Solar installation is a mission-driven business, and certain solar contractors take that notion a step further by also making their business operations mission-driven through employee ownership.
Generally, employee ownership gives employees some monetary stake in their company through stock options, company trusts or profit sharing. Depending on the style of employee ownership, companies will have written bylaws by which they operate, and with them a level of governance wherein employees can guide the direction of the company. This style of business can flatten the hierarchy of personnel, sometimes replacing C-suite positions entirely, with a form of business-level democracy managed by the employees instead.
Employee ownership typically comes in four forms:
- Employee stock ownership plans (ESOP)
- Employee-ownership trusts
- Stock options
- Worker cooperatives
Each model has different ways of operating, but the four solar companies interviewed for this story all agreed that enacting employee ownership in some form has built a reliable company structure in an industry that has experienced more ebbs and flows than most.
Getting their fair share
As of 2021, there were 6,533 active ESOPs among the tens of millions of companies operating in the United States. Through an ESOP, employees become shareholders of their company and generate internal stock that accrues by contributions from the company itself.
“This is the third leg to the retirement stool,” said Daniel Clapp, CEO of ReVision Energy, a Northeast clean energy company. “You’ve got your 401(k), you’ve got your social security and now you have your ESOP shares. It’s not a ‘get rich quick’ scheme. You’re building long-term value over time.”
The employee-owners and planned participants of ReVision Energy. ReVision Energy
An ESOP doesn’t require total company ownership by its employees; they can be broken down by percentages, with founders still retaining majority shares of a business. In the case of ReVision Energy and Burns & McDonnell, a global construction firm with a solar arm, both are 100% employee-owned companies.
Burns & McDonnell is one of the largest ESOPs in the world, with a current employee count of more than 14,000. Back in 1985, 10 employees purchased the company from previous owner Armco Steel with the intention of becoming employee-owned. Once that transaction was completed eight years later, Burns & McDonnell’s new employee-owners burned their paid-off mortgage.
“Our employee-ownership model sets us apart in solar construction,” said Adam Bernardi, renewable EPC sales and commercial strategy leader at Burns & McDonnell. “As owners, we have a personal stake in every project’s success or failure, which fosters a culture of accountability and excellence. We pay for performance and incentivize our teams to go above and beyond to deliver exceptional results.”
ReVision Energy was founded in 2003, and from Day 1 had operated in some capacity as an employee-owned business. Around 2012, ReVision developed a stock appreciate program and in 2017 bought out those shares to establish a trust and officially transition to an ESOP.
In an ESOP, the trust is what owns and manages those shares and passes stock increases to employee-owners at regular intervals, typically after annual company valuations. This differs from an employee-ownership trust, in which employee-owners receive a profit share through the trust instead of a retirement stock.
Building the business cooperatively
Profit sharing is one of the tenets of worker cooperatives. Where ESOPs build company buy-in through a retirement plan, worker cooperatives build buy-in by sharing company profits with employee-owners directly. How well a worker-owned cooperative performs affects how much profit-sharing an employee-owner earns.
“Something that I was focused on, and still am, is that a company’s success isn’t determined, or isn’t in most cases, because of the one guy who happens to be the company owner,” said Kevin McCollister, partner and co-founder of Catamount Solar, a Vermont solar contractor. “Everybody plays a role in making a company a success, and so they should share in that success more.”
Credit: Namaste Solar
McCollister entered the field in 2005 and worked for two other solar contractors, and “I saw them grow themselves into the ground,” he said. After witnessing company layoffs, McCollister and two colleagues founded Catamount Solar in 2011 as a worker-owned cooperative from the start.
One of the primary functions of a worker cooperative is to ensure its employee-owners have employment opportunities. Catamount has grown from three to 26 employees over its 14 years in business, and McCollister said that growth has been deliberate and organic. The goal for the business isn’t to overextend its resources and employee-owners to drive maximum profits; it’s to build a sustainable and consistent workflow to ensure there is work and income for everyone employed there, even in a smaller solar market like Vermont.
“That guy on the roof who’s putting holes in your roof with those screws, he’s an owner,” McCollister said. “He really cares about what he’s doing. He’s got pride of ownership, and he’s going to take care of it and do the job.”
With profit sharing, stable work and a handsome benefits package, there’s low employee turnover at Catamount as well, McCollister said.
Everyone is steering the ship
A pillar of employee-owned businesses is operating with some form of governance that involves employee-owner participation. For worker cooperatives, that can take shape as a direct democracy, where important company decisions are made collectively, with one person representing one vote on an issue.
As these companies scale, that governance can take different shapes. Namaste Solar, a worker-owned cooperative from Denver, Colorado, employs more than 200 people. It uses a representational democracy where employee-owners vote for a board of directors annually that represents the employee-owners and works with the CEO on company issues.
“We have this circular accountability, where the CEO runs the business, which is predominantly made of owners, but the owners elect the board who can hire and fire the CEO,” said Jason Sharpe, CEO of Namaste Solar.
ReVision Energy has trustees that manage the ESOP, and they are also are responsible for appointing the company’s board of directors. The board is responsible for tasks such as fiduciary oversight of the trust, company financials and operationally strategic decisions. Leadership ultimately manage these tasks, but still consult employee-owners for input.
These companies to operate this way by having written bylaws that dictate who can make what business decisions. What constitutes something worth voting on is at the discretion of the employee-owners or the elected officials representing them.
Becoming a worker-owned business
Whether a company is intending to start off employee-owned, or the workers are trying to buy the business from its sole proprietor, there is additional effort while establishing the new company structure.
A few members of Namaste Solar’s residential installation crew. Namaste Solar
Certain states have worker cooperative statutes to simplify launching or transitioning the business. Regardless, it is necessary to bring in third-party representation in a lawyer, preferably one familiar with this process, to draft an employee-owned business agreement.
“I think for any business, the conversion to employee ownership is a leap. How big the leap is probably depends on who you are and what dog you have in the fight, so to speak,” Sharpe said. “It wasn’t a leap in the way we ran our business, because we always sort of ran it as a democratic workplace. But your capital structure and how you run your business can be very different things.”
The result is a business agreement lending greater transparency to the minutia of business operations and even employee-owner wages.
Building a solid base
Most employee-owned businesses include a probationary period before a new hire is eligible to become a worker-owner. ReVision’s Clapp found this to be a crucial time to educate employees about the importance of the “owner mindset” for running this type of business.
As with any business, its success relies on the involvement of its employees. The difference with a worker-owned company is there isn’t a sole proprietor individually deciding to sell the business. Employee-owners have a real stake in guiding their business and the communities they’re working in. The impact of these employee-owned solar contractors extends well beyond operating democratically day-to-day.
Namaste Solar started the Amicus Solar Cooperative (which Catamount, ReVision and many other solar contractors are members of) and the O&M Cooperative to collectively assist in solar component purchasing and establish a network of solar operations and maintenance technicians, respectively. Both ReVision and Namaste are also certified B Corps. And since it was founded, Catamount has donated 5% of its annual profits to community organizations across Vermont.
“You can point to all the studies on retention and increased productivity, but at the end of the day, it’s a culture that I think every company wants to build,” Clapp said. “And this is a true way of actually stepping up and showing your employees or your future co-owners that you’re willing to do it — that you’re going to build a sustainable company that’s going to last well beyond the founders’ careers, and that’s what you’ve got to do if you truly want to make an impact on our clean energy transition — on our social justice missions.”
