How to Balance Worker Safety and Demand? Ask Your Employees
Employee-Owned King Arthur Flour Involves Workers in Decision-Making, Especially in Crisis
As the coronavirus continues to disrupt our society and economy, the community of Certified B Corporations exemplifies how centering business around all stakeholders can make the crisis a little more manageable. Employees, among the key stakeholders that B Corps consider, are especially feeling the weight of the crisis. Many are losing their jobs, others are working remotely, and some still must go into the workplace to keep operations running.
At King Arthur Flour, one of the founding group of 19 B Corps in 2007, care for workers is built into the company’s ownership structure. The company has been 100% employee-owned since 2004. This ownership structure encourages employee engagement and collaboration to make decisions, especially important now as the decisions made by the company affect workers’ financial and physical well-being in more apparent ways than ever.
“At the core of all of this is that we have an employee-owner culture and employee ownership means a lot,” co-CEO Ralph Carlton said. “We do believe that it means a lot to everyone, that people come to work thinking like an owner, asking questions like an owner, and behaving like an owner. And that’s an important part of being a B Corp. They overlap each other, but the ownership piece is just a very powerful motivator.”
Carlton and Karen Colberg, co-CEO, share leadership responsibilities as well, ensuring multiple perspectives are taken into account at every level of the business. For my upcoming book, Better Business: How the B Corp Movement Is Remaking Capitalism, I interviewed them and Carey Underwood, director of mission-driven partnerships and programs at King Arthur, about how employee-ownership affects company decision-making during this crisis — and all the time.
How did King Arthur initially decide to become a B Corp? Was this something that resonated with the employee-owners?
Carey Underwood: Carol Atwood, who was on our board of directors at the time, is the one who initially brought it to the company. It was very much in line with what we were already doing and the values of the company. It also provided us a way to benchmark our performance, to see what we’re doing compared to other companies and where we can improve and make changes.
But while becoming a B Corp was a Board of Directors decision, becoming a benefit corporation required an all-company vote. It was seen as a way to protect our ownership structure. King Arthur Flour wanted to maintain employee ownership and not be bought, so becoming a B Corp and then becoming a benefit corporation were steps along that path.
Ralph Carlton: One of the important considerations about becoming a benefit corporation was protecting our mission. Under the Vermont benefit corporation statute, the board must look at all constituencies, not just shareholders. One of the concerns that an ESOP (employee stock ownership plan) always has is that someone could walk in the door and say your company is worth X and here is 5X, and the trustees would have a fiduciary obligation to at least consider if it was a bona fide offer. This now creates an intermediate step, where if someone made a bona fide offer, it would go to the board first, and the board as a benefit corporation could look at the variety of criteria that are available to them and satisfy the needs of various constituencies before bringing it to the ESOP group.
How did your co-CEO structure come about? How does it work and why is it important, including in times of crisis?
Carlton: Steve Voigt had been CEO for 15 years before he stepped down. While he was CEO, King Arthur operated with a leadership team called the strategy team. It was very democratic in terms of running the company and decision-making, but not hierarchical at all. Steve pretty much involved this group in all decision-making within the company.
As I understand it, when they looked at a successor, they didn’t necessarily feel that any one individual stood out per se and felt that actually four, at the time, had the skills and ability to do it collectively. So, we entered into this novel form of government that worked extremely well for us. It happens to epitomize a lot of the shared values of being an employee-owned company and a B Corp. It’s nice that it’s reinforcing, but it wasn’t necessarily the reason that we did.
Karen Colberg: Whether that is two or three CEOs, I do think there’s a real benefit to being able to talk about everything without a hierarchy. We are pretty collaborative. Without that hierarchy of any kind, it makes it different, whether it’s bouncing ideas off one another, needing to vent about something, or coming up with an answer to a really challenging strategic issue. So, being able to do it together just makes it a better place. It’s more fun.
We try to have pretty distinct areas of functional expertise. We both have broad experience to some extent, and you might say general management ability and perspective, but if there’s something that’s operational or financial related, Ralph handles those decisions, and I cover the consumer facing pieces.
Carlton: It is everything Karen’s said. The way we divide things up, though, we keep each other informed of the respective areas we oversee. The vast majority of the time when we share our thoughts, it’s relatively easy to come to a point of view that we both share. It’s very rare that after talking something through there are strong disagreements. And even there, we need to keep the company moving forward, so we don’t have a choice of not reaching a decision. Reach a decision and you move forward.
How has the coronavirus affected King Arthur’s business? How has King Arthur adapted while maintaining its values and keeping employees involved in decisions?
Carlton: The virus has had a different impact on different parts of our business. Some parts of our business are actually way more active than usual. Consumers are baking, so there’s tremendous demand for flour. On the other extreme, we have our large retail operation, and while it continues to operate on a phone and carryout basis, it’s down quite substantially. That’s the general overview.
We have put in place a variety of policies. First, we have really allowed at-risk employees not to come to work, following CDC guidelines. That’s been one of our highest priorities. Also, everyone who can work from home is working from home. For those who have to come to work, we’ve provided enhanced wages to acknowledge that they are taking on additional stress by coming into work as opposed to being able to work from home. We also spend a tremendous amount of time on safety, building in safety practices, distancing, sanitation and other procedures to make it a safe work environment.
Colberg: I would say from just a general cultural standpoint, we do try, and I emphasize try, to engage our employees as much as we can in the process as we get to a decision. We have a group of leaders called the Roundtable. We have monthly town meetings. We’ve added weekly virtual town meetings, and they’ve been one of my favorite new activities of this COVID experience because I think we might have more engagement on the virtual town meetings than our regular town meetings.
B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
