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Last Update: Sunday December 17, 2017

Key Idea: Turn Great Employees into Owners

At Ziba Design employees can earn shares in the company.    More...

Key Question:

A: 

Find ways to give employees ownership in the company.

Sohrab says, "One of my golden rules is that what is good for the goose is good for the gander. Whatever is good for me should be good for the next person. If you want them to feel like this is their own company, give them what you have."

Q:
What are the benefits of an Employee Stock Ownership Program (ESOP) to a small business?

A: How often have we said that we wish our employees would act like owners? Under an ESOP, it's not an act, the employees are owners. Think of the ESOP as a stockholder. Distributions of profits at year end are made equitably among all stockholders based on their percentage ownership. Within the ESOP, different employees hold different percentages of the total stock of the ESOP based on their position and longevity with the company.

An ESOP is also an effective way for you to cash out of your company while leaving the company intact. The transition of ownership can be gradual and you can be paid the value of the company from the earnings stream as you enjoy retirement. The next generation of ownership can do the same thing, thus prolonging the life expectancy of the business.

Think about it

Should you talk  to your CPA and your attorney about ESOPs and whether they are an appropriate incentive and legacy planning tool for you and your business?
 

Clip from: Ziba Design - Be well. Do it well. Then Do It Even Better.

Sohrab Vossoughi and his people seek a higher perfection.

Portland, Oregon:  "Be well. Do it well. Then, do it even better"  drives this industrial design firm. These creative perfectionists have come from all over the globe to work side-by-side with this man pictured above, Sohrab Vossoughi.  They want to be part of a team that can make a difference in this world and in their life.

"Strive for simplicity, innovation, human-centered interaction, visual interest, and efficiency." This is the calling card not just of a design firm; it is a calling card for all businesses for the future.

Ziba Design, Inc.

Sohrab Vossoughi, Founder, CEO

334 NW 11th Street
Portland, OR 97209
503.223.9606

Visit our web site: http://ziba.com

Office: 503.223.9606

Business Classification:
Design, Invention,

Year Founded: 1991

Turn Great Employees into Owners

HATTIE: After Sohrab discovered that a bookkeeper was embezzling, and a mentor told him the business needed a CFO, he hired his brother, Sia.

SIA VOSSOUGHI: We got to a point about 7 - 8 years ago – where we were stuck at a certain revenue. We couldn't push over that -- you know -- and it was chaotic and people were trying really hard and everything else, but it just wouldn't happen. So we sat down and we actually strategized, we brought a couple of – our clients were MBA graduates and they sat down with us and they strategized about where we wanted to go in the next 5 years. And based on that also we decided what type of infrastructure we needed. We realized that in order for us to grow, we needed to figure out how best to retain the individuals who are here and one of the tools that we are using is our ability to give stock options to individuals.

HATTIE: Okay, let me get this straight. You are now allowing employees to own stock.

SIA: That's correct.

HATTIE: That's great. Okay, so when did you start that? How did you do it – what instruments? Did you go to a stockbroker, your attorney – to put this all together -- how does that happen?

SIA: We went to our attorney and then we also have a human resources consultant working with us to put a plan together. When our employees get reviewed – which is once a year – everybody gets reviewed. It is a 360 degrees review -- and the group director, their direct reports, they suggest the name of the individuals who should be compensated – just not in cash wise but also in stock situation – to this committee of three. Which is my brother Sohrab plus two other individuals, two other employees. And then, they make a decision about how many shares of option are given to each individual.

HATTIE: So they are given this stock. If I worked here, I couldn't write you a check and buy some.

SIA: No. HATTIE: I have to earn it by my contribution. SIA: That is correct.

HATTIE: So did your attorney put in place?

SIA: Yes. It is an Employee Stock Ownership Plan or ESOP, as they call it.

HATTIE: An ESOP. Right. And the people that have stock are staying?

SIA: That is correct. And they share in major decisions of the company. We let them join the management group in making decisions that affects the bottom line.

SOHRAB: One of my golden rules is that what is good for the goose is good for the gander. Whatever is good for me should be good for the next person. If you want them to feel like this is their own company, give them what you have.

JONATHAN: I think the thing the surprised me most when I got here is that Sohrab actually sits in the same office with everyone else. I have worked in corporate environments and other consultants -- when I came here and saw that he actually sat in the corner of the room, that was a really big thing for me. He wasn't closing himself off or putting himself away from the people who work for him. You know, he is in there, right in the middle of it.

NANCY: It's great to have a leader that you can go to and throw these creative ideas off of and he gets it.

AARON: He is like anybody else that you hear about a lot and you admire from afar and that you read about in magazines. You don't really know them as a person, and then you get here and you get to work with them. It's great, it is such a learning experience.
 

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