Direct Ownership Alternative Where Neither ESOP nor Co-op Fits Company Culture
ZINGERMAN’S CASE STUDY CATEGORIES:
Business Owners Sell to Employees: Owners' wanted to share wealth without changing unique community of businesses structure
Effective Employee Participation (Participative Workplace): Substantial internal education for all employees, consensus decision making & pathway to partnership
Direct Ownership: Allows for diverse network of businesses, different types of equity ownership, access to ownership for all 730 employees
Opened in March of 1982 by Paul Saginaw and Ari Weinzweig in a historic building near the Ann Arbor Farmers’ Market, the Deli got its start with a staff of two, a small selection of great-tasting specialty foods, a host of traditional Jewish dishes and a relatively short sandwich menu. Today, Zingerman’s Community of Businesses (ZCOB) is a group of 13 different types of food businesses in an Ann Arbor. Each of the businesses was initiated by a Zingerman’s employee or group of employees who went through a rigorous “Path to Partnership” business development program organized by the founders to help their employees create new businesses in which the founders would invest and bring into the Zingerman’s marketing group. All the new entrepreneurs invested in their own businesses, with the founders providing a minority investment in them. The 13 businesses have a Partners Group, made up of representatives from each of these businesses that governs the ZCOB group. This Partners Group is not an incorporated entity, although it has a strong set of values on which all the entities operate. The ZCOB group shares back office services, training and other resources.
In 2013 Paul and Ari started planning for their retirement with a strong focus on maintaining the strong ZCOB quality standards, social enterprise goals and values. With assistance from Attorney Deborah Groban Olson they investigated several methods of employee ownership and settled on one that is unique to their non-traditional structure. All 730 of the employees in all 13 businesses have an opportunity to buy a share in the company that holds Zingerman’s intellectual property (ZIP) for $1,000, via payroll deduction if they so desire. Dividends on this stock are based on the profitability of the entire group of 13 companies. In 2016, the first year’s dividend was $314 per share. The company will buy back the shares when employment terminates at the $1,000 par value. Employees who purchase this stock have the right to vote on employee representatives to the ZCOB Partners Group.
