ESOP arrangement checks 3 key boxes for Room & Board

MINNEAPOLIS — Officials for Top 100 retailer Room & Board wanted to ensure the brand is set up for success in the years and decades after founder and Chairman John Gabbert calls it a career, whenever that might be.

On April 1, the Minneapolis-based retailer shifted to an Employee Stock Ownership Plan, giving its 1,100 employees a financial stake in the company’s success. Jean Sand, Room & Board’s chief financial officer, told Furniture Today that the company had considered several succession structures, including non-profit ownership, public ownership and even private equity before landing on the ESOP. She said putting the company’s future in employees’ hands gave the leadership team what it was looking for.

“When we got to ESOP, we had three goals in mind: to preserve the company’s culture; making sure the environment, community partners and customers remain well-served; and that we stay profitable. That was the only one for us that checked all the boxes,” Sand said. “We had been looking at this for years. In October, we decided that ESOP was the way to go. We started looking very seriously at the ESOP transaction in October.”

The move is one in a long list of decisions the company has made with employees, its community and the environment in mind. Room & Board established a company wage of $45,000 for all full-time employees, pioneered same-sex partner benefits more than 30 years ago and, most recently, became a certified B Corporation.

“If I think about all the things we’ve done over time from staff member engagement and providing for the wellbeing of our staff members to being B Corp certified, the ESOP is a natural next step we’re excited about,” Sand said.

Sand said when the announcement was made, the excitement was palpable. “From staff members, the amount of excitement we got was amazing. It was so great. People are excited about the program, as are we,” she said. “It provides a meaningful retirement program for them, but it doesn’t change the day-to-day. We’ve had a profit-sharing plan and a 401k in place for years. The profit-sharing plan elicited the same feeling for them, understanding how doing their job and serving the customer well impacts the company and the bottom line. The profit sharing and 401k will remain in place.”

And while the ESOP creates a greater stability, Sand said it really won’t change the way Room & Board operates, and its board — with Gabbert, Sand, President and Chief Operating Officer Bruce Champeau and Chief People Officer Nancy Greatrix — will continue to provide leadership and guidance.

“We’re still going to operate in the same, effective way we have over the years. We have a board of directors with John, Bruce, Nancy and myself,” Sand said. “We will still provide strategic and financial strategy for the company. From day-to-day operations and how we move forward, I don’t think there will be a lot of changes.”

And now that Room & Board’s ownership picture has expanded, Sand said she believes it will lead to continued growth for the brand.

“I think the simple answer is if staff members feel they have skin in the game and they’re working to make sure the customer experience is amazing, and that will ensure growth in and of itself. Great customer service spurs growth,” she said. “From a store perspective and location, 60% of our customers are interacting with us on the website. Stores have a critical part as well. We’re always looking out for opportunities, but for now we don’t have anything in the immediate future in store growth perspective.”