In 2007 Zingerman’s unveiled its “Vision 2020,” setting out broad goals for what the Zingerman’s Community of Businesses (ZCoB) would look like in 2020. According to the document, although “back in ’07 none of us could have guessed what the creative solution was going to be,” Zingerman’s by the end of this decade would have “found a way to share the growth and financial opportunity of the ZCoB at an organizational level.”
Zingerman’s governance committee, which includes both managing partners and staff of the Zingerman’s businesses, spent six years figuring out that solution. The result rolled out this February, when Zingerman’s offered any employee who has been with the company for more than two years the opportunity to buy a “community share” in the business for $1,000. The shares represent a financial stake in a newly created entity, Zingerman’s Experience LLC, which owns Zingerman’s intellectual property. (Previously, Zingerman’s co-owners and founding partners Ari Weinzweig and Paul Saginaw owned the Zingerman’s brand through a company called Dancing Sandwich Enterprises.) Each ZCoB business will contribute a portion of its profits to the Zingerman’s Experience pool.
Only active workers can buy shares, which must be sold back when an employee leaves Zingerman’s. About 400 of the companies’ 700 employees were eligible for the stock ownership plan during the first enrollment period in February. There will be another enrollment period this month.
Workers can pay a $50 financing charge up front, and then have the $1,000 share price deducted from their pay over a two-year period. The governance committee is also developing a second class of higher-risk shares.
The program’s lengthy development process was largely due to the ZCoB’s unusual organizational structure, with ten separate businesses each run by different managing partners. In Weinzweig’s words, the ZCoB “doesn’t legally exist, even though we’ve been operating it for twenty years as though it does exist.” That made it difficult to apply existing models like an employee stock ownership program (ESOP) or a worker co-op, because the governance committee wanted to make it possible for an employee of any of the individual businesses to have a stake in the entire ZCoB.
“There’s already gainsharing plans within each business,” Weinzweig explains. “If the coffee company has a good year, based on whatever metrics we agreed on, everybody in there would get something [as a bonus]. But what this does is, it’s a payout from the whole organization. You might have a bad year at the coffee company and you work there, so you get nothing from there, but you might get a couple hundred dollars from this.”
In addition to gainsharing, Zingerman’s has long had an open-door meeting policy allowing any employee to be engaged in management discussions. In late 2014 the company also added three staff partners to its managing partners’ group, allowing ordinary staffers a more formalized voice in Zingerman’s biggest decisions.
“I think a lot of places do staff ownership because they want to incent people to work harder, but I think here most people are already acting like owners anyways,” Weinzweig says. “We wanted to make it congruent by having them actually own shares to back up the way they were already spiritually and intellectually acting.”
Gauri Thergaonkar bought a share in February. Thergaonkar is a community builder at ZingTrain, the business focused on sharing Zingerman’s organizational methodology through instructional materials and presentations. Thergaonkar says she left a nine-year career at Ford to work at Zingerman’s in 2003 because she was drawn to the feeling of making a direct, quantifiable impact, both in customers’ lives and in her employer’s success. She says Zingerman’s democratic approach to decision-making made her “feel like an owner” even before she purchased a financial stake in the company. “I don’t have that ‘they’ feeling. It’s a ‘we’ feeling,” Thergaonkar says. “Sharing ownership,” she says, is “just an obvious next step.”
Ironically, after giving away Zingerman’s intellectual property to create the community shares, Saginaw and Weinzweig each paid $1,000 to buy one. “It’s important for us to be equal participants,” Weinzweig explains.
