ESOPs and Create Amazing with Greg Graves

Greg Graves is the former CEO for the employee-owned engineering firm, Burns & McDonnell based in Kansas City, Missouri. Greg’s new book is Create Amazing which a readable, informative, and even at times, an inspiring discussion on ESOPs. In this interview, several themes surfaced including how a band of committed employee owners tamed rivers and captured the wind by making a difference for the clients they served.

Who Is Greg Graves?

• Greg started his career at Burns & McDonnell in 1980 before the ESOP existed.
• At the age of 43, he was named the 6th CEO in the firm’s 104-year history.
• During his CEO term from 2004-2016, Burns & McDonnell cracked the Fortune 100 Best Places to Work in 2009 – They reached 14th on that list in 2014.
• Greg’s first book is Create Amazing – Turning Your Employees into Owners for Explosive Growth.

Interview Questions

1. Favorite definition of an ESOP?
2. What are the biggest myths of ESOPs?
3. Is it possible to be too small to consider an ESOP?
4. What was the employee culture like at Burns & McDonnell?
5. What is the main difference between a 401k plan and an ESOP?
6. What are the main benefits of an ESOP?
7. While the benefits are obvious, do you still need strong leadership and direction to foster the employee-owner culture?
8. What was your top 100 group and your list of 100 changes?
9. What would Merrie Ferguson say about the B&M ESOP?

2 Requirements of a Great ESOP

• The original owner has be ‘all in’
• The employee-owners have to be ‘all-in’ too

Biggest ESOP Myths

• Too hard
• Sellers will not get a large payout compared to other exits
• Sellers believe the firm will not be engergized

Merrie Furguson

• Started at B&M as a teen
• ESOP started 10 years after she had been saving in your 401k plan
• ESOP value exceeded 401k plan within 5 years
• She retired before turning 60
• Now she’s a philanthropist in the Kansas City area.

Get them to ‘Whoa!’ and you have an employee-owner for life.

Greg Graves, author of Create Amazing

Greg’s Timeline at the End of Create Amazing

The podcast host loved the timeline in the appendix at the end of Create Amazing. When you read the book, Mark recommends you do the following after reading each passage in the timeline:

1. Read it again, and this time make notes and highlights on any milestones that stand out.
2. Start writing your own timeline of the company you serve.
3. Then get feedback on the timeline from others.
4. Make that timeline available on the company website where clients and staff can read it.
5. Go back to the reference to the list of 100 changes to the firm in 2004 created by Greg. Start creating your list of 100 changes for the firm you work for right now, then get to work after you share that list with colleagues.
6. Notice the newly-created roles in that 2004 entry and ask yourself if all of the roles in your company are filled or if gaps exist.
7. Even if you only have a small team, are you sending a weekly email to every team member?
8. After reading the passage for 2009, what will it take to make your company a great place to work? If you already have a great place to work, how will you make it better?
9. In 2014, B&M’s headcount surpassed 5,000. What will your headcount be in ten years?
10. In 2018, a long-time employee retired at just the age of 58 as a multi-millionaire. How is your company building value not just for the shareholders and customers of the company, but for employees too?

ESOPs Do Not Guarantee Success

My favorite part of the interview was when I listed the four benefits of ESOPs. I then asked, “Don’t you still need strong leadership to cultivate these benefits?” Greg’s answer did not disappoint.

According to Greg:

• the business still needs a strong strategy
• the business needs a strong management team
• worker distrust cannot exist
• employee-owners have high expectations so they expect the the boss to be great at leadership

Mark’s Favorite A-Ha Comments from Greg Graves

• “I don’t want to redistribute wealth, I want to build wealth.”
• The Top 100 List – brilliant!!
• “All in.” Not just for the owners, but for the employees too.
• The biggest CEO myths about ESOPs can be said of any owner exit.
• WinCo Foods at one time had more than 400 grocery clerks with ESOP accounts exceeding $1,000,000 each.
• Top 100 Group – also brilliant!
• Merrie’s ability to retire early.

Where to Reach Greg Greg Graves

1. LinkedIn
2. Twitter
3. Website
4. Amazon

If You Liked The Greg Graves Interview

The CFO Bookshelf Podcast catalog includes an interview with the founder of PFSbrands along with board members of that employee-owned business. Topics included goal setting, accountability, employee culture, business transparency, and team member development.

Title Image by Greg Graves.