An Interview With Chad Silverstein
Transparency. Employee ownership succeeds when employees understand both the hard work and the rewards, and then take part in making it better.
In a business landscape increasingly marked by employee entitlement and corporate greed, Employee Stock Ownership Plans (ESOPs) stand out as innovative outliers in business succession. ESOPs not only secure business continuity but also spread the wealth, tying a company’s success to employee well-being. This approach shifts the corporate success narrative towards participation, engagement, transparency, and collective prosperity. In this interview series, we are talking with forward-thinking leaders adopting ESOPs, despite the challenges. As a part of this series, I had the pleasure of interviewing Gil Mermelstein. Gil is a board member and the president of West Monroe, a global business and technology consulting firm that is 50% employee owned. He oversees all market and client-facing parts of the business, including consulting lines, client success, market growth functions, strategy, revenue, commercial growth, and marketing. Under his leadership, he ensures the firm’s value proposition to implement value creation programs enabled by technology, is a sought after by its clients for their most important opportunities.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a little bit about you. Can you tell us about your ‘backstory’ and how you got started?
I have been a leader at West Monroe for nearly 15 years and have spent almost three decades in consulting.
I grew up in Israel, completed my three-year military service in the Israeli Navy, and moved to the United States for college at 22. I got my degree in accounting with an economics minor from the University of Maryland and began my career in auditing at one of the Big Four.
I knew I didn’t want to do auditing forever and I decided to get an MBA from INSEAD Business School in France, known for its international focus. Throughout business school, I was exposed to a variety of industries and career paths. Ultimately, consulting appealed to me because it offered variety — I was too curious and wanted to master how to solve challenges and help companies succeed.
After spending 14 years at A.T. Kearney, MBNA (now Bank of America), and Bearing Point, both in the United States and in London, I joined West Monroe in September 2010 for the entrepreneurial opportunity as employee number one in New York City. Then, the firm was only about 150 people, and mostly concentrated in Chicago. We have grown the firm 15-fold since. I have held various leadership positions at the firm, including heading global alliances, leading our firmwide Financial Services industry segment and overseeing the New York office and East Coast.
Most recently, I served as Chief Operating Officer overseeing all consulting lines, laying the groundwork for my current role as president. Shortly after joining West Monroe, I also became a board member to take part in the firm’s governance and strategic direction.
How would you describe the culture at your company and what has been the biggest contributor?
I’d describe our culture at West Monroe in three ways. First, it’s highly collaborative. Our people work together to deliver impactful results for our clients, communities, and the company as a whole. I like to say it’s a true “we” culture. Second, there is a strong and clear mindset of stewardship, where everyone looks out for one another and all of our stakeholders. Lastly, West Monroe is a fun place to be. Our people genuinely enjoy working together and building things for the benefit of our clients and their careers. That’s why one of our core values is “Make work fun.”
One of the biggest contributors to our culture has been employee ownership, as it attracts the type of individuals who are motivated by self-discipline and mutual accountability. Our commitment to employee ownership demonstrates our dedication to building careers and financial security for the future. We care for our people and foster a culture where everyone contributes to the greater good — both within our four walls and outside of them.
Over the years, we’ve embraced different variations of employee ownership, including an incredibly successful ten-year ESOP from 2012–2002. Now we have a KSOP, which allows 100% of our employees to be owners of the company. Regardless of structure, the DNA of employee ownership is vital to West Monroe and is a key differentiator.
How would you explain what an ESOP is to someone who has never heard of it before?
An ESOP means that every employee is an owner of the company with real shareholder ownership provided incrementally over one’s tenure. This structure promotes longevity and is meant to build long term financial security. The longer you stay, the greater stake you have in the company.
Looking back, what was the catalyst that made you start thinking about transitioning to an ESOP?
This is often the catalyst for many organizations and was the case for West Monroe — we went through a generational shift in the company as several founders were retiring. This turning point prompted us to think more deeply about the future of West Monroe and how the ownership structure should evolve for the next generation.
In response, the board decided to adopt an ESOP to double down on our commitment to employee ownership with a formal structure in 2012. Previously, we had operated under a phantom stock employee ownership structure for our first ten years. Moving to an ESOP ensured a highly regulated and federally established plan, ensuring that our employees could participate in a fair and equitable way.
Was there ever a point you doubted the ESOP route? What kept you motivated to push through those challenges?
I have never doubted the ESOP or broader employee ownership model. Throughout West Monroe’s history, the philosophy of employee ownership has consistently proven to be a success story and a unifying force among our employees. There is a clear correlation between our employees’ commitment and care of one another, our clients, and the company. The mantra of employee ownership is powerful in driving both business results and creating a better environment for people.
However, as organizations evolve and change, so may the ownership structures. In 2021, we had to reevaluate and change our employee ownership structure concluding in the shift to an alternative structure and bringing an investor to join our next growth chapter, BDT & MSD Partners. We transitioned to a KSOP, which an employee ownership vehicle via our 401(k). Our employees now have the choice to buy in, and I’m proud to say an overwhelming majority do, with over 80% of our employees participating!
Although I’ve never doubted employee ownership, there have been a few challenges. One that comes to mind is the highly regulated nature of ESOPs, which can make acquisitions more complex due to valuation. We acquired 10 companies while being an ESOP, so we were able to find ways to do it, although it was more challenging to do so.
ESOP companies often have a distinctive culture and operational approach. What makes your company stand out from others, thanks to the ESOP structure?
The ESOP structure was a great fit for the long-term growth mindset we cultivate at West Monroe. Our ESOP structure was a huge factor in West Monroe’s 10 year 27% CAGR, which is unheard of in our industry. This is not uncommon, employee-owned companies outperform.
Since our inception it’s been incredibly important to operate cohesively across practices, disciplines, and capabilities in a true multidisciplinary fashion. By working together we’re able to create lasting value for our clients and win in the marketplace. ESOP and employee ownership play a significant role in this by aligning our people’s shared incentives and fostering a culture of shared success.
Great. Now, let’s dive into the heart of our interview. The transition to an ESOP involves a lot of challenges and opportunities to learn. Could you list the top “Five Things You Need to Successfully Leverage the Power of ESOPs”?
- 1. Transparency. Employee ownership succeeds when employees understand both the hard work and the rewards, and then take part in making it better.
- 2. Stewardship. Everyone, from leadership to entry level employees, has a shared responsibility to make the company better.
- 3. Long term view. The ESOP structure is not suited for those looking to stay for only a little while. Rather, it creates long term value for employees that want to stick around.
- 4. Education. ESOPs are complex. Companies have an obligation, particularly with the younger generation, to educate them to fully understand the value.
- 5. Value creation. Companies with ESOPs must execute well by turning the ESOP concept into a tangible reality, otherwise it loses credibility.
Financial literacy is crucial in an ESOP for employees to understand the value of their shares and how their actions impact the company’s success. What initiatives have you taken to educate your employees about financial aspects and the workings of the ESOP?
We host information sessions and provide dedicated online resources, including an employee ownership intranet hub. There is also a total rewards section on our intranet unique to each employee, showing how all aspects of their rewards package, including employee ownership, factor into their long-term earnings. We also have a dedicated full-time resource available to answer questions and assist directors and above with financial planning resources.
Education must take place at all levels, from partners responsible for driving sales to entry level consultants focused on work quality for client projects. Everyone must understand how their various responsibilities play a significant role in driving profitable growth for the firm.
Employee ownership often changes the dynamics of engagement and participation. How have you seen employee involvement evolve in decision-making and daily operations since transitioning to an ESOP?
I noticed much more scrutiny by our employees when we transitioned to an employee ownership model. We provide our people with latitude, which in return comes with responsibility and accountability, rather than a top-down mandate. We always encourage our people to think and behave like owners — and they do.
Company culture and the ability to attract top talent are critical factors for business success. How has adopting an ESOP model impacted your company culture and your approach to recruiting and retaining employees? Do you believe the ESOP model has given you an advantage in the labor market?
Employee ownership has given us a significant advantage in recruitment and retention. The culture at West Monroe is distinct and palpable, noticed by interview candidates all the way to tenured employees. New hires comment on the unique commitment to each other and client success — — something unlike anything they’ve experienced before. It all ties back to the culture of common ownership.
How can our readers further follow you or your company online?
You can visit our website: https://www.westmonroe.com/ and follow us on LinkedIn: https://www.linkedin.com/company/westmonroe.
This was great. Thank you so much for the time you spent sharing with us.
About the Interviewer: Chad Silverstein, a seasoned entrepreneur with over two decades of experience as the Founder and CEO of multiple companies. He launched Choice Recovery, Inc., a healthcare collection agency, while going to The Ohio State University, His team earned national recognition, twice being ranked as the #1 business to work for in Central Ohio. In 2018, Chad launched [re]start, a career development platform connecting thousands of individuals in collections with meaningful employment opportunities, He sold Choice Recovery on his 25th anniversary and in 2023, sold the majority interest in [re]start so he can focus his transition to Built to Lead as an Executive Leadership Coach. Learn more at www.chadsilverstein.com
Gil Mermelstein Of West Monroe On Why ESOPs Are the Future of Business Succession was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.