in this little apartment, he had a little plot of land out front for a garden, and we come there, and he pulled out the line for us, and we had the tomatoes and all this good stuff. And so, we were asking him about, you know, why employ Why did you work at a worker cooperative, when you could have maybe worked somewhere else and made a gazillion more dollars. And he said, he goes, I've got my place. I've got my little garden out here. He goes, once in a while, you know, I get to go out and have some fun with the ladies and the friends. And he said, but the most important thing is he goes, the reason I work there is because it was a different way to run a business instead of the bottom line, as we've talked about. He goes, it was about the legacy. He goes for my kids and my grandkids to have a really great place to work, and for our community to stay solvent and everything else. And I found that very profound. I mean, he was in there. It wasn't about him. It was about his legacy for his family, and his community through his work. So, my question you guys, I think, I think we're kind of at that stage here. Maybe in the US, ESOP's only been around basically like a generation and now we've got all these opportunities where it's the next generation for employee ownership like SRC, Randy, you're just starting the journey. And there's a lot of other veterinarians out there, they could start the same journey to create this legacy. Because it is more of a longer-term view. It's about sustainability. It's about creating something that builds value over time, but maybe it's not as grotesque. It's not all about somebody making a gazillion dollars and then they just walk away and whatever happens to the employees or the community or whatever it is. So, I just throw that out. Food for thought on that, you know, did especially for you know, Tom you and Shane, you guys are right at that CUSP. It's a generational shift at SRC. Do you see that? Is there more of that in SRC I mean you're just you know, one data point but is there a lot of people that have worked there now their kids Maybe there are grandkids that are starting to work there I don't know
Tom Harms 30:04
Yeah Victor, I'll address that you know when I retired there was several people ahead of me that retired and obviously several people after whatnot but I've been out of SRC for five well I'll never be out but because it just part of me but for five years now when I come back and I look at all the you know, the additions and the improvements and what's going on with SRC as far as businesses, buildings, it's, I said, Man, this all happened in five years. I mean, we did build something special that you know, I'm so proud to have Shane work in here, because he's part of it. He gets it, you know, kind of like, you know, I got it, he gets it, this is it's pretty special. It's not just the, you know, the retirement money or this or that, learning the income statement. It's a good group of people from top to bottom that I worked with, they were they were special people. And that's what maybe brought in the whole Great Game of Business reset, you know, to, to flotation for me, you know, that this is special, and we're all in it, and we're going to do this, you know, and we've done it, so, you know, and then the celebrations you know, it's just not about the numbers we celebrate. We celebrate our wins. You know, we have anniversaries, we've had the Beach Boys, the Doobie Brothers, you know, we Give back to the employees on their successes and the company that we've been building. You know, I mean, I've been an Easter Bunny, I've been a Santa Claus, you know, we celebrate every occasion for people to bring their families get together with current employees. And I guess that's what made it so special for me, Victor?
Victor Aspengren 31:53
Well, I could resemble the Easter Bunny, I did that once, too. We did the Easter Bunny hunt and our employee-owned company, I locked the doors. And then we had an Easter egg hunt. And I left chocolate covered raisins throughout the plant. Funny have been through so as they were hunting, but anyway, so Randy, as you think about just starting your journey, and, you know, it's a long way down, but obviously I mean, your tenure, you know, you're not going to be there for another probably 30 years, maybe you will, I don't know but so you've got that transition in that legacy. Have you already started to think of how to make sure that this thing lasts way past you and through multiple generations of, you know, your 300 people in their, in their network?
Randy Spencer 32:49
So yes, I'm absolutely, then that's, that's been a lot on my mind before and especially now, I mean, we're putting our board of directors together. And so, what that board does those rules that are put in place, one of the things that I want to see is that first pet is always veterinarian led that was one of the tenets of the Mayo Clinic that they would always be doctor LED and so that helps you to keep the heart if it's a CFO or something like that a CPA and it's running it then all of a sudden it is more about the numbers. So, I want that to be part of the culture. So, there's lots of decisions that are yet to come to produce that legacy. I mean, as Tom and Shane talked, I mean, that's who we are, too. We've long been more of a family feel with 300 people it's hard to know everybody in the family anymore, but we were very close closely connected and it's it really is a group effort to move forward in the future. And so, wanting our team to jump in and the leaders rise. That's what I love about the Great Game is it produces leaders that has prepared us for the future. And so, I have a lot of people to pick from a lot of our doctors that have been leaders for some time. That's what it's about, putting those people in place that can, they'll just keep it going. Almost everybody we have in leadership in fact I think everybody has come from within we’ve, yet we need to get some leadership from outside just because we need some expertise in a couple of areas. But the culture is very benefited by people learning growing and becoming leaders and then taking responsibility and, in all honesty, there's not near as much that I do anymore. I mean my part right now is more getting everything settled for the future, but it's still the vision. And that's what I've long brought to it his vision and implementation of, that vision. But we brought people on such that, I mean, they don't need me right now. I mean, that's the reality of it. That doesn't make me feel bad at all. I can leave for a little while and doesn't miss anything. So, it's wonderful.
Victor Aspengren 35:23
Well, I think that's I mean, one of my premises of leadership has always been a good leader works their way out of their job from day one, because you're right if the organization's functioning and you set it well, there, you know, the Great Game of Business, because in all the companies where I've been in an ESOP, we practice open book management, too. And I do agree that it helps you build those leaders, because it's risky. When you bring somebody in from the outside to fit in. It's there's always that risk, where if you can build it within one, it makes it stick easier you have those opportunities. And Tom and Shane, you both have shared you guys have moved up over the years through a Great Game. You've had opportunities to move up and your career in that process is and I think you would agree that you guys are pretty SRCS got that down, where multiple divisions have that same rhythm of creating future leaders?
Shane Harms 36:20
Oh, yeah, absolutely. I was, you know, shown pretty quickly that if I did a good job, that there was going to be an investment in me. And so, as I moved through the company, you know, I got opportunities to go take Great Game of Business courses. And, you know, I was taught I've had the benefit of having good leaders myself. And I think ultimately to that's a huge part of the ESOP is having those right leaders in the right place that are totally bought in. Because if your teams are listening to a leader that isn't bought into the ESOP or a Great Game of Business, well, what are you know, we're talking about a legacy what are those people going to go tell their families or, and so on and so forth. And you kill that legacy. You have to have strong leaders who understand the importance of an ESOP and are fully bought in. And I have been fortunate throughout my career of having such leaders. And you know, you talk about SRC, and opportunities internal I have never once thought about looking outside of SRC because the opportunity has always been there. I've always seen it. And I think that's a product of ESOP and ownership.
Victor Aspengren 37:36
I would totally agree I think that's the power of the Great Game of Business. And ultimately, the ESOP they go hand in hand, but that Great Game of Business if you're practicing it, because if you're not growing up the adage of the companies, if you're not growing, you're dying. And in one, it could be literally you're dying, because you're not making money. But you can also be dying, because you have attrition, and people don't stick around because they don't have opportunity. I mean, I think companies forget, one of the themes of the Great Game of Business is by practicing it, you're increasing the odds that you're going to grow your company and grow opportunities, which makes your organization stickier. So, people don't go look for the grass is greener on the other side, which you can't blame anybody for that. But if you're practicing the game, you're kind of creating your own grass is greener on the other side within your company. So, people don't have to leave it. I think it makes it a little stickier. Is that would you guys agree with that?
Tom Harms 38:35
Absolutely. Yeah, yeah. I mean, vector there's, there's several benefits to SRC. I mean, you got the SAP and your 401k and tuition refund. So, all the individual really needs is the one. You know, the tools, the tools are there, the teaching, the training, the opportunities, if you have the one up, you'll have a bright, you'll have a great opportunity to succeed. Right?
Randy Spencer 39:05
Just add that this for veterinary medicine. I mean, it's not just our company, it's throughout the whole nation. And we're learning throughout the whole world that during this COVID period, veterinary hospitals have become incredibly busy. We've been insanely busy, especially as a 24-hour hospital and with that, there are not enough veterinarians, there's not enough team members. I mean, that's a problem. Almost all industries right now, no doubt about it. But we're facing that and trying to take care of business. And so that
2. Having great culture within your company can help you navigate through tough times, and also help to attract and retain employees.
stickiness that you talk about is incredibly important to us and having the culture put us at a great advantage during this time because we don't lose many, and we do attract the best and the brightest out there. We still could hire 100 people tomorrow and probably put them to work. But having said that, the culture is able to help us really attract we, I mean, at the last emergency doctor convention, they were offering $100,000, signing bonuses for emergency veterinarians, they were offering new cars. I mean, this is bribery up and down. And we just don't do that. We just say, look at us what we have, what your future will be what it's like here. And I mean, we hired an emergency veterinarian just last week, and we've got another one that wants to come work out for us. And we're trying to decide if they're a fit for us. I mean, we're a little picky even about who we bring in. And so that what the culture does. That's I mean, that's where Great Game, but also ESOP I mean, everybody we talked to we're talking to about employee ownership, and they're all excited, and it is, I mean, you talk that versus here's $100,000, signing bonus. Well, I like that better. And that's why we're finding some real good things happening as a result of this combination.
Victor Aspengren 41:03
Yeah, that the culture, the stickiness, it's, it, we've got this issue, it's going to be another 10-15 years of this worker shortage. So, it's not just attracting, it's keeping people. And that's going to be really, really important. So, one thing I'll just share this was a number of years ago at an ESOP conference actually was in Kansas City where I facilitated a panel and we had three people that had left ESOP's just like you, Tom, three people left one was a bank teller. She had worked at the bank for 30 years as a bank teller. The second one was a CFO that only been within ESOP for about 15 years. And the third one was an engineer, just a rank and file not a manager, just a rank-and-file engineer and an engineering ESOP company. So, we were talking about the ESOP, and you know, we didn't say how much money did you get, but I said to him, I said, how much of the ESOP, what percentage of your retirement was your ESOP? So, you know, the CFO obviously CFOs make more money, and he'd only been there 15 years in an ESOP, but he said the ISA was 40% of his retirement income. 15 years, okay, CFO, that I asked the engineer, how much was it yours. And he'd been there, I think 25 years, and he said, it was around 60% of his retirement income came from being in the ESOP and being a part of it. And then I asked the bank teller, I said, well, how much of your retirement she said, 90% of my retirement is from working in the ESOP, but she was there 30 plus years. So, Tom, can I ask you, what percentage of your retirement was your ESOP? If you're willing? If you're not that's
Tom Harms 42:52
fine. Just let me collect it for a second here. It was, it was probably, I would say around the 40%
Victor Aspengren 43:00
Tom Harms 43:02
Yep. Yeah. And when I say that Victor, because I was also a big promoter of the 401k plan to with the SRC match on your 401k. So, you know, if you can you know, have to two kidneys here, though. And at the same time, that would even make your retirement that much better. So, I didn't retire totally on ESOP like a 60 or 70%. But it was a big part. I mean, a 40% is a big part of your retirement.
Victor Aspengren 43:36
Yeah. And then when you think about that, it's how do how do people that don't participate in ESOP, you think about how do they How do they put their money away? And you hear about the retirement crisis? It's out there. I mean, there's a lot of people that are totally underfunded, and don't have a clue or maybe have never even had a clue of what does that look like? Or how do I get there, which again, goes back to Great Game of Business, not only you learn about the business, but you're learning for yourself on how this all goes together. And then the other side of you know, the ESOP legacy. There's the cultural component, all of that, but part of the Great Game of Business is making sure that you have the money to pay out the people like you, Tom, and that's not you know, success breeds a lot of obligation for that whole group of people that have these big accounts so part of the ESOP legacy, which some people say, Oh, it's the downside. Well, I think for ESOP's where it was a downside. They didn't practice open book management. You know, you had a small group of people that were in charge of the finances, you know, your typical leadership team, but it wasn't the whole organization saying, we all got to work together because there's an obligation to pay out are retirees and we still want to build value. And guess what, if I'm Shane, I want to retire to and make sure that I get paid like dad did. So, there's that's another side of the Legacy then the link between Great Game and ESOP's. And then when you throw in the legacy component, it's another three-legged stool when you say, what do we get the end of this career? If you don't have those three things balanced out, you can get yourself in a little trouble on that. Randy, I know you guys just became an ESOP. But have you guys already started thinking about that down the road? obligations?
Randy Spencer 45:26
Yeah, I mean, that's certainly part of it is the repurchase obligation. I mean to me this early on where we're thinking about it, but we've got to make sure things work well. Now, one of the things that I brought up in our recent celebration, we've done it in some other venues, there's, I mean, that combination of great game and ESOP's but the there was a study done at Stanford back in the 70s, where they took kids, they were looked like five or six year old kids, putting them put them individually in a room, gave them a marshmallow, and said, if you don't eat this, I'll give you a second marshmallow. They didn't tell him how long, but it was about 15 minutes, there was a video done where they reenacted this on YouTube, you could watch it and I shared it, but you can see some of them put it to their mouth, and some of them just ate it right away. They said, ultimately, 70% ate at 30% did not. But long term follows up on that study was that there was a very good correlation between those that waited, and their future success, their ability to say, I will wait for something better. And so, we tied that into the ESOP and saying that this is what this is about. This is about having those two marshmallows or many marshmallows later down the road. One of the things I find exciting is with the Great Game of Business, and that bonus, or we do call that stake in the outcome, it's all stake in the outcome. But that bonus is the now and the ESOP is the later I mean, to me, it's like having your cake and eating it too. And getting our people to understand that. And that's one of the things that interested me about SRC, when we went and visited there got to participate in a huddle. They spent a good five or six minutes with people that are like Tom, that are getting closer to retirement and touting how important that ESOP was and that you needed to participate in it. And so, I can see that it's an ongoing process of teaching and guiding and helping and encouraging the participation and the excitement about ESOP's. But I think both together are the answer. Really.
Victor Aspengren 48:00
Tom, did you get excited on those quarterly payouts over the years?
Tom Harms 48:04
Oh, absolutely. Absolutely. Yeah. Speed, it allows me to do my fishing, Victor.
Victor Aspengren 48:12
There you go, hey, that's what it's all about, or do those fun things. That's right. We've got a few questions here. So, I'm going to pause for our stuff and just got a question here. What is your investment period for your new people joining your ESOP? I'm assuming last to you, Randy, what's your investing? I assume it's probably the six years
Randy Spencer 48:32
Yeah, it's a six-year vesting percentage every year going up. Yes.
Victor Aspengren 48:39
Yeah. Right. So, here's the loaded question. So, how do you get new hires to engage in, buy in to the ESOP quicker
Randy Spencer 48:52
And so, for us? I'll answer for first pet.
3. Different ways to get new employees to engage and buy into ESOP.
One, we talk about it in that opening interview, we want them to be interested in that that's part of whether they join us or not. But then in our onboarding process, we start right off talking about the Great Game of Business and now ESOP's. I mean, we have a video that we show about ESOP's telling them about it. And then I mean, right away, they know that they're expected to be to our weekly huddles, to our monthly huddles, monthly huddles are absolutely required. And so that our newer people are the ones that are more engaged in some of our older people. And that's why because of the process, some of the older ones were a little more hesitant. And we told them it's okay to be neutral. Just don't fight against that we're all in this together. So anyway, that's so far, I think we're doing well with that. I mean, that's something that takes effort and work and you got to keep that at the forefront to keep it going.
Shane Harms 49:57
Yeah, 100% agree with Randy there you just start from day one. And it's reputation, you just keep, you know, talking about it, talking with people about it, because the more you talk about it, you know, it's going to make these new hires think, you know, it's important, which it is. And I think that goes back to I said before, it's also very valuable to have strong leaders who fully believe in the ESOP because, you know, they're going to be talking to these people in new hires, they may want to be in that person's position at one point, and if they're constantly talking about the ESOP, like we talked about it, it becomes sticky.
Victor Aspengren 50:35
And the one thing for the audience that I'll say for my years of being in this space, both open book and ESOP is if you if you were not practicing open book when you became an ESOP, it's a tougher, it's a tougher road for education. Because if people don't understand the numbers, and how this all relates to, you know the bonus to the bottom line to how you grow stock value. When you throw somebody in an ESOP and they haven't had any financial literacy, and all of a sudden you start talking about stock value and growth. People are like, what are you talking about, and it's a longer learning curve where if you're practicing GGOB and I, quite frankly anymore, I just say it should be a prerequisite for every ESOP to practice GGOB at least two years before they become an ESOP. Because you get a bigger bang for your buck when you become an ESOP because now, they can put together the whole story. And I say this, because in the first company I was in, there were no numbers shared with anybody. We became an ESOP. And the ESOP was like, what's that? What does that mean? We did not trigger our Aesop power until we went to the Great Game, and we started doing open book management and then people started connecting the dots of what do I do today? How does that impact you know, the week the month the bonus? And you know, I always used to say if we're handing out bonuses, folks, what does that mean for the ESOP high probability the stock value is going up not a guarantee. But if we're not paying bonuses, then the stock may be flat or start declining. But if we're paying bonuses, because it should be a self-funding bonus, that should link to that stock going up, but it wasn't until we started doing the game that we that we got that Tom, do you have anything as far as your time or any tricks of the trade near tenure there?
Tom Harms 52:28
I agree. Kind of what Shane said you know, you've got to just keep reinforcing the Great Game of Business and ESOP through your departmental meetings You know, you're teaching the rules and teaching the teaching the numbers etc. Not everyone's going to buy in, you know, if you can't focus on that there's if you get a percentage high percentage buy in you know, that's a great accomplishment and be truthful with you, Victor, I got, you know, I spend at least an hour a day as a production manager on the floor, 1 hour in the morning or in the afternoon. And I would not I knew who the doubters were in any way I'd make it a point to you know, converse with them one on one, just a casual pop in or whatnot, they could ask me questions, one on one without being in a group setting. And, you know, I probably had as much success turning those people, you know, the light would come on for, you know, after a few of those encounters or whatnot, where we were able just to, you know, they'd be the, that their work area, and I'd be there talking with them. And it was starting to hit home with them, you know, because they knew I was sere. Right? Well, that
Victor Aspengren 53:47
Goes to the power of leadership. It just can't be the quote the CEO or the president touting the importance of this. If you don't have that down through your levels of leadership throughout the whole company, then you're going to miss it because it's that special time right there because oh, here comes you know, the seat here comes Jack Oh, who wants to listen to Jack, we hear Jack all the time. Then when Tom shows up people hear in a different way and jack will forgive me for saying that. I've known him a long time. But it's just normal that, you know, the CEO you, I was told Victor, no matter what you do, you can't get rid of CEO. It's there. And for some people, that CEO gets in the way of a good conversation. And that's where you need, why you need layers of leadership, especially the bigger you are, that can go in and have a different conversation than quote the CEO title because it does get in the way sometimes. Yeah, absolutely. Here's another question. So, talk to us about how to blend communication of employee ownership and GGOB without causing confusion as to what is the priority for employee owners to focus on Thank you. That's the question.
Shane Harms 54:02
So, I think they, you know, they go hand in hand, you can use the ownership teachings and the Great Game of Business at the same time. And I think if you're afraid that teaching that might blur the line, you'd be surprised how teaching somebody to be an owner. Actually, the only effect is there's positives. So, you really, you know, you set that number, and then you teach to be an owner. And you'll be amazed that how many people actually latch on to that when they're actually know that somebody is looking at what they're doing, what their position entails, with more intent than just you got to punch a hole in this or your job is this and that's it, nobody else cares. You know, if you can show them the importance of owning that. It has direct positive effect everything else.
Randy Spencer 56:03
Okay. Yeah, I spoke a little bit to this just a little while ago, but I mean to me, Great Game and an ESOP is synergistic. I mean, that means one plus one equals three. And so, I think connecting them together makes all the sense in the world. I think that that stake in the outcome. I mean, that's to me, that is Great Game. ESOP is the retirement arm, I think you can separate it out a little bit that way and explain the difference between those two, but both of them rely on employer or on ownership thinking. And so, one, with an ESOP it goes from just thinking you're an owner to actually being an owner, that's what makes that path. Great Game first, then ESOP so powerful as you get into the rhythms and the culture and the patterns, and then all of a sudden, you really are an owner, and it drives it up even more. It's
Victor Aspengren 57:06
There is kind of a strange thing with this. I remember one time we had a company meeting, and we were pretty, we were very open. They used to say we were that socialist ESOP. And I was what they used to call us. But anyway, we had a company meeting and one time remember, Tom stood up, and this was back in the early 2000s. And we were a plastics manufacturer. So, some of the jobs are literally putting plastic components together, it was in the high tech or whatever. And he stood up in a company meeting and said, Victor, it's complete bs that everybody in this company doesn't make at least $10 an hour. He goes, it's just a crime. And he said it in front of everybody. 120 people, and I said, well, Tom, let's go down that path. And this is kind of that balance between owner I said, Okay, let's pay everybody 10 bucks an hour. I said, we'll do that we'll raise everybody to 10 bucks an hour. But then well, that'll then our bonus is going to go down. Well, then somebody chimed up. Now wait a second, that bonus I need that bonus is important to me because of this, that or whatever, keep my wage where it is I want that bonus because those bonuses are big. I said, Okay, fine. We'll keep the bonuses we'll do the $10 an hour. I said, we'll just let that stock value tank. We’ll all go No; you can't do that. And I said, oh, you know, Oh, my God. I said, Okay, fine. We'll do all those things. We're just going to get rid all the benefits, forget the benefits. Well, you know, then again, and I think part of this to the question to the person out there. It's a balancing act. And I think sometimes people forget that it's not right or wrong. It's where you're at in your journey through this employee ownership thing. You know, what stage are you in your career, the life choices you've made, because it can shift dramatically what's important, it can shift in a day, that all of sudden benefits are really important. And before those benefits weren't important. So, people forget. And I think within the Great Game community, even with the ESOP sometimes we get so caught up in our own little thing. It's we got to we're trying to meet the needs of everybody. And that's a balancing act, and there is nobody will get it right. But I think it's that awareness that people understand. We want a good wage, we got to have a good wage to attract people. We like the bonuses we can we want to give bonuses, but we can't kill our stock value. But also, we got to have a good benefits package. So, the people that need the benefit. So, it's all of them. Sometimes people forget, it's not just the ESOP it's just not the bonus. It's everything, folks, and remember that we're all at different stages. And it's about learning to be an owner in the concept of it's the good of the whole versus the good of the one when people start to focus on themselves. I think that's where you start to lose some of that synergy that you said, Randy, because they keep thinking about themselves and said, well, how does this bounce off for everybody? Because everybody wants the best for them. But in reality, you got to think what's best for everybody? And then take what you get out of that broader perspective. Let's see here.
Tom Harms 1:00:29
Can I make a comment quick?
Victor Aspengren 1:00:30
Tom Harms 1:00:32
Yeah. You know, I never in 30 years thought of the Great Game of Business and ESOP is two different entities, you know, I thought they were joined at the hip because through given departmental meetings, or staff meetings, or whatnot, and follow the numbers and keeping the score or whatnot, you know, the employee is good, get to a level where they understand, you know, the better your net income is, the better your quality is, etc., etc. The better your ESOP is going to be, the better the stock price is going to be, the better your contribution, you know, so to me, they went hand in hand, and he'd be surprised through the years, you know, when the first shareholder meeting I went to when I first started, in reason I went to because they had this stock operate, and I bought X amount of shares of stock. So, I went to the shareholders meeting, and it was a handful of people in there, basically. And it just so happened that the share price doubled from like two and a half dollars a share, or from $5 share it double back down to two that should be it, you know, and it just it just escalated from that but now we can work to the point towards the other by my career, Victor when I walked down the hall, people are people are asking you what's the ESOP contribution going to be this year? What do you think our stock price is going to be? You know, we're taking wagers or playing games on who can get the closest to guests about the stock value is and then you have your shareholders meeting in any bet. You know, there isn't a handful of people there is an event with hors d'oeuvres, and beer tickets and etc., etc. And it's something that at least in our division, everybody was talking about. And you know, from where from my first one to my last one. Wow. I mean, what a difference. Thank you.
Victor Aspengren 1:02:29
That's great. Randy, I got we got a question here for us specifically if you're willing to spout on this. Talking great job explaining ESOP and legacy for those people who are 100% owners. Could you explain how you came out financially compared to selling the company to a strategic buyer?
Randy Spencer 1:02:51
You bet that was one of the things to look at. I receive it's not really offers but I have people are hospital is such a size, that there's not a week that goes by sometimes not a day that goes by that don't get an email or, or phone call from somebody saying this equity group. I call the corporation's Mars bars, because Mars candy company owns much of Veterinary Medicine right now. I mean, it literally the Mars Candy Company, if you Banfield and VCA and blue Pearl, and a lot of a lot of those guys, so there is a lot of money flowing out there. And they're paying a premium for veterinary hospitals like ours, less so in the small practices, but in our larger practices, there's a lot of money, I estimate that I got in this deal about half of what they would have paid. And that's knowing specifically what how many times they pay times EBIT da and how much we did it was right, right about that. But I mean for me, and as I now am going forward and trying to show a different path, an alternate path to other veterinarians to other veterinary hospitals, I think it's a better path. And my point is, you know, how much is enough? And that's sort of the way I looked at it. I was like, Yeah, I don't need I don't need that much money to pass on to my kids that I don't really want to pass on anyway. And so it is, it's plenty, what is the fair market value, and that's what the Esau does. It's a fair value for the company. There's they look at that a number of different ways. And these other companies are plant paying premiums. There's some benefits to it. Now, the way We did it. I mean, I can go into as much detail as we want. I don't want to bore anybody, but you can do it as a bank loan, you can do it as a seller note, and you can give the shares away. I've never believed in giving things away. That's part of who I am. But I do. I don't like working with banks. And so, I actually it was only about 25, I thought it'd be 40% is about 25% of a bank loan, I'd like yeah, I'm not going to put myself through all the garbage of banks due to you. So, I put that to the side. And I did 100% seller note. Yeah. And so, with that, though, all of a sudden, you can, you know, you pay, you receive a fair interest rate, but at an interest rate that's higher than then probably I was even expecting. And so, over the course of those 10 years, you make back a fair amount of that, based on that. Now, it's not upfront, I mean, when that's what some veterinarians are so tired, they say, I want to take the money and run and, and off into the sunset. But my point to the veterinarians is going to be and is to this for your team members. They helped you build this practice, they helped you build this business, and let them be a part of it, sell it to the employees. There's the ESOP is a great method to do that we actually hired a marketing company to help us put the word out. Darren Dahl and others at Great Game are also helping us do that. But we landed a front page, magazine article and today's veterinary business. And so that'll be coming out in December. We just completed that. And that's what it's going to talk about is the ESOP give us specifics of what we did, and why it is good for veterinary medicine? And I think we could apply that to every business. I mean, it SRC is a manufacturing company, as one of my first thoughts. Yeah, but I'm not I'm not even close. There's nothing about me that's similar to SRC, some great people, and honestly, that's what it takes. That's what it's about it is about the people and getting people to work together to do something for themselves and for others.
Victor Aspengren 1:07:23
So, it was kind of stated, maybe you know, that reduction in what you get is maybe, quote, kind of the price of the culture that you want, that you'd rather live in a culture that your people can thrive in and take a little less than maximizing your dollars at the cost of that culture. Yes. Is that a fair statement?
Randy Spencer 1:07:46
Yeah, I think that's that is a fair statement. Yep.
Victor Aspengren 1:07:50
And I've been doing this a lot of years and a lot of people ask the question of strategic buyer private equity. And as you said, you know, your seller notes, there's some other things along with that. You can close that delta between a strategic buyer and ESOP. And you know, every market is different, every seller is different, every deal is different. But it's just making sure you have a good team that can look at all that and really put it together because like you said, it's dollars today versus dollars over a period of 5-10 and 15, Heck, even 20 years. But so, it can be closer than what people think. But as you said, the amount of dollars that are being thrown at companies all companies existing ESOP's it's big, big dollars. And so, when you think about Aesop and legacy, it's making sure that you are financially solid to take care of the repurchase obligation and all those other things to where the ESOP is not running your business. The corporation you know, you got to focus on the business. The thing about Great Game what I tell people and people have brought this up, you know, they think that ESOP's solve everything ownership mindset and all that and I go not good business. Good ESOP bad business baddies up. So, focus on the business, which is great game, which gets you focused on the business, but it still focuses on ownership. But if you take your eye off that ball of the business, and the ESOP becomes the driving factor of all your strategy, then I think you missed the boat and you can get sideways with your ESOP. It's a balancing act from day one. It never stops. You never get there. It's a journey. Just like SRCS journey, Tom just like you. It's a journey. I'm sure there are days when you walk out going grrr and then there are days when you walk out going yeah. And that's just human nature. So, Shane, we talked about this the other day as we were having the discussion. When, when did your ESOP account become Significant to you? Was it just the best thing? Or was there kind of like was there a number that all of a sudden you went Whoop, that number finally the number appeared you go that okay, this thing is real.
Shane Harms 1:10:12
I think it you know; I had a little bit to do with both. I think the best thing seeing that, you know, I hit 100% that's when I really started paying attention. But like I hit on with the great leaders, I was fortunate that at the time when, you know being younger, and I'm still feeling out the ESOP, I had somebody in the corporation who wasn't, you know, too much older than me. He was a younger guy who had been with the company for a while same story, it built himself up and he was in a very good position. And he was comfortable enough was showing me, his ESOP. And when I saw the significance out of it, and him being 100%, and, you know, knowing that I was not really too far off from that the only thing that separated us was time in the company. And so, I think for me, that was a huge eye opener. As in, you know, I can make this happen. This could be real for me, and then also knowing a younger guy with that amount already in his ESOP. You know if he's going to work to retirement age who knows what his ESOP could have been.
Victor Aspengren 1:11:21
So that's the reason I asked that, as I tell everybody, you know, significance is in the eye of the beholder. And it also depends on how much you're putting into your ESOP. You know, some Aesop's only put in two or 3% of pay some Aesop's put in 10 to 12%. I know Aesop's that have been putting in 25% of comp since day one. And they've been an ESOP for 25 years. So, there's a wide variation, but it's not until that number is significant. And Tom, you probably had that moment to somewhere back there all sudden, you looked at that account went now this, and maybe it was the best thing, but was it after best thing? Or was it really the best thing? Or was there some laughter there where you went, oh, now that number, I'm not let go that number,
Tom Harms 1:12:07
that it was the best thing in the green was saying once you became 100% vested, and it made a lot, a lot more. Because now really with that money in there, it was your decision to stay with the company or take your money. And run, you know, if you stay with the company, you're going to help build that nest egg. Yeah, which most people do, you know, so. And then it's just about accumulating, accumulating shares my opinion bigger, you know, your contributions, the better the company does, the contributions you get on an annual basis, almost all of a sudden, you know, you go from 500 shares after several years to now you're sitting on two or 3000 chairs after 1520 years, you know, and then that stock value goes up by 5-10 and what not and that's where the hoop in an hollering it starts because all of a sudden they are seeing their ESOP jump 25-50 grand, you know, and that's where the you know, and really started sinking. sinking in then. Yeah, but we're
Victor Aspengren 1:13:08
getting we're down of our last 15 minutes. I don't know you guys aren't even looking at the clock. But Time flies when you're having fun. So, as we start to wrap up, why don't we Randy, maybe I can start with you any words of wisdom or thoughts or commentary for the audience out there in regard to how you look at ESOP and legacy and any advice or input you'd like to give the audience? We'll start with you.
Randy Spencer 1:13:38
Yeah, I mean, that's, that's what we've been talking about. So, I'm trying to think of how not to re say some of the same things I don't I don't know that I can do that. I I'm obviously sold on this pathway of the ESOP. The future for us, is unknown. I mean, people Honestly, I feel like people at my hospitals have a lot of trust, and they see what the past has been. They say that we've done things right. And that we have done things with a mind to, to their needs, as well as the pets needs and the client's needs. One of the things that I absolutely have learned to love about the Great Game of Business, is that everyone that I have met, truly cares about their people. And that's a culture that I love being in because what that does, I'm telling you, that money is not very important. But happiness and happiness come from serving others from doing good. And that's where business owners will have the most joy I mean, when I just talked about an ESOP, and I had a half a dozen or more people come up and hug me that had never hugged me before that was what was in my heart. They didn't even know we were going to do it. You know, but we do what were we talked about, we do what we say we're going to do. And so that's the future and I'm excited about it. You don't I mean, there's a lot of things that can happen in the country and the economy, but when you have people pulling together, I that's why I love that saying Jack Stack. I mean, you can stop one guy, but you can't stop 100. And that's what it feels like there's like 300 people and we're going full speed ahead. I don't care what Mars bars is doing. We have a better culture; we have better service by far than what they have. I mean, people love coming here. So anyway, I think that both the Great Game and the ESOP are, are really a great combination. And I can't say it's for every company. But I can't say that for us. It is a really good deal. And for my people, for all our team members, who are a part of our large family is going to be a blessing to him. There's someone that don't even have a clue what an opportunity this is, and I don't care. I mean, we're moving ahead, we'll show it to them over the years that this was the right move. So, with that, thank you, Victor. Yeah,
Victor Aspengren 1:16:29
That was wonderful. Thank you, Shane.
Shane Harms 1:16:32
I think you know, one of the hardest things for me being is a supervisor, I get all sorts of different walks of life, young people, older people, and the hardest part is getting them to see the value of the ESOP you know, right away, because those first two, three years there, whenever they get a certificate, it's kind of shows you a percent. And you know, they may not see the value at that time. And I think it's so important to talk, you know, to just preach it and to talk about real life things, like take stuff that you've heard in this discussion today. And you know, tell him that, you know, Randy, he has 300 people and it's completely changing his business and everything. For me I have a friend who had worked in SRC he took his ESOP and now he has a food truck he owns it you know, that's what he wanted to do. He's not able to do that without his Isa you know, I know all these retired guys like the one next to me you know, he's doing what he wanted to do he's got a live that and you know, ESOP has helped contribute to that and I think getting people to think like an owner and helping them see their future you know, just saying ESOP is a great thing, you know, that it's not going to help them you need to give those real life examples or how you know, that it's going to affect and yeah, I think you know, real life examples those are a great way to show the benefit of the ESOP
Victor Aspengren 1:18:10
Thank you, sir. Tom.
Tom Harms 1:18:12
Yeah, but after all that gold kind of what Randy and Shane feels and which to me is a big part of your ESOP a Great Game of Business and that they actually genuinely care about the people that they work with or the people that are in their company that to me that is a that is a secret you know and if you do that show them respect you'll get respect you know, you need to have patience and teach them the number and teach them the outcome how their little job over here impacts the bottom line on your income statement they'll get it they'll put the they'll play you know it's frustrating at times it's not all rose petals you know on the way to retirement for sure your you know there's like you mentioned there's days you just like to run out of there screaming you know, but you get over those and then for sure, the good days way out weigh the rough days you know, the more people that understand the numbers and track them the more frustrations are going to be because they they're following the business or keeping score and when things are going south yeah people who get frustrated and there's a little anxiety and this is how we work through you know everybody's got their piece of pie make your piece of pie bigger and we'll be fine. But what I think about it I mean my oldest son he's in his limited SRC and we talked earlier a lot of my friends you know, they've got sons and daughters working there and I was thinking in the back of my head just how many I thought wow, you know, there's a lot of family members that got their kids working at SRC in one dimension or not, I mean, it's a time which says volumes to me about the type of atmosphere that we create. So, I was very blessed to come across SRC.
Victor Aspengren 1:20:11
Well, that was great. Thanks, everybody. And you know, when you said there was how many people? That would be interesting, I would be interesting for SRC to share how many second or third generation folks they have in there, that would be a great piece of data. I'll throw that out to Mr. Baker or Mr. Armstrong, that would be some good data, gentlemen, to get out there. Because I do think it's one of the challenges and thinking about it your stories today, folks, because I'm pretty passionate about all of this. I've been living it for a long time. And any chance I get to promote employee ownership and making a difference? I do, because I think you said it. Well, Randy, it's about bringing about the best in others and helping people be successful. And is it hard? Yes, it is. And Tom, you said it, it's not a bed of roses all the time. But if your belief is that, that it's for the greater good, and that you can make a difference, then you know, employee ownership is a very powerful tool. And again, Randy, you said it good, it's not for everybody, because not everybody, it's a lot of work. You know, when you practice Great Game, and you practice ownership, it's about having an adult-to-adult relationship with people, that you can debate things, you can challenge things in a respectful way, and then you walk away. And some people just want to tell people what to do. And some people just want to be told what to do. And there's nothing wrong with that, if that's where you want. But when you talk about ownership, it's about dueling it out in your own head, it's dueling it out with your peers, respectfully, because you never know where that great idea is going to come from. Whether it increases your chances to get the bonus, you know, Great Game bonus, or increases the stock value or increases saw a new brand-new business that you want to get into or a subsidiary. The power is in all the people's minds. It's not in any one person's mind. So, one other thing, folks, for people that are out there, there's a white paper that the Great Game has out there on their, on their site, it's called the ground rules for building an enduring company. ground rules for building an enduring company. So, if you want some more data on a white paper kind of along these lines, you can go out there and get that or contact somebody GGOB and they can get that to you, but it's out there for you. We're going to get done here a little early, but I've never been on any event or program where if we get done a little early that people go Oh, they shortchanged me. So, we are going to finish a little bit earlier. But Randy, Tom, Shane, thank you so much. Thanks for being open and honest, there's many comments on here for your frankness that the audience like that. And that's the way I am. So, thank you so much for contributing and spending this hour and a half with this Great Game. Thanks for putting this all together for the audience. And everybody. And I assume that will be an EESOP roundtable four sometime here in the future and who knows what the topic will be, but with Kylie and the group they're working on and I'm sure it'll be a good one. So, thanks, everybody, and have a great, great day. Thank you. Thank you.
Steve Baker 1:23:33
Well, let's keep the conversation going. Guys, send us your stories, your best practices, your ideas, your challenges, your victories, your questions, and remember, you're not alone. This is capitalism at its best. Thanks for joining us. We will see you next time.
The "Change the Game" Podcast is produced by The Great Game of Business. To learn more, visit greatgame.com