Sarah McGinley-Smith, Director of Corporate Communications for Vermont-based King Arthur Flour Company, explains how employee engagement works at this two-century-old ESOP firm.
A brand familiar to generations of Americans, King Arthur Flour Company represents the nation's oldest flour company and the single largest educator of home bakers in the world. Founded in Boston in 1790, impressive growth has accompanied the company's transformation from a small, fifth generation operation to the 100 percent employee-owned business seen today.
Most recently, as a founding member of the "B Corporation" certification project, King Arthur has again embraced transformation as a means to remain competitive, finding great success through their longstanding commitment to a quality product and the triple bottom line.
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"King Arthur Flour's commitment to quality and ideals probably hasn't changed much since the 18th century," argues employee-owner Beth Latchis, Senior Programmer/Analyst in the firm's IT Department. Having only been with the company nine months, she explains that such principles, though not new to King Arthur, are still a thrill for her.
"It is very refreshing to work for an organization that's actively committed to the environment, its employees and the community," she says.
Indeed, King Arthur's history is rich with stories that speak to its distinct character.
"Frank Sands' grandfather would hire Irish workers in Boston 100 years ago," explains CEO Steve Voigt, "when a lot of other shop keepers were hanging out signs that said 'No Irish need apply.' It always was in the company's DNA and we're just making it more and more explicit for all of us, internally and for our customers."
In 1891 the company demanded that its product remain unbleached and sold to all dealers at the same fair price. Inspired by the mythical King Arthur and his insistence on sitting alongside his knights as peers at the Round Table, the ideals of strength, purity and honesty continue to permeate the business and strengthen their brand.
"King Arthur Flour has always been known for creating the best flour available," explains Travis Oman, Team Leader in the Customer Service department. "Now we're helping to blaze a trail for other socially responsible companies to follow."
For decades the company operated small scale and independently, actually shrinking to the point of having only three employees in 1990 (with revenues of $3.5 million). But a pivotal switch to push items through catalog offerings meant huge growth, eventually leading to 160 employees in 2009 and 1,500 product offerings. Roughly two-thirds of the business involves flour production, but one-third has become direct-to-consumer services through their physical store, mail catalog, and an award-winning online presence that includes Facebook and Twitter pages in addition to the King Arthur website.
"As more and more small companies were subsumed by large companies, KAF was flexible and courageous enough to create an organization that is multifaceted and able to stay competitive," adds Latchis.
In 1996 legacy owner Frank Sands felt like the company needed to make another big change. In a move to avoid the classic model of union-management relations in which a union must protect the workers against a management drive solely to maximize value to the owners, papers were drawn up to sell the 200-year-old company to its staff. Revenues at the time were $14.5 million.
"The classical model," explains Voigt, "does not include the workers. So when you have a model that is 100 percent owned by an ESOP, it isn't an 'us-them' situation."
It took until 2004 for the company to become completely bought up by its associates, but it's a move that has cemented success for the organization: Revenues jumped 124 percent from the start of the sale, to $32.5 million. After being named a Winning Workplaces/Wall Street Journal Top Small Workplace in 2008, King Arthur made this year's list of America's fastest-growing private companies in Inc. magazine, and has remained one of the fastest-growing companies in Vermont since going ESOP.
Accolades and sales growth have naturally translated to employee recognition – something the company takes pride in and does in a way that fits their culture. "Knighting" ceremonies honor long-term employees and "Vesting" ceremonies mark an employee's vested stake in the ESOP account. Even the stationery awarded for a job well done has the image of a knight on horseback and the stamp, "A message from an owner."
Travis Oman calls the Knighting ceremonies a "truly unique and terrific experience," and P.J. Hamel, a Senior Editor with 19 years tenure at the company, says such activities, though whimsical, are worthwhile.
"I love to see a colleague celebrated. The ceremonies themselves are touching, funny, and memorable," Hamel says. "Bottom line, they're an opportunity for us all to say thanks to one another."
Giving back is a theme that plays out at a high level at King Arthur as well. It was one of the first companies to distinguish itself as a "B (Beneficial) Corporation" and the first to utilize the B Corp logo on product packaging.
The title is reserved only for "purpose-driven corporations that create benefit for all stakeholders, not just shareholders." To become certified, B Corporations must meet comprehensive and transparent social and environmental performance standards, and amend their corporate governing documents to incorporate the interests of employees, community and the environment.
As Hamel puts it simply, "It reinforces our 200-plus-year history of doing the right thing." And doing the right thing has continued to pay handsomely: from 2004, when the sale of the company to its employees was completed, to today, revenues have increased over 100 percent to $67 million.
Company: King Arthur Flour
Web site: www.kingarthurflour.com
Industry: Food manufacturer, catalogue, retail, school
Location: Norwich, VT
Number of Employees: 160
Sales: $67 million
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