The Value in Creating an ESOP for your Manufacturing Employees with Ashleigh Walters
Connect with Ashleigh Walters:
LinkedIn: https://www.linkedin.com/in/ashleigh-walters-makethingsbetter/
Website: https://www.onexinc.com/
Lisa Ryan: Hey, it's Lisa Ryan. Welcome to the manufacturers' network podcast. I'm excited to introduce you today to Ashley Walters. Ashleigh is President of Onex, an employee-owned business operating for over 54 years in Erie, Pennsylvania. Onex designs services and manufacturers high-temperature industrial furnaces. When Ashleigh assumed the general manager role in 2013, the company has lost sight of its mission and family-centric core values. Today Onex's mission is to make things better: empowered employees, happy clients, thriving communities.
Ashleigh holds a BS in chemical engineering from Auburn University. She's the chairman of the board of directions for Northwest industrial resource Center, a manufacturing extensive partnership, and President and director of Aspire casualty, a reinsurance company. Ashleigh is the author of "Leading with Grit and Grace: a journey of organizational culture change. Ashleigh, welcome to the show.
Ashleigh Walters: Thanks so much for having me, Lisa.
Lisa Ryan: Please share with us a little bit about your background and what led you to Onex, to begin with, in 2013.
Ashleigh Walters: Sure, I have; as you noted, my bs in chemical engineering from Auburn University. I met my husband there back in 1998. He started Onex in the southern division in 2002 when we graduated from college; I joined Onex in 2003 as a technical salesperson.
Fast forward to 2013. I was a stay-at-home mom with two little boys, and my father-in-law called to let me know that the current leader had left the organization and that he needed me to lead and take a look at the financials.
Lisa Ryan: Okay, and then, and so what happened, I know that there was that they had kind of lost sight of their vision by that time so tell us a little bit about the process of what you saw and how that transition started to take place.
Ashleigh Walters: The previous leader was a command and control style leader, so he had siloed the company. People weren't working well together. People were living in fear. The first thing I started asking curious questions: how are we doing this; what's going well; what's not going well.
As I asked those questions, employees at first were fearful of answering me because they thought I would find something wrong in what they were doing. They thought I was going to throw them under the bus. Then they realized, as I helped them solve the problems they were facing, that I wasn't there to hurt them; I was there for them and helped get rid of the obstacles in their way. I call that a much more democratic approach to leadership.
It's really about putting people first. As a leader, I have to help them. The most important part of my job is helping them do their job to the best of their abilities.
Lisa Ryan: How about how many employees do you have it Onex.
Ashleigh Walters: We have 50 full-time employees.
Lisa Ryan: Okay, so going around and talking to each of the employees and having those conversations. How much time would you say that that took out of your week?
Ashleigh Walters: To change a culture takes time. It took us a good four years before I felt like we were in a spot where everybody was on the bus everybody was on the same page. We did many different events and used many lean principles to help us make that cultural shift, so we started with a value stream mapping event.
We mapped our entire production process, and then we went on to map our office processes as well. Since we did those different lean-type initiatives, it started the conversation and started the collaboration. Those initiatives are what helped to lead to the culture change as well.
Lisa Ryan: So take us back to the early days when you first came in, and you start asking these employees questions, and they were still in that fear state. What did that sound like? How are they reacting? What did it feel like that there was the trust wasn't there?
Ashleigh Walters: Yes, I think it was a very divided organization people came to work with their heads down to their work and left for the day. Now you can feel a difference when you walk in the door. You get smiles and friendly faces, and how can we help. It's just a different dynamic. You can tell people are working together, all playing on the same team.
Lisa Ryan: You mentioned that you were helping employees when you were asking questions and then pitching in and giving them what they wanted. What were some of the things that they were asking as far as what's going on, what's working well, and what's not.
Ashleigh Walters: yeah, sometimes it was just as easy as like a report; it took a ton of their time that I didn't need. Maybe the previous manager had wanted to see this report every Monday, but it wasn't important to me. Just flushing out some of this helped. I always asked what takes up the most of your time and annoys you. Then, whatever that was, we worked to try to fix it. We found three different people filing different AP stuff in different ways; it was just redundant tasks.
We tried to flush out kind of the inefficiencies and waste in the system and, as we helped remove those obstacles and get rid of that annoying work for people, they were more apt to give us even more ideas on how we can improve.
Lisa Ryan: I love that question of what annoys you because that can be a little bit of a difficult question because you don't know exactly how employees will answer that or what they're going to come up with. Was there some hesitation in using that word? What was it about the word annoying that made it?
Ashleigh Walters: We've gone on to use that Paul Acres from his book and he says what bugs you might be a better way to phrase it. You're never allowed to talk about another person. It's always a process or a piece of your work that is causing the issue that you'd like to see improved. I also call it servant leadership in that you're there to serve. Those on the team look like going to their workspace and seeing them do the process and helping them understand like there is a better way to process - whether it's an officer on the production floor.
Lisa Ryan: And I know that in your intro, it said that you're that Onex is an employee-owned ESOP, so was it like that, when you first came on board or how did you transition to an ESOP.
Ashleigh Walters: So when I first joined Onex, my father-in-law, Eric walters, was the majority owner of the company. Drew and I purchased him out in 2018 and became the majority owners. Drew and I had begun thinking about Okay, what does a succession plan look like for us. And while I understand retirement succession planning for 40-year-olds seems like a very odd topic, we also knew that third-generation family-owned businesses only had a 13% success rate. So, while our two sons, we would love for them to come and work for the company, one day if they so choose, we didn't want to make that something they had to do. We tried to understand what succession planning for the future might look like for us.
I sat in on a panel for succession planning, and I found out about an ESOP. When I came home and told Drew, I think this could be an excellent plan for us. He told me I was crazy that I hadn't understood what I heard about the planning event. We watched all the YouTube we could find on it, and he said, "actually, I think you're right. This is going to be a good option for us." We already had that family-centric culture. We repaired that culture, and an ESOP was a kind of a natural transition for us. It was just reimagining what a family-owned business looks like.
Lisa Ryan: What is an ESOP? What does that mean that the employees own the company? What there a percentage is that is. Please share a little bit about what that looks like because Drew thought it was too good to be true. People who listen to this don't understand the full implications of what an ESOP is. Can you share a little bit about what you discovered?
Ashleigh Walters: ESOP's became part of the law in 1976. there are not many of them in the US, I think; maybe around 5000 Companies are ESOP's. So it's not something that's widely known about. An ESOP is an employee stock ownership Program. That means Drew, and I sold all of our shares to the ESOP trust, so all of our shares went to the ESOP trust. They are released every year to the employees who Onex employs within that year, and they release based on payroll out of the total payroll for the year. The company is also valued every year, and so you, the employees get a statement at the end of each year that says, these are the shares that you own, and this is the value of those shares. The employees never pay a dime to be a part of an ESOP, but it becomes their retirement plan. So when they retire, the statistic is that they retire with 2.5 times more as an ESOP company than a traditionally matched 401k.
Lisa Ryan: So what does that mean as far as succession planning, though? The employees own the company, but once you and Drew decide to retire, what happens in that next step?
Ashleigh Walters: It's just like every other company. The next step is to make sure that we have leaders within the company that are coming up and learning how to lead and manage the company so that one day when we retire, those leaders are still here. The thing that Drew and I felt the best about is that previously, before we sold the shares, if Drew and I had been killed in a plane crash or a car wreck or something, then there wasn't a succession for the company itself there was no we don't know who would have bought the company if we weren't here. If something happens to us, the employees go right along; the company goes right along with no change.
Lisa Ryan: Okay, that makes sense, so what are some of the things that are keeping you up at night.
Ashleigh Walters: So I think as a leader, what keeps me up at night is always trying to assess a situation and understand what my options are for addressing it and thinking through the different options, all the different scenarios. It weighs very heavy on me that I have 50 families banking on me to make the right decisions. While I don't always make the right decisions, I try to fail fast, learn from them and quickly recover.
Lisa Ryan: And from a networking standpoint, if you were to reach out and learn from your manufacturing colleagues or people that are listening to this podcast, what are some of the things that you might like to learn from other manufacturers.
Ashleigh Walters: Since COVID 19 hit, I haven't been able to be in person and network with these other manufacturers or other business leaders in person. I do miss that. I always want to hear what they're doing, and their organization is going well. What I'm interested in is to hear about is not just the standard business stuff, but what are they doing that's different and unique, that's helping move their business forward.
Lisa Ryan: And, by the same token, what expertise or insight would you be willing to share with your colleagues.
Ashleigh Walters: So I certainly have led through to crisis now, so anybody coming out of this COVID 19 pandemic and it's just feeling a little tired and a little lost and doesn't know which way to go. I'd be more than happy to share my story and see if there's a nugget in there that would help them.
Lisa Ryan: If you were to wrap this up and then nice bow and give your best idea or suggestion for something that's worked over there and Onex to the people listening, what would that be?
Ashleigh Walters: So I think that the freedom to fail has been an ample opportunity and a competitive advantage for us here at Onex. I mean, you're free to make decisions within the bounds of our vision or mission and our core values. I'm not letting you light up a furnace and make it destructive. I'm only saying like think outside the box. Don't take the status quo; try something new. If it doesn't work, that's okay try again. You truly learn more from your failures than your successes but never make the same mistake twice.
Lisa Ryan: that's terrific advice, and it also helps you create a safe environment for people. They would rather know that if something didn't work than they told you. You learned from their mistake and moved on versus knowing that they would get in trouble, and then you don't know where it's going to.
Lisa Ryan: Well, Ashley, it has been an absolute pleasure having you on the show Thank you so much for sharing your insight with us.
Ashleigh Walters: Thank you so much, Lisa.
Lisa Ryan: I'm Lisa Ryan, and this is the Manufacturers' etwork. See you next time.
