October is ESOP month, and we thought it was worth sharing why Harrell Design + Build created an Employee Stock Ownership Plan in 2001 and how being a 100% Employee-Owned company benefits our clients.

What is an ESOP?

In 1974, Congress enacted the Employee Retirement Income Security Act, the first of a series of tax measures designed to encourage employee stock ownership plans (ESOPs).  

Today, in approximately 6,500 businesses in the United States, 139 million employees hold most of their company’s stock, effectively making them owners. The most common form of employee ownership in the U.S. is the Employee Stock Ownership Plan (ESOP) – a tax favored non-taxable entity that is specifically designed to buy, hold and distribute value of the employee owned company among their active employees.

In California, there are 1,000 ESOPs and one million employee-owners. You might be surprised to learn that many companies that you are familiar with are Employee-Owned.  One of the largest California-based Employee-Owned businesses is San Francisco-based Recology, which became 100% Employee-Owned in 1986. 

In addition to tax benefits available to Employee-Owned businesses, employee ownership helps to attract and retain employees, providing them with the potential of building long-term wealth. 

ESOP companies also tend to cultivate highly involved work cultures where employees are encouraged to think and act like owners, because they are owners. 

Harrell’s Pathway to Employee-Ownership 

In 2000, Harrell’s founders, Iris Harrell and Ann Benson, and the company’s management team, decided an ESOP would benefit the company and its employees, and so they set out to arrange and affect a sale of the company to their ESOP for the benefit of the then and future employees.  Anthony Mathews, one of the nation’s original ESOP and employee ownership experts, was hired to help the company navigate the process of establishing an ESOP at Harrell.  Over time, the Harrell ESOP has distributed significant returns to Harrell employees in their retirement while providing new opportunities for current employees to build their wealth as well.  Anthony later took a seat as one of the independent directors at Harrell and he continues to assist with the operation of the ESOP and the development of real wealth for our employees to this date. 

ESOPs are not without their complexities.  But with both our commitment to make our employee ownership real and powerful, as well as Anthony’s long history of experience on our side, the Harrell ESOP is a model for the community on how much of a difference it can make to have a corporate structure that includes an opportunity for all the employees to become beneficial owners and to make a considerable improvement in their position at retirement. 

Anthony says that he may have been instrumental in Harrell’s initial transition from a privately held business to one that was Employee-Owned, but he specifically attributes the real heart of the success that has been generated to the large group of dedicated employee/owners thinking and acting like owners and building a truly wonderful company along the way.  

Why Employee Ownership? 

Harrell Design + Build launched its ESOP to enable our staff to become owners over time, via contributions from company profits, with no out-of-pocket expenses to the employees.  

The value of the ESOP to our Employee-Owners is multi-faceted. A Harvard Business Review article states that ESOP companies are most successful when ownership and programs for worker participation are present. Ownership provides incentive for employees to work productively, and opportunities for involvement enhance productivity by providing channels for workers’ ideas and talents. 

“Employee-Owners realize significant financial benefits,” explains Anthony. “They increase employees’ retirement wealth by 400% compared to non-ESOP peer companies.” 

In addition to financial gains, being an Employee-Owner is also intrinsically motivating.  

Part of Harrell’s Mission Statement cites the goal of “fostering a safe, healthy, stable, challenging and growth-oriented environment for our Employee-Owners.”  

Being well informed and included in problem-solving and decision-making prompts Harrell Employee-Owners to feel, act, and respond like owners.  

According to Anthony, ESOPs have staying power, which also benefits the company’s clients.  

Ciro Giammona assumed the role of CEO in 2014 after helping the company become 100% Employee-Owned. “In ESOP environments, employees have a voice, are encouraged to pursue continuing education, are more engaged, and are paid appropriately,” explains Ciro. “This culture builds commitment over time.” 

Ownership Culture 

Compelling research and decades of experience show that Employee-Ownership is a powerful tool to improve corporate performance when companies have high-involvement “ownership cultures” in which well-informed and dynamic employees think and act like owners.  

“Ownership is one of our 10 Core Values” explains Ciro. “When employees see the bigger business picture and their role in it, it elevates their understanding. They realize what they do is essential to our success. They begin to think and act like owners.”  

In 2019, Harrell Design + Build’s culture of Employee-Ownership earned us the prized designation as one of the Best Companies to Work For in the Bay Area News Group’s Top Workplace Awards, and the California Western States ESOP Association’s ESOP Company of the Year.

When a company is 100% Employee-Owned, employees have a genuine stake in the company’s success and feel more inclined to make day-to-day decisions that drive business forward.  Employees take pride in their work because they have a real investment in the company’s success. In essence, ESOPs help make each employee an entrepreneur; they are working for their long-term future and the success of their team.  This, in turn, is highly beneficial to the company’s clientele. 

How Employee-Ownership Benefits Our Clients  

As a result of becoming Employee-Owned, Harrell’s company value has steadily increased. This gain stems from careful management and oversight specifically designed to maximize the benefit to the Employee-Owners. Our strategic growth plan has resulted in greater top-line results, increased production efficiency, reduced overhead costs, elimination of long-term debt, and adequate cash reserves, all of which also benefit our clients by keeping the company a reliable service provider for decades to come. 

Employee-Ownership also lends itself to longer tenures, especially in an industry with an average turnover rate of 30% annually. Factoring in recent hires over the past two years due to growth (we have more employees than ever before!), several retirements, and normal turnover, our average employee tenure is 6.5 years. 24% of our team has been with the company for over ten years.

A primary goal continually reiterated in Harrell’s annual Business Plan states: “As a 100% Employee-Owned Company, grow the Employee-Ownership (ESOP) culture with a focus on developing leadership and entrepreneurship skills, technical skills, personal development and accountability at all levels within the company.”  

Harrell underscores this goal via our Employee-Ownership motto of “See It, Own It, Solve It, Do It,” borrowed from the book “The Oz Principle“ by Craig Hickman, Roger Connors, and Tom Smith.  

At Harrell Design + Build, we believe that when Employee-Owners are empowered, their “self-accountability” increases, resulting in higher levels of individual and collective performance.  

We encourage everyone to act like an owner, and every Employee-Owner is tasked with and dedicated to our team’s success. Integral to Harrell’s success is providing an exemplary experience to each of our clients. On an Employee-Owner level, this translates to being empowered to identify and resolve problems, innovate, perform their best work, collaborate creatively, and communicate effectively.  

As a prospective client commented, “Wow! Everyone is an owner? That means everyone cares.” 

Woman Founded and 100% Employee-Owned, Harrell Design + Build has created distinctive homes in Silicon Valley and on the mid-Peninsula since 1985. 

It’s that time of the year again, as we celebrate the holiday season and approach the end of the year, when the world slows just a bit and the season creates the time and space for reflection and gratitude. We reflect on the positive things that have occurred in our lives during the year, and on the challenges and hardships we faced. We are grateful for the good things in our lives and take inventory of the losses, contemplating how we move forward in the coming year. This year, a moment of gratitude is especially helpful to makes sense of an otherwise challenging year for all of us.

For Harrell Design + Build, as the year 2020 in business draws to a close, we find ourselves reflecting on our company’s ground-breaking history, the extraordinary year we have faced, the success we had as a company, and all the great possibilities that lie in the years ahead. Through it all, HRI has been grounded in a culture and values that embrace diversity and offers a gentler, more compassionate remodeling experience for its clients. But even more so, we find gratitude in our broad and diverse group of clients who have embraced our unique approach to Design + Build remodeling. They have been the foundation that helped build our great company.

Exemplifying the motto, “We never forget it’s your home®,” from the outset Harrell Design + Build made its mark by flipping the script on the typical jobsite mentality, providing a kinder, more considerate touch in our client interactions. From the beginning, company founder Iris Harrell instituted jobsite rules that embodied a woman’s sensibility and fell right in line with the corporate motto to respect our clients and their homes. For over three decades, these policies have been a key point of differentiating HRI from the average general contractor.

When Iris founded Harrell Design + Build in 1985, she was one of very few women in the construction industry. Her pioneering and visionary spirit shaped a Bay Area company that educated and elevated those around her – employees and clientele alike. That vision included diverse and deliberative hiring focused more deeply on cultural fit than prior construction experience. Her process of hiring based on one’s potential and ethos has resulted in numerous talented women assuming leadership roles, each of whom have been instrumental in advancing the success that continually carries us forward.

Lisa Sten, CR, CID, UDCP is a perfect example of the vital leadership roles women have held at HRI. And in March 2020, Harrell Design + Build once again welcomed a woman leader to its helm. Lisa assumed the role of CEO upon the retirement of Ciro Giammona, the company’s most recent past CEO who recounted, “My mother raised me as a feminist!” Sharing in Iris’s passion for excellence, Lisa is mentoring a new generation of women leaders to meet this moment, ensuring the future success of HRI while continuing to foster the culture and values upon which it was founded.

Before relocating to the Bay Area from Minneapolis, a mutual acquaintance connected Lisa and Iris, leading to Lisa joining Harrell Design + Build in October 2000. Lisa always wanted to be involved in helping to govern HRI. Over her twenty-year tenure, Lisa has taken on more responsibility and leadership, holding positions as Sales Designer, Sales Manager, General Manager, culminating in her transition from President to the company’s top position as CEO.

“I still embrace our long-standing mission to provide excellent customer service and be our clients’ ‘contractor for life’.” When asked about what it means to be a woman leader in a still primarily male-dominated industry Sten replied, “Harrell Design + Build has an inclusive culture that encourages new ideas and achievements regardless of gender. As Employee-Owners, we collaborate toward a singular goal, providing the ultimate quality and the best customer service to every client.”

According to Ciro Giammona, he stated emphatically that Lisa’s progressive entrepreneurial spirit, deeply-rooted understanding of the industry, and “get it done” attitude are reminiscent of Harrell Design + Build’s founder. “She embodies our company’s innate DNA and deeply entrenched core values. Through her leadership, Lisa Sten continues to elevate Harrell Design + Build’s already high level of quality, design, and customer care to even greater heights.”

Other talented female leaders also play critical roles at HRI. Senior Designer and Sales Coordinator, Gloria Carlson, CKD, UDCP, has worked at Harrell Design + Build for over six years. Gloria prides herself on listening to her clients, understanding their needs and lifestyle, which enables her to provide designs that are appropriate to how they live and the overall design of their homes. She also takes the lead in matching clients to other HRI Designers who then explore remodeling engagements with Harrell Design + Build.

Senior Designer and Design Coordinator, Sara Jorgensen, AKBD, CID, has been a key player at Harrell Design + Build for over 14 years. Sara is a stickler for process and helps guide all of our projects through the critical phases of design development, like feasibility and city plan check reviews. For her own projects, Sara starts with the initial planning stage, commencing with complex code city research. From the schematic floor plans to the design development for the entirety of the project, Sara works from a holistic viewpoint to the smallest of details that create the design’s “wow” factor.

Chief Design + Build Estimator/Specifier, Kathy Paul, has been estimating projects for Harrell Design + Build since 1998. In 2001, Kathy was promoted to Chief Estimator, and over the past 20 years has been leading the estimating team and been instrumental in developing Harrell’s comprehensive approach to developing projects through thoughtful phases from conceptual scopes of work to highly detailed build contracts.

Outdoor Living Designer, Lisa Parramore, APLD, brings a unique set of experience and skills to Harrell Design + Build. Lisa P’s passion for designing indoor-outdoor living spaces enables her clients to embrace the lifestyle for which California is celebrated. Her projects are informed by the special relationship between traditional Japanese architecture and their surroundings, whether it’s borrowing scenery from a distant landscape or creating a lovely courtyard vignette, Lisa P’s creativity is inspiring.

Divya Vijayanandakumar, LEED AP ID+C, UDCP, joined Harrell Design + Build in May 2019, and has already proven herself to her colleagues and clients alike. She takes a practical approach to designing spaces for clients, making sure functionality is weighted equally to design. Her charming personality makes her easy to work with and her practical approach to leading clients through the phases of design make the journey both pleasant and productive.

Harrell Design + Build’s design team offers a heightened appreciation for the finer points of style trends, mixing of materials, color, and cabinetry. Their practical knowledge of the home and inherent female touch affords them the ability to lead clients through a complex journey of design and value.

Despite having one of the industry’s most talented and award-winning design teams, “Collaborating with clients is a philosophy,” explains retired HRI Designer, Genie Nowicki. “If you engage the client in the design process, it’s a much stronger relationship.”

By involving every client in a collaborative process, listening to and understanding their distinct requirements, HRI’s female design leaders provide the love and care clients want, the quality they expect, and the flawless execution for which Harrell Design + Build is known.

As we enter 2021, we are incredibly grateful for our community of clients, many of whom have become friends and serial remodelers. Thank you for trusting Harrell Design + Build to transform your homes and make your vision a reality. We are inspired by the women in leadership roles that carry us forward into the future, and we remain indebted to Iris for the foundational and cutting-edge culture and values upon which she constructed the company. All of Harrell Design + Build’s Employee-Owners uphold the high bar she established for quality, relationships, and client care.

Since 1985, Harrell Design + Build remains Woman Founded, Client-Focused, and Employee-Owned.

PALO ALTO, CA Harrell Design + Build, has been named the 2019 ESOP Company of the Year by The ESOP Association. The announcement was made at the Association’s Annual Conference in Tahoe, CA.

“Harrell Design + Build is a terrific example of an ESOP company that actively engages its employee owners, the employee ownership community, and our elected officials at the local and federal levels,” said Lisa Sten, President of Harrell Design + Build. “We are fiercely proud of our commitment to sharing the power of ESOPs both internally and externally.

Founded in 1985, the company launched its ESOP only a few years later, in 2001. By 2014, Harrell Design + Build was 100 percent employee owned with every one of our employees eligible to participate in our Harrell Design + Build ESOP.

”We are so often inspired by the many remarkable Employee Owned companies that make our ESOP Association Chapter,” states Ciro Giammona, CEO of Harrell Design + Build “To win the Chapter’s Company of the Year Award among such an impressive field of contenders is a true honor and it makes us that much more proud of our 100% Employee Owned company and our Team!”

Harrell Design + Build proudly supports our internal ESOP educational committee, comprised of employee owners from every department in the company. They meet for 60 minutes once a month and offer a wide range of educational and inspirational activities to help our employee owners learn about ESOPs and our unique company culture. Externally, they shares lessons learned by participating in and speaking at chapter and national meetings of The ESOP Association.

Founded by Iris Harrell in 1985, Harrell Design + Build is now a 100% employee owned company, and provide award winning, full-service Design + Build services, specializing in timeless residential interior/exterior design.

Learn more about our work and culture here: https://harrelldesignbuild.com/.

About ESOPs
An ESOP (Employee Stock Ownership Plan) is a retirement plan permitted by federal law. Owners of a business set up an ESOP by selling some or all of their shares to an ESOP trust, which then credits shares to the accounts of participating employees. The Trust holds the shares for employees for the duration of their tenure with the company. After leaving the business, employees may receive cash for the value of their shares or roll the funds they receive into another qualified retirement vehicle. ESOPs are the only retirement plan authorized to invest primarily in the stock of the employer. Under specific conditions, employees are legally entitled to diversify their ESOP funds and to invest assets outside of the company.

Related Links
http://www.esopassociation.org

Media contact:
Bella Babot
Director of Marketing
650-230-2900
bbabot@harrell-remodeling.com