Bret Keisling is joined by Certified EO co-founder and CEO Thomas Dudley. In this excerpt from an upcoming full podcast episode, Thomas shares the intentions behind the organization and how companies qualify as “certified.”
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Mini-cast 124 Transcript
Bret Keisling: 00:08 Welcome to the EsOp Mini-cast. Thank you so much for listening. My name is Bret Keisling and as it says on my business cards, I'm a passionate advocate for employee ownership. Next week, on our primary EO/ESOP podcast, I'm very excited to bring you a deep dive conversation with Thomas Dudley, who is the co-founder and CEO of Certified EO.
Bret Keisling: 00:29 There are a lot of really exciting things underway at Certified EO. For example, you'll hear about their directory of employee owned companies that currently has about 5,000 entries. Today. I'm going to bring you an excerpt from that full conversation where Thomas will share how Certified EO came about and how it developed the parameters for membership.
Bret Keisling: 00:50 As you know, at the podcast we celebrate and amplify all forms of employee ownership, sometimes at the same time. So at the end of this episode about Certified EO, I'm going to share an exclusive discount code for podcast listeners that will save you $25 off the NCEO's virtual annual conference in April, 2021.
Bret Keisling: 01:13 As you listen to Thomas Dudley, you'll hear he references his EO "A-ha Moment" as well as his graduate school background. And he shares both on next week's full episode. He also references a blog post and we'll include a link to that blog post in our show notes. Here's my conversation with Thomas Dudley.
Bret Keisling: 01:34 When you formed Certified EO in 2016, what was the intent and what do you mean by "Certified EO"?
Thomas Dudley: 01:42 Yeah, that's a great question. So the big intent is really, as I mentioned, to create national recognition for employee owned business, and there are many people in the employee ownership space doing all sorts of great work. Our unique contribution is focusing on, on really the Main Street audience, the normal person, helping them.
Thomas Dudley: 02:02 First of all, helping our community, tell this story in a way that resonates with millions of people, people who are not financial experts, who are not necessarily business owners looking to sell, but just more and more regular folks. And helping them see, well, hey, first, this is an option. Second, there are a lot of companies doing this nearby. If you buy these products, you can help your local economy. If you go and get a job here, it can create a financial opportunity for you and your family. Right? If we base our economy around this, it's going to anchor businesses in communities and create more stability. It's going to recession-proof some towns it's going to root these businesses locally so that factories don't don't move as much.
Thomas Dudley: 02:39 So we want people to see the opportunities, both for them individually, but also for their communities. And I think by doing that, we can help create this broad base of support for this idea, which will help everyone in our community. Ultimately, by doing this, we will reach business owners. So we will help facilitate more conversions to employee ownership, to grow the space. We'll drive more resources into existing companies to help them grow and grow the space. We'll make everyone's job easier in terms of that outreach. If everyone already knows about a couple of employee owned companies and has this positive opinion that'll help when other folks are reaching out to the business owners, that sort of thing.
Thomas Dudley: 03:14 So, the big intent is combining the reach of all these different companies to start this drumbeat of support and do something that'll be good for the whole community, but that we can only achieve through this coordinated effort by working together.
Thomas Dudley: 03:24 So that's our big, our big picture. And that was what we were thinking about when I was in graduate school. The link there is between discovering this idea, having that "A-ha Moment," and then coming up with this idea, I got interested in public opinion on employee ownership. So was in graduate school 2015, 2016 actually got involved in the Fifty by Fifty initiative with The Democracy Collaborative as well. So I was on that team as the researcher and doing that work. And I was lucky enough to sit in on this great convening where all these different people from like Loren Rodgers and Corey Rosen from the [National Center for Employee Ownership] NCEO and Michael Keeling from The ESOP Association and Melissa Hoover from the Democracy at Work Institute and all these different people from all over the space came together to talk about all these different ideas and I was lucky enough to be in the room because I was part of that Fifty by Fifty initiative, helping do some of the data and all that.
Thomas Dudley: 04:14 And something that struck me both after that meeting but then also as I was thinking about this idea, was just what do, what do normal people think about this, right? I get, there's this very passionate community. I get there's these true believers who see this and I'm one of them, but what is, what is the normal person thinking? And so I looked for research and I had seen some people who had studied this at the time, maybe like 20 or 30 years prior in the eighties, maybe the nineties, but I didn't see anything recent. And we've had some great advances in survey technology. So I used the Google Consumer Surveys platform to run some quick surveys of public opinion on employee ownership, wanting to understand consumer sentiment, but also job seekers and found really strong support.
Thomas Dudley: 04:54 I found consumers as interested in this as fair trade and organic, I found job seekers about twice as interested in employee owned as a great place to work. So found this really strong, positive support. And then this kind of links with the question of, well, how do you actually even find these businesses? Right?
Thomas Dudley: 05:07 And so the idea of the certification program is this is a proven model to create that visibility. And what you're doing is leveraging the reach of all these different businesses. I think ballpark there's about $300 billion in revenue among companies that meet our certification standard and are employee owned. That's huge reach, right? If we can get everyone on the same page with the same mark, the same simple message, that's how we're going to get this out there and get this in front of those 300 million Americans. So that was kind of what was forming in our head in terms of the motivation for the certification program.
Thomas Dudley: 05:38 Obviously to have such a program, you need to have a distinction. What does it mean to be employee owned? Our intention with that is not to be the arbiters of who's a good employee owned business and who's a bad one. No one really cares what we think on that level, right? This is a means to an end. It's not about us being the gatekeeper, but you do have to have that. And so big part of 2016 was reaching out to people to have that conversation and try to understand, okay, what does it really mean to be employee owned? And where should we set that standard?
Thomas Dudley: 06:02 We probably talked to about 150 people, companies, service providers, trade associations, I mean all, all over the space. What emerged was -- and actually, it's funny, I have a blog post I'm going to put up on this in, actually, a week or two -- but what emerged were basically three categories, right? There's money as an aspect of employee ownership, there's involvement in decision-making, and then there's involvement in governance and different people across the space have different opinions on, on like which of those three is important and to what degree, but what we found is that the big common thread is the money side. And really if you aren't creating that wealth building for everyone in a broad based way, it's hard to say that's employee owned. And you might think there are other things that need to happen as well. People might disagree with you, but I think everyone, at least the common thread we saw in those conversations was the financial aspect is really what is the common thread across all of these different aspects of the community. And the wealth building is really, what's going to move the needle on wealth inequality as well, which is one of the strongest motivations here is, is addressing wealth inequality and creating this more egalitarian or open way of doing business that has broad-based benefits and doesn't just benefit a few people.
Thomas Dudley: 07:16 So with that in mind, and kind of based on this broad consensus or not even consensus, but these 150 / 200 conversations we had, and trying to pick out the common threads there, we ended up setting our certification standards around significant, broad-based ownership. So significant would be at least 30% of the business owned by employees, excluding founders. Broad-based means access is open to everyone and concentration is limited. And we have more specific criteria that underlie that. Now some people hear those standards and they say, wait, we're a hundred percent employee owned, why 30? That seems low. Or, hey, we have you know, in the worker co-op space, people might say, well, we have our employees on the board, right and that's, that's much higher. And that's true. But if you zoom out to the broader economy about one in 200 American businesses meet our standards, right?
Thomas Dudley: 08:02 So it's only half of 1% of businesses that are 30% broad-based. So this is a very high bar when you start thinking about what the status quo looks like. And on top of that, from the certification standpoint, given our mission, it's really a means to an end here, we need enough reach to actually reach 300 million people in America. And so it, I think it's, both for those sorts of pragmatic reasons, but then also in view of the fact that it is a very high bar we ended up setting our standards there.
Bret Keisling: 08:33 I hope you enjoyed this excerpt of my full conversation with Thomas Dudley that will be available next week on our primary EO/ESOP podcast available wherever you get podcasts and at www.ESOPpodcast.com. We have over 260 episodes in our archives, and I hope you'll check them out.
Bret Keisling: 08:52 As I mentioned at the top of the episode in NCEO's virtual annual conference will be held April 20th to 21st, 2021 with a pre-conference on April 16th. I'm registered and I hope you will, too. When you register use the discount code EOPODCAST25 to save $25 off the cost of registration.
Bret Keisling: 09:14 Our country is going through a lot together right now, and that's how we'll get through it together, which is in the best spirit of employee ownership. Thank you so much for listening. This is Bret Keisling; be well.
Bitsy McCann: 09:32 We'd love to hear from you! To contact us, find us on Facebook at KEISOP, LLC and on Twitter @ESOPPodcast. To reach Bret, with one "T", email Bret@KEISOP.com, on LinkedIn at Bret Keisling, and most actively on Twitter at @EO_Bret. Again, that's one "T". This podcast has been produced by The KEISOP Group, technical assistance provided by Third Circle, Inc. and BitsyPlus Design. Original music composed by Max Keisling, archival podcast material edited and produced by Brian Keisling, and I'm Bitsy McCann.
Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field and the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement, but if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.
A note on the transcript: This transcript was produced by Temi, an automated transcription service. While it has been reviewed by The ESOP Podcast, we can not guarantee the accuracy of the transcription. Please refer to the original audio when citing sources.