Gallun Snow – an Employee Ownership Conversion Success Story

Gallun Snow Associates, Inc. is a professional commercial design firm located in Denver, Colorado. In 2019, the four owners contacted Jason Wiener PC to help them structure and then implement a conversion to an employee-owned company, worker cooperative. Members of JWPC met and discussed options with the owners for several months and a plan was created to sell the owner’s shares of the company to a worker cooperative. The owners accepted a promissory note from the new cooperative for the entire purchase price. Thereafter two of the owners retired while two remained with the company as co-owners with many of their employees.

Background

Here is a summary of a discussion conducted with Sara Parsons, one of the original owners of Gallun Snow and continuing as one of the “design principals” today. Sara was asked several questions about the benefits, advantages, and challenges of the employee-owned worker cooperative business model. Gallun Snow has had over four years of experience with the business model and can share the following:

Current Structure

When the company first converted to employee ownership, they had 18 employees, and all were invited to join the cooperative. Most of the employees were designers, with two administrative positions. Over the years, the company consolidated many job functions with the utilization of outside resources, such as payroll, bookkeeping/accounting, human resources, etc. so the co-owners could concentrate on what they did best – design the interiors of commercial spaces. They consider these outside resources as part of their team. Now, Gallun Snow has 14 people working at the company 10 of whom are co-owners, with 12  working as designers, an office manager, and a business manager. In addition, all but one of their co-owners are women, so for contracting purposes they are a woman-owned business.

The management structure at Gallun Snow consists of 4 Design Principals and 1 Business Manager Principal who act as the management team and conduct the day-to-day operations of the company. The co-owners all meet formally on an annual basis, and less formally in weekly or monthly round-table discussions. This structure allows the workers to have a voice and maintain their crucial role of providing services to clients.

Benefits/Advantages

Gallun Snow co-owners go through a probationary period when first hired and are then invited to join the cooperative if they meet the requirements for membership. Employee ownership has led to higher engagement of the employees in the activities of the company as well as a sense of ownership that cannot be had at most traditional professional services firms. Those firms might require decades of experience prior to getting their “name on the door”, while Gallun Snow can proudly announce who is a co-owner in a much shorter time period. Of course, the workers enjoy patronage dividends, which in some years have been limited, but in recent years have been healthy. These dividends are additional to other forms of compensation received by the employees that reward the contributions of various persons, including, for example, year-end bonuses.

Challenges

Gallun Snow has had several transitions over the years that have affected the business, including the disruptions surrounding the COVID pandemic, and a move to a new building. Unlike other companies required to move, Gallun Snow used the opportunity to have the co-owners design the new space. Following the move, one of the more challenging aspects of employee ownership for the company is how to keep the communication flowing between the co-owners and management team while still running the business. Another challenge has been to clarify what the qualifications for an invitation to ownership should contain. Thinking about who would be a good owner requires qualifications that go outside the scope of a job description, so much thought has gone into the definition of ownership and the roles and responsibilities of being an owner, as well as an employee. This is an ongoing process for the Gallun Snow team.

Conclusion

Sara has expressed that she believes strongly in employee ownership and thinks the conversion to a cooperative was the correct direction to take. The retiring owners had the opportunity to see a return on their investment, while the legacy of their company continues. Sara has even encouraged other firms in her sector of professional firms to think about employee ownership as either a retirement option or as a great business model and she knows of at least one other firm who has made the step toward employee ownership. Jason Wiener PC had the pleasure of helping this cooperative form and watching it blossom over the years. We will hopefully continue this relationship for many years.