All in: ‘From Founder to Future’

Back in the 1970s, CEOs were paid about 20 times more than their employees. That number has since ballooned past what you’d think would be the popping point, to 300 times. As John Abrams writes in the introduction to his most recent book, “From Founder to Future: A Business Road Map to Impact, Longevity, and Employee Ownership” (Berrett-Koehler), “If worker pay had grown as quickly as CEO pay during the past 50 years, the minimum wage today would be more than $100/hour.” 

Abrams is the founder and CEO of South Mountain Co., a well-known architecture, renewable energy, and design firm on the Island. South Mountain was among the first businesses in the U.S. to transition from a sole proprietorship to a worker co-op, and Abrams uses South Mountain’s story as a launching pad to explore other models of employee ownership in this country and globally. “From Founder to Future” is a fascinating primer and exploration of employee-friendly business models. 

For South Mountain, it came about like this: In 1986, two longtime employees, Steve Sennett and Pete Ives, approached Abrams about becoming more financially involved in the company. Abrams writes, “I could easily have made my two friends minor partners, but it occurred to us that if we did our job well, this situation would manifest over and over in the years to come. The three of us wanted to imagine a structure that would consistently welcome new partners into ownership.” A year later, South Mountain was trying out the worker co-op model.

There have been challenges along the way, notably in 2008 when the economy soured and building projects were getting canceled. But as Abrams writes, “Difficulty and opportunity mingle; at times, it is hard to distinguish one from the other.” Mistakes were made, but they inevitably led to implementing a well-defined business structure. He advises, “Thoroughly test your hiring choices.” Writing, “South Mountain Co. has a rigorous employee evaluation process and a comprehensive path to ownership. Sometimes, as hard as it is, you must get people off the bus.” 

Abrams takes readers through the history of the growth of employee-owned business models, B-Labs, and B-Crops. He explains, “‘B’ stands for benefit. As a community, certified B Corps are building a new sector of the economy in which the race to the top isn’t to be the best in the world, but the best for the world.” 

He visited companies using the worker co-op model to get their stories, and interviewed some 60 or 70 people working in the employee-ownership world. He describes how businesses like Namaste Solar, in Colorado, became one of the largest successful worker co-ops in the country. He reports on business practices, and explains to readers strategies such as OBT “open-book management” — allowing employee access to a company’s financials; and ESOPs — tax advantages to transfer a private company to employee-owned. In doing so, and in profiling a number of employee-owned businesses, Abrams makes a convincing case for the implementation of worker co-ops, which of course was why he wanted to write this book. 

There isn’t so much resistance to the employee-ownership model, but “a lack of knowledge and a lack of understanding,” according to Abrams. He hopes this book will help illuminate and educate. 

“There are 3 million small businesses in the U.S. with founders over 55. Something is going to happen to them in the next 15 to 20 years,” Abrams told me in a phone conversation. “There’s going to be a tremendous transfer of wealth, and most people — most founders, most employees, and maybe most importantly, most people who would buy small businesses — accountants, attorneys, bankers, succession consultants, business brokers — most of them really know nothing about the employee ownership options available to them.”

While wrapping up his time at South Mountain, looking back and thinking ahead, he realized, “I really wanted to do a book that might spread the message.” 

And in “From Founder to Future” he’s done exactly that.