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How to Build an Employee-Owned Business

These four steps will help you turn employees into engaged, invested coworkers.

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By Michelle Goodman

Julia Vandenoever
Kim Jordan turned over ownership of New Belgium Brewing Company to employees; beneficiaries included tasting room rep Laura Ferenchik.

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Kim Jordan and Jeff Lebesch wanted to run a more democratic business. Rather than shoulder all the tough decisions themselves, the founders of New Belgium Brewing Company sought their employees' input early on. This meant cultivating what Jordan calls a "high-involvement culture" of engaged, enthusiastic workers and transparency with staff about all sorts of matters, including company finances.

But employee enthusiasm goes only so far, so in 1996 the pair created a phantom deferred compensation plan, at no cost to the staff of their Fort Collins, Colo.-based craft brewing company. Later, when they started an employee stock ownership plan (ESOP), they honored the original plan until all account-holders' ESOP balances were larger than their phantom balances.

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