Gardener’s Supply Co. Is Reaping the Rewards of Its ESOP Model

Garden-Gear Retailer Realizes Bottom-Line Benefits From Employee Ownership

Gardener's Supply Co. Headquarters

Gardener’s Supply’s headquarters are on what used to be an illegal junkyard. The site also includes the Intervale Center, which incubates small farms, helps farmers sell their produce and supports other agriculture-related projects.
Photo by Michael Corones

As Gardener’s Supply Co.’s product team designed its new Gardener’s Revolution Tomato Planter, employees throughout the company weighed in with suggestions. One recommendation made the portable planter easier to clean. Another prevented it from looking like a laundry basket.

“I think we had five or six designs for what this product would be, where we were having employees and test gardeners vote on what they liked and providing feedback about functionality and things like that. So we really opened the product up to the entire company to get feedback,” says product developer Cody McKibben. Sales of the planter after its launch in March were 50 percent higher than expected, he says.

This engaged level of employee participation has helped make Gardener’s Supply one of the strongest companies in the garden-gear industry and has earned it a 2016 Best for Workers designation. In print catalogs, on its website and in its two retail stores, the Vermont-based company sells roughly 3,000 products — a diverse array that includes self-watering planters, organic fertilizers, garden supplies, gardening tools, greenhouses, yard carts, outdoor furniture, footwear and apparel.

“It’s having these hundreds of employees thinking about opportunities and ways we can leverage them that I think really helps accelerate our success,” says Jim Feinson, Gardener’s Supply president. “We’re really focused on the home gardener. What are the challenges they face, and how do we create solutions for them? That does lead to true innovation.”

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Why ESOP?

For the company’s 215 year-round employees and 130 seasonal workers, this innovative spirit has been both rewarding and rewarded. All employees who work at least 1,000 hours per year can become corporate employee-owners as part of the company’s Employee Stock Ownership Program, or ESOP. Chief Operating Officer Cindy Turcot sees the participatory nature of the company’s ESOP as key to its success.

“We’re not democratic, we’re participatory, so we’re asking for input, and then management still makes the decision. We’re still a company run with hierarchy, but a participatory model is shown to be the key difference in what makes employee ownership more profitable compared with our competitors,” says Turcot, who runs the company’s ESOP and was elected chair of the national ESOP Association in 2015.

This competitive advantage is backed by research data. A 2013 Rutgers University study of a decade’s worth of data found that privately held ESOPs have been shown to increase sales, employment, and sales per employee by 2.3 to 2.4 percent annually over what would have been expected absent an ESOP. Another Rutgers’ study titled “Does Employee Ownership Enhance Firm Survival?” reports that “employment is more stable in employee-owned companies than in others, which in turn is associated with employee-owned companies surviving longer.”

Gardener's Supply Cindy Turcot

Cindy Turcot, chief operating officer, runs the company’s Employee Stock Ownership Program and serves as chair of the national ESOP Association.
Photo courtesy Gardener’s Supply

Gardener’s Supply’s ESOP began in 1987.  The company started making contributions to the stock accounts of employees, gradually increasing the ESOP’s ownership over the next 22 years until the company became 100 percent employee-owned in December 2009.

“Our founder, Will Raap, chose the employee-ownership model — he calls himself an “accidental capitalist” — because he believes philosophically that not only financial capital should get a return, but employees’ intellectual and physical capital should get a return as well,” Feinson says. (The company declined to reveal revenue and profit information, citing the competitive nature of its business.)

In addition to the benefits of employee ownership, Gardener’s Supply workers laud the company’s community spirit. In the 1980s, Raap and others helped revitalize 350 acres in part of an area in Vermont known as the Intervale that was used as an illegal junkyard. He moved Gardener’s Supply’s headquarters to the edge of the site and also created a nonprofit organization, the Intervale Center, that incubates small farms, helps farmers sell their produce, and supports other agriculture-related projects.

Today, Gardener’s Supply gives away 8 percent of pre-tax profits from its sales of garden gear to scores of organizations. At least 80 nonprofits benefited in the first six months of this year.

“Way back when, Ben & Jerry’s made a big deal of giving away 7.5 percent, and we wanted to do better than them, so we picked 8 percent. So that’s where the magic comes from,” Feinson laughs.

Flexibility and Mutual Respect

Flexible work schedules are also a cornerstone of the company’s operating practices. Nikki White, a seasonal employee at the company’s Burlington retail center, explains that the company’s worker-focused philosophy allows her to take time off on short notice to care for her 10-year-old daughter with special needs.

Gardener's Supply Company Farm

Gardener’s Supply employees harvest potatoes at Company Farm, which was started by employees in 2013 on a hillside beside the company’s Burlington, Vermont, headquarters.
Photo courtesy Gardener’s Supply

“If my daughter is ill, I know I can let the manager know and can care for her. There are not negative repercussions. If we are busy or are missing someone, we work together to cover what needs to be done. If I am off the clock and I see something that needs to be taken care of, I take care of it,” White says.

At the company’s Solar Energy Research and Construction (SERAC) factory in Georgia, Vermont, which manufactures Gardener’s Supply garden carts, raised beds and other products, employees have the latitude to use the company’s generous vacation policy — five weeks of vacation for employees with 10 years of service or more — to moonlight.

“Most of the successful people here are hands-on people, so most of them have construction or building-type backgrounds. Some of my better employees right now are master builders that tired of working outside, playing that game,” says Pete Gay, SERAC’s general manager. “So, to some of my guys, I say, ‘You want to get a job building a garage in the summer, use your vacation.’ And a lot of people do that. I have a guy who has a concrete business on the side, and he’ll say, ‘Hey, I have a job tomorrow, can I leave tomorrow at noon?’ ‘Sure!’”

McKibben says that culture of mutual respect leads to innovation.

“We are constantly getting input from people in the call center, people up in marketing, people in the warehouse, in retail — all chiming in with different product ideas or suggestions or things they saw,” says McKibben. “Great products can come out of that. And that probably wouldn’t happen if the people upstairs were like, ‘I just answer the phones.’”

This article originally appeared as “Where Worker Cultivation Includes Employee Participation” in the Fall 2016 issue of B Magazine. Read about the experience of another employee-owned business, Dansko, in our interview with co-founder Mandy Cabot.

Note: The percentage of above entry-level positions and filled with internal candidates and the paragraph detailing the company’s ESOP have been updated since this article ran in print.


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