Wright-Ryan adds ESOP to its recruitment toolbox
Photo / Tim Greenway
Greg Lanou, general manager of Wright-Ryan Homes, left, and John Ryan, president of Wright-Ryan Construction Inc., at the Bayside Anchor Multifamily Housing Community site in Portland.
Add Wright-Ryan Construction Inc. to the list of companies that have converted to an Employee Stock Option Plan.
The ESOP was finalized on Oct. 1 and gives both the roughly 75 employees and the company, which was founded in 1984 by John Ryan and Tom Wright, long-term sustainability and longevity, Ryan says.
Ryan is still leading the company after 32 years. Wright left the company in 2006 to start a nonprofit, Seeds of Independence.
Ryan says he is not yet contemplating retirement but is thinking about ownership succession. And who better to own the company, his thinking goes, than the employees who have made it such a success?
“I can't imagine my life without work,” Ryan says. Still, “I recognized we've got to build a platform for life without me. We needed a realistic ownership transition plan. So I set out trying to establish goals that I thought would work for me and my co-workers, things like long-term sustainability, preserving the culture and rewarding the team that got us here.”
Ryan researched options, which, he says, were few, including a third-party sale or management buyout.
“When I evaluated all the options, the ESOP came out clearly the best choice for accomplishing my goals.”
A company’s long history
Ryan and Wright grew up as childhood friends, spent summers on Cliff Island in Casco Bay and worked together on carpentry jobs throughout the 1970s.
Wright went on to a career in construction and industrial arts education while Ryan began his working life as a civil engineer. They found their careers satisfying. But whenever they met, they ended up talking about how nice it is to work alongside people who care about each other and share a commitment to excellence.
Those ideas finally clicked into a partnership. They formed Wright-Ryan Construction in 1984, hired two employees who were connections from their previous days, and settled in Portland.
Today, the firm has grown to 70 to 80 people, sometimes more, depending on projects, and diversified into a variety of commercial, institutional and residential categories and services, primarily in Maine, with a focus on forward-thinking projects that “make a difference in the community,” such as the recently completed “passive house” construction — the Village Centre affordable housing community in Brewer.
Recruitment and retention
“Career” is a key word for Ryan, given the challenges of replenishing an aging and out-migrating workforce. Ryan views work in the construction industry as a career, not just a job.
“We already have an ownership culture at Wright-Ryan, with employees operating like owners, and a business philosophy defined by collaboration and transparency,” says Ryan. “The ESOP takes that to the next level.”
Ryan and others at the company see the ESOP as a retirement benefit on top of the company's employer-matched 401(k). Each serve as recruitment and retention tools. Given Maine's general labor shortage and the growing challenge construction companies face, having attractive benefits is crucial in this day and age.
Some 7,000 U.S. companies have ESOP plans, encompassing 13.5 million employees, according to the Oakland, Calif.-based National Center for Employee Ownership. The ESOP is one of a variety of mechanisms used to transition a company to employee ownership, and also has significant tax advantages, making additional capital available for investment in the company.
Generally, ESOPs are a contribution to the employee, not an employee purchase and function as “a kind of employee benefit plan,” NCEO says. The company sets up a trust fund, and shares in the trust are allocated to individual employee accounts. “As employees accumulate seniority with the company, they acquire an increasing right to the shares in their account,” NCEO says.
A number of Maine companies in industries as far ranging as construction, manufacturing, advertising and insurance have taken a similar route. In construction and engineering, Cianbro, Landry/French Construction, Sargent Corp. and Sebago Technics have gone that route. In manufacturing, there's GAC Chemical Corp., Kennebec Technologies and SteelPro Inc. Allen Insurance has an ESOP, as does the VIA Agency, an advertising agency. That is by no means a comprehensive list.
Finding labor is an industry challenge
The ESOP is expected to attract new employees to Wright-Ryan in a tight labor market. According to information provided by Wright-Ryan:
- Employment in construction has increased steadily nationally and statewide since a low of early 2011. Construction employment totaled 6.7 million nationally in October according to the U.S. Department of Labor, the highest level since December 2008.
- Maine's Center for Workforce Research and Information projects consistent demand for construction jobs in the state through 2024, ranking trade professions such as carpenters and general maintenance and repair workers in the top 10 for high-wage, in-demand occupations.
Still, the Associated General Contractors of America says construction companies face challenges identifying interested or qualified candidates. Opportunities exist, but candidates might not realize the potential available to them or might not have access to technical training. The challenge is amplified in Maine by an aging workforce and a trend of out-migration by trade professionals opting for higher earning potential in neighboring states.
Wright-Ryan has seen employees stay with the company, thanks to the commitment to creating not just jobs but careers.
“We've always tried to make careers for people, to give them a place to grow, whether it's within their current position or in new positions, with the opportunity to explore different aspects of our business,” says Ryan. “That has been very important to us.”
But the workforce is definitely aging.
“We have a number of people who have been with us 20 to 30 years and another slug of people working with us well over 10 years,” says Ryan.
Greg Lanou, 17 years at the company and general manager of the Wright-Ryan Homes division, says the age mix in his group leans toward long-timers.
“Most of our managers are those who have already served with us for many years and yet still have good careers in front of them.” Lanou says. “But we're not seeing as many younger people coming up through the trades into management type positions. Craft positions like carpenters and foremen are our talent in the field, and they're getting older.”
Generally, Lanou says, construction careers start with carpentry. “We find if we can get smart carpenters, either out of a trade school program or talented kids who have worked summer construction jobs, these are the feeder pool for foremen and superintendents. Those folks are hard to find. It's outdoor work, it's physical and it can be a young person's game. We feel that [the ESOP] is a tool that will recruit younger people. It's for their retirement, and maybe they don't have that concern yet, but we feel it's one more tool for recruiting.”
As far as retention, Lanou says, the ESOP demonstrates to employees “that it's an investment in them, in their collective achievements. Everyone also feels the owner is completely committed to the company succeeding in the future so that the employees actually benefit from their own success.”
“Our reputation in the industry is probably our strongest recruiting tool,” says Ryan. “We offer competitive wages and benefits — that's the price of admission. But what we promote is that there isn't any limit to what you can do. There's opportunity across the board.”
The ESOP builds on that culture, he says.
“With its focus on the long-term, focus on sharing in the success of the company, focus on that collaborative aspect, that we're all in it together — those things present a compelling argument for people who are looking for more than just a job.”
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