The Most Democratic Midsize Company in America?
Ted Gould works in the West Rutland plant, running the machines that turn big rolls of paper into cardboard cylinders. Tina Bell’s job is in the office of the plastics molding facility, over in central Rutland. Dan Pomykala is an IT specialist based at corporate headquarters, in nearby Proctor.
What do the three have in common? All are elected representatives to the corporate steering committee at Carris Reels, a Vermont company that is wholly owned by its employees through an ESOP.
Then there’s Frank Donovan, a maintenance electrician at the plastics plant, a man whose rangy arms and grease-stained fingers suggest his skill at pulling machines apart and making them work again. Donovan serves on the five-person trustee committee, the legal fiduciary responsible for overseeing the ESOP.
The steering committee—composed of elected representatives from every facility in the company, plus corporate and site managers—vetted and formally nominated Donovan for his position. It did the same for Shanna Sharum-Plis and Mike Arias, who currently occupy the positions reserved for an hourly employee and a salaried (but non-corporate-officer) employee on the company’s eight-member board of directors.
Make no mistake: Carris Reels is not a small-scale cooperative that can make every big decision democratically, one person one vote. It is a good-sized multinational business with manufacturing or distribution facilities in nine US states, Canada, and Mexico. Annual revenue is in the neighborhood of $100 million. Overall head count comes to about 750. Yet the company is at least a partial representative democracy—and then some. “Employees are involved in all aspects of Carris Reels’ governance,” writes Cecile Betit, an independent scholar who has studied Carris for years, in a forthcoming book. “The governance structure has become a drive shaft and steering mechanism for the company.”
As for what it took to reach this point, well, as the Carris folks might put the matter, it was one man’s vision and a hell of a lot of hard work.
A different kind of company
In the beginning, which is to say 1951, was Henry Carris. Henry, born in 1912, was a transplanted Iowan who settled in Vermont after serving in the US Marine Corps during World War II. He did a little teaching. He worked in several manufacturing jobs. Before long, he founded Carris Reels. For startup assets he had one employee, two thousand dollars borrowed from his father, and a handful of power tools. By the end of the first year he had six employees and was cranking out a thousand reels every day.
Reels, should you be wondering, are the spools used to package wire, rope, or cable. Reels come in a variety of sizes and materials—big wooden ones with plywood cores all bolted together for heavy-duty use, smaller plywood ones with Ted Gould’s cardboard cylinders at the center, small plastic ones with components created on injection-molding machines. It’s a pint-sized but critical industry: buyers such as cable and telecommunications companies are utterly dependent on a steady supply of reels. One of Carris’s large customers receives between ten and twelve truckload shipments from a Carris facility every day.
By 1980, Henry’s son Bill Carris was ready to take over the business. Henry had been a hard-nosed Vermont businessman. His favorite expression, according to company lore, was Get the wood out, meaning Move product out the door. Bill was a child of the sixties. Though a savvy reel man who had grown up in and around Carris’s plants, he wanted to know what the company’s purpose was. Who received the wealth it created? Who benefited from its operations? Was it fair? Bill began to study different corporate forms and management methods, and to commit his restless musings to paper. By 1994, after no fewer than 17 major revisions, he produced the final draft of the new Carris Reels’ founding document: The Long-Term Plan for the Carris Community of Companies.
The plan was nothing if not ambitious. Carris would be a values-driven organization, operated with a concern for the community and informed by the Golden Rule. It would be employee owned and employee governed. It would share profits with its employees and with charitable organizations. At the same time it would be a serious, profit-minded, growth-seeking enterprise run by skilled professional managers. Bill Carris offered to sell his stock, over time, to a newly created ESOP at half its appraised value. “It is extremely important to me that the future we have outlined in this Long-Term Plan be achieved—and used as an example for others,” he wrote.
The next 24 years brought a truly staggering amount of change to Carris, as Bill began to implement his vision. The company grew rapidly, including starting up a new facility in Mexico to serve the local plants of US customers. The ESOP bought chunks of Bill’s stock, culminating in 100% ownership in 2008. Bill retired as CEO in 2005, passing the torch to the company’s longtime vice president, Mike Curran. Carris struggled mightily through the dot-com bust in 2001 as major cable and telecoms companies retrenched or collapsed, and it struggled again (though not as mightily) during the 2008-2009 financial crisis. Along the way it acquired some companies and divested others, opened up new markets, and gradually became a leader in its industry. Dave Ferraro became CEO in late 2013 and continued the growth, acquiring reel makers in Quebec and Texas.
Meanwhile, Carris experimented with democracy. The corporate steering committee, with its elected representatives, came into being in 1996, and took a while to become a smoothly functioning unit. (“Used to be, we’d focus on one issue and gum it to death,” says Ferraro with a laugh. “It’s better now.”) Rank-and-file employees were first appointed to the ESOP trustee committee in 1995, and to the board of directors in 2014. Writes Betit in her forthcoming book: “In the practical, everyday sense, as the goals for 100% employee ownership and governance were met in the LTP [Long-Term Plan]—the employees became the successors in the Carris family business. In addition to becoming corporate shareholders their roles were made essential within the infrastructure and daily life of the company.”
Works in progress
Carris’s democratic structure, as executives such as chief financial officer Dave Fitz-Gerald are quick to note, is an ongoing journey, not a finished product. Some parts of the system work well. Others are under development.
Elections to the corporate steering committee, for instance, seem to go remarkably smoothly. “If you want to run, you can,” says Tina Bell, the office employee, who is serving her second three-year term on the committee. Now, she says, she’d like to get somebody else interested: “It’s quite an experience, and I want everybody to have a chance.” One obstacle to participation: members have to report back to their plants on what the steering committee discusses, which means speaking before a large group. “I wouldn’t want to do that,” confesses one employee.
As for its substantive responsibilities, the steering committee reviews and discusses measures to improve safety. It examines the company’s financial statements. It makes decisions about benefits such as health insurance. It also serves as a sounding board, both for employee concerns and for new ideas. These are no small matters, but the committee also has a larger role: it is “keeper of the flame,” as Carris people say, where the flame is the Long-Term Plan, and it is guardian of the company’s culture. Right now, it is about to take up Carris’s next strategic plan. “We discuss what the future holds for the company,” says Dan Pomykala. “We had a 2020 plan, now we’re working on a 2025 plan.”
But the steering committee isn’t involved in every major decision, mostly because of the nature of business. A sizable acquisition, for example, is a big strategic decision for any company. But acquisitions by their nature involve strict confidentiality agreements. When Carris acquired Texas-based Lone Star Reels, in 2016, CEO Ferraro made sure to inform every Carris plant, by video, at exactly the same time. But he was not able to discuss the prospective acquisition beforehand with anyone other than the board and a handful of senior leaders. “It was a little against our culture,” he acknowledges, “but that’s the way it had to be.”
Shop-floor involvement—regular participation by hourly workers in decisions affecting working conditions and processes—is also a work in progress. A consultant, Ownership Associates, helped Carris create a grid of decisions—which ones should be made on the shop floor, which by supervisors or site management, and so on up the ladder. “It has been interesting to hear employee owners asking, ‘Why are you making this decision? Where’s the decision grid on that?’” says Alex Moss, president of Praxis Consulting Group, a firm that has worked closely with Carris on governance over the years. Carris has also implemented a systematic method called Ideas in Motion for gathering employees’ suggestions and ensuring that they are followed up. Gould, who serves on the West Rutland plant’s ideas committee, cites one example:
Up in tube winding, we had these racks, we had to get a forklift to move them. One guy had an idea to put wheels on the bottom of them, we can roll them right out of the way. It makes our job so much easier. Simple things like that, management wouldn’t even think of, they’re not in the area working. In the ideas committee we’ve been finding that the people running the stuff have more of a grasp on what needs to be tweaked here and there, just small things that make the process run so much smoother.
Gould concludes: “People love it when they can see their idea being put to work. They feel they have input, and they feel like an owner.” That’s a goal that the company had from the beginning of the Long-Term Plan.
Democratic participation of all sorts, of course, has to be learned. As we have seen throughout our country’s history, it waxes and wanes depending on the issues at hand. Carris is no different. The company’s people have been—and still are—learning the rights and responsibilities that go with ownership and participation in governance. They are also learning more about the business. Though these processes are far from complete, there are at least two reasons to believe they will continue.
One is the ESOP itself. “In the beginning, I was young, I was in no way thinking of retiring,” says Bell, who has worked at Carris for 32 years. “But then you see your stock statement and it’s like, Wow! When you can have people retire early because of their ESOP account, it’s just amazing.” Ownership of a sizable stake encourages employees to take seriously how their company operates. Over time, the number of people with sizable stakes will increase. So will the stakes themselves. The company also shares 18.6% of its yearly profit with employees, issuing checks every February. That’s another stake that tends to focus the mind.
A second reason for optimism is less tangible: organizational democracy is based on trust, and on a belief that if you invest your time and effort you will be treated fairly. Several employees volunteered an appraisal along these lines. “It’s like a family here,” says Donovan, the electrician. “They care about you. You don’t get that at larger companies.” Says Pomykala, the IT specialist: “The atmosphere here, it’s hard to describe, but it’s different. Friendlier.” And Gould: “I love this company. I do my job, come to work every day. Even though I might not enjoy my day-to-day job every day, I love this company. I’m striving to make it better for everybody.”
The source of this culture? “Bill and Barb Carris,” says Donovan, firmly. “But I believe it will continue for a long time, especially with the leadership group we’ve got right now. That legacy is instilled in them.”
Carris is unlikely to diversify its business. “We are diversified geographically, and we have a diversified customer base,” explains CFO Fitz-Gerald. That doesn’t mean that growth is over. Ferraro, the president, says the company continues to experience some organic growth, and he confirms that other reel-industry acquisitions may be in the offing. So the company’s twin challenges will remain: run a thriving, growing, profitable business with skilled professional management—and do so as democratically, and as fairly, as possible.
Just what Bill Carris wanted.