SHELTER

October  2004

Empowering Employees
Wisconsin Distribution Emphasizes 
Customer Service Through Employee Ownership
by Samantha Carpenter

The best way to make its workforce totally committed to customer service is by being an employee-owned business through an Employee Stock Ownership Plan (ESOP), so believe the employees of Western Building Products of Milwaukee, Wis. As participants in the ESOP, employees are challenged to actively participate in the business, have the opportunity to share in the profits of the business and to vote on major governance issues that affect their work life.

What’s ESOP?
ESOPs have only been an option for companies since the 1970s. Western was family owned until 1983, when the family members left the business and Western implemented its ESOP.

An ESOP creates a trust in which it makes annual contributions. These contributions are used to acquire stock in the company, which are allocated to individual employee accounts within the trust. A number of different formulas may be used for allocation. The most common allocation is in proportion to compensation and formulas allocating stock according to years of service … but many others have all been used. Typically, employees might join the plan and begin receiving allocations after completing one year of service with the company, where any year in which an employee works at least 1000 hours is counted as a year of service.

“Becoming an ESOP takes time, and it’s not right for every company. A company culture that actively involves employees in the operations of the business is an excellent base for an ESOP,” co-chairperson of the board and ESOP trustee George Lorenz said.

Good-Paying Jobs
Through meeting and exceeding its customers’ needs, Western addresses another important mission of the company and its most important contribution to its communities, the creation of good-paying jobs for its employees. The ESOP makes a significant contribution to the fulfillment of this mission.

“That’s why we come to work, and that’s what has kept us here all these years,” co-chairperson of the board and ESOP trustee Bill Nicholson said.

Nicholson went into more detail about what Western provides its employees. Besides providing good paying jobs, he said the company also provides:
• A civil workplace;
• A community in an individualistic society;
• Opportunities for people to grow; and
• Job security when the norm isn’t security.

Western employees feel that being a participant in an ESOP is “an opportunity of a lifetime,” according to president Mark Willey.

Willey says that most employees, especially if they have worked at other companies in the industry before coming to Western, say, “I can’t believe they are so open to share so much information on how the company is doing.”

While Western provides for its employees, it also expects its employees to uphold certain standards. For instance, the company expects each employee to be on the job and to be fully engaged in serving its customers every day. (The company believes employment is not a casual relationship.) It expects each employee to give his best effort, to continually improve job skills and to meet quality standards.

The company also encourages employees to share their ideas and make suggestions at daily production and weekly team meetings. It feels it’s the employees doing the job who have the best ideas for improvement. They give out “Recognition Rewards” for ideas when they are implemented.

“We have a very diverse workforce, and the commitment we’ve received from employees has been overwhelming,” Lorenz said. “Many of our veteran workers take new employees under their wing. Everyone understands that the sooner a new employee becomes a competent contributor, the better job we’ll do. Meeting our customer’s needs is what makes the ESOP work.”

Marketplace Trends
To fully utilize the ESOP requires a company to hold a strong position in the marketplace. Staying abreast of trends in the marketplace is vital to creating that strong position. 

“Back in 1960 when I started, I remember talking about the need for two-step distribution, many people commented that they thought that the middle man would go away … I believe today the job of the two-step distributor is important and we are getting stronger. The more value-added services the better, such as pre-hanging doors, pre-finishing millwork and doing things correctly,” Lorenz said.

According to Lorenz, its prefinished millwork is probably the most significant value-added service it offers. Lorenz said the reason the company went into prefinished millwork was because the builder didn’t want to continue finishing millwork on the jobsite. The company stocks moulding in five colors, but it says its color offering is unlimited.

“[Colors] are driven by the market. We watch kitchen cabinet trends and watch what the large builders are requesting. If he says, ‘I really like toffee for a color,’ then we better be able to offer that and be flexible. Maybe that’s part of it, we [as a distributor] must be much more open minded,” Lorenz said.

Western has become an educational resource and hosts breakfast meetings where dealers come in with their customers and discuss such things as windows being installed properly. The company also gets feedback from its dealers’ customers by being a member of various builders’ associations. 

“Our whole philosophy is designed to do more for the customer. When you take a Western catalog and put it in front of the customer, we offer more services and we offer more products. Our philosophy revolves around doing more,” Willey said. 

Product Offerings
In addition to prefinished millwork, the company offers its customers windows, doors, jambs, exterior and interior millwork and other millwork-related products.

Some of its suppliers include: JELD-WEN, Andersen, Coffman, Ferche, Karona, Woodgrain, Brightwood, Trinity, Fypon, Turncraft and Simpson. 

The company also carries some imported products. 

“We haven’t gone overboard on imports. We’ve taken a lot of time researching suppliers, and we feel our suppliers are the very best. There are a lot of good prices out there, but we’re really looking at the whole package,” Willey said. “With that in mind, we are very cautious.” 

As far as trends in the door industry, the company says a lot of people have said that steel and fiberglass have taken over. 

“People still like wood. They want to have that natural look,” Willey said.

“People want variety. Everybody doesn’t want the same door. They want their house to make a statement of who they are … [While steel and fiberglass certainly have their place], you can do things with wood that you can’t do with steel,” Lorenz added.

Communication is the Key
Challenges that the company faces with suppliers revolve around the supply chain. 

“There’s been a lot of confusion and a lot of change. I think it’s starting to work its way out. There’s a place for boxes, there’s a place for selling direct to boxes, there’s a place for the distributors … The good manufacturers, good distributors and good dealers in the market continue getting stronger. There are companies that have gone out of business and consolidation continues throughout the industry,” Lorenz said.

“Communication is important. We have to be talking to the manufacturers all the time—to make sure they understand our role,” he added.

The company also feels communication with employees on hot topics such as increases in health insurance is important.

“It’s important for our employees to understand the health care situation. As employee owners, we provide them benefits … We set up focus groups. We meet with our employees and share all the information and show them the different options that are available,” Lorenz said.

Nicholson described Western best when he said, “We take care of the customer, but in order to take care of the customer, we have to take care of the employees.” 


SHELTER

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