Golden Valley-based Room & Board has given its employees a seat at the table and transitioned the furniture company to an employee stock ownership plan.
The move provides Room & Board's 1,100 employees, who are mostly showroom salespeople, with financial stakes in the retailer.
"Our 1,100 staff members have been key to our success," said Bruce Champeau, president of Room & Board, in a Wednesday interview. "It's so exciting to be able to award the staff."
Founder John Gabbert started Room & Board in 1980 after he left his family's Gabberts furniture business. Over the last four decades, Room & Board has become known for its focus on modern, quality furnishings, with more than 90% of its products made by manufacturers and artisans in the United States.
Last week, a video of Gabbert explaining the ESOP was sent to employees. The ESOP trust, which is responsible for managing the shares for the employees, was effective as of April 1.
Room & Board had been owned by 27 shareholders including 19 employees (including Champeau), with the rest consisting of Gabbert and his family members. Employees eligible for the ESOP are part- and full-time workers from various Room & Board departments including delivery and distribution, outlet, retail and headquarters staff. Room & Board has nearly 400 workers in Minnesota.
Room & Board's ownership change to an ESOP is rare in retail. About 5,900 private American companies have ESOPs, but less than 6% are related to retail, according to the National Center for Employee Ownership. In a lot of similar retail showrooms, employees are paid by commission, Champeau said. Room & Board moved its sales staff away from commission to salaries more than 30 years ago, early in the company's history.
ESOPs can not only give employees a sense of ownership and motivation for high performance, they are often used to provide stability after an owner's exit. While Champeau said he doesn't have any immediate plans to leave the company, "you don't want to make these kind of decisions when it's forced upon you."
"At Room & Board, our staff members are at the heart of everything we do," Gabbert said in a statement. "Over the past few years, we have explored every possible option for future ownership — from going public, to private equity, to nonprofit ownership. Becoming 100% employee-owned was the only option that allowed us to stay true to our business values of respect, accountability, transparency and collaboration and most importantly, preserve our company culture."
Earlier this year, Room & Board was certified as a B Corp organization for its social and environmental performance.
