The Los Angeles Times featured an article about Howard’s Appliance & Flat Screen Superstores, which has been 100% employee-owned since 2000.
The company, which started as a radio repair shop in San Gabriel, sold nearly half of the company over to the employees when the government approved employee stock ownership plans in 1976. Employees acquired 100% of the company in 2000. Howard Roach still retains his place as chairman of the board. Under the ESOP structure, profit shares accumulate in employee’s retirement accounts The more profitable the company, the more employees receive when they retire.
The ESOP has resulted in far lower employee turnover than the in the rest of the industry. Howard’s, turnover rate is around 15% whereas other retailers typically experience 75% or more. Customers like dealing with faces they are familiar with from year after year and from generation to generation so having employees who have been there for decades is very beneficial.
“Because every employee has a vested interest in the success of the company, they do their part to make sure every customer gets individualized service,” Lawrence said. “Their ownership is reflected in how they treat customers, watch expenses, and in their dedication to constant training so they understand the products they sell and can guide customers to the smartest choices.”