R&P Oak Hill Development has found new owners: its employees.
The Buffalo construction company will transfer ownership to its full-time employees over the next 10 years, it said. The transition will take place through an Employee Stock Ownership Plan, a type of profit sharing plan that pays workers with stock ownership, Employees will be awarded stock according to a performance-based formula. The company has 45 full-time employees.
The transition goes into effect Thursday.
Company owners said they are getting older and were looking for a succession plan that would benefit employees and keep the company strong. Partner Gary Bichler is 65, partner Chris Hogan is 59.
“We could stop taking on more work and close up shop, but that’s not fair to our younger workers,” Hogan said. “We could sell, but we’d be putting their fate into someone else’s hands.”
The ESOP would let them put employees’ fates into their own hands, he said. It would also give the partners plenty of time to ensure a seamless succession and incentivize worker performance.
R&P said it was inspired by two other local ESOP success stories – the John W. Danforth Co. and Ferguson Electric Co. Ferguson is an electrical contractor based in Buffalo which sold its company to employees through an ESOP in 2000. Danforth is a mechanical contractor in Tonawanda, that has had an ESOP for decades.
Giving employees an ownership stake has been shown to have a positive effect on company performance. ESOPs have been shown to increase sales and employment, help a company’s longevity and increase sales per employee by up to 2.4 percent per year, according to a Rutgers study published in 2013.
R&P was formed 10 years ago by Melissa Garman Baumgart and is still owned by the Garman family with Bichler and Hogan as minority shareholders. Former president Baumgart will remain on the company’s board of directors. Bichler will stay on as president and CEO, Hogan will stay on as chief operating officer. Three other employees have been promoted to executive positions – On Rattanphasouk, Matt Famiglietti and Dave Sanford.
The company will also rebrand with a new logo to mark the ownership transformation. It will also change its name to RP Oak Hill Building Co.