An Interview With Chad Silverstein
ESOPs require A LOT of patience and a real commitment to both making it a reality and the ongoing management… it is not for the faint of heart. You must firmly and genuinely believe an ESOP is important and the right thing to if you go this route.
The global pandemic has forever altered the landscape of sales, propelling us into the era of remote selling. Today, businesses and sales professionals face the challenge of connecting with clients and closing deals without the traditional in-person interactions. Mastering the art of remote selling has become not just an advantage but a necessity. From leveraging technology and digital tools to building trust and rapport over virtual platforms, the skills required for effective remote selling are evolving. I had the pleasure of interviewing Melanie Dulbecco.
Melanie Dulbecco’s mantra is “Grow, baby, grow!” and that’s exactly what she’s done for 33 years as Torani’s first outside CEO. Torani, the fiercely independent flavor company and certified B-Corp, has averaged double-digit, year-over-year growth for over three decades and is the nation’s leading brand in consumers’ kitchens and cafe shelves from coast to coast.
Unconventional in approach, Melanie leads with a “people-first” philosophy that benefits each individual team member and the company as a greater collective. Torani’s company culture is palpable, with a shared passion around its “Flavor for All, Opportunity for All” purpose. Melanie and the Torani team are deeply committed to building value and positive impact for all stakeholders, team members, partners, customers, and the local San Francisco Bay Area community.
How would you describe the culture at your company and what has been the biggest contributor?
Most people know Torani first and foremost as a flavor company. You may have seen our bottles lined up in cafes, or maybe you even use Torani syrups and sauces at home. What you might not know as much about us is who we are at the core… we are an “opportunity company.” We believe businesses can and should create more opportunities for people — both economically, and in learning, growth, and development.
We’ve built an array of opportunity practices to support our team members at Torani, including long-term wealth building. We believe that success should be shared, so every role from the production floor to the c-suite has diverse wealth-building benefits. Benefits that offer 15% of an individual’s annual income toward retirement savings each year are considered world-class. At Torani, we’ve exceeded this benchmark with the combination of profit sharing, ESOP, and the chance to participate in 401(k) with matching funds. We believe this is the right thing to do and that if more companies supported their team members with wealth-building, this could begin to close the dramatic inequality and wealth gap in our country.
At Torani, we have other opportunity practices that give our team members agency to build their careers, pathways, and incomes. These include our “Contribution Management,” “Career Mixology,” and “Skill Blocks” programs. We’re proud to have never had a single layoff in our 99-year history and have unparalleled retention rates (mid-90s). We believe that giving our team members agency over their growth, career, and income trajectories is a powerful approach not only for our people, but for the company as a whole to thrive.
How would you explain what an ESOP is to someone who has never heard of it before?
An ESOP is an employee benefit plan that allows team members within an organization to own part of the company they work for. Participants receive shares in their ESOP accounts each year, and the value of their account can increase over time when the company is financially successful.
At Torani, our ESOP has been a fantastic way to let every team member from the production line to leadership have a part of our growing company. This year, when we announced the latest valuation and the growth of team members’ accounts, the excitement was palpable! We believe that open book management is not just the right thing to do, but also great for business. When team members understand the financials and how they contribute to them, everyone is more successful.
Looking back, what was the catalyst that made you start thinking about transitioning to an ESOP?
Helping our team members build long-term wealth has always been important to us. With Torani’s exponential growth — we’ve recorded a consistent 20% compound annual growth rate (CAGR) for over three decades and counting — creating an ESOP felt like a natural way to bring all our team members into the fold and share in this incredible success.
Was there ever a point you doubted the ESOP route? What kept you motivated to push through those challenges?
ESOPs are not for the faint of heart! There are many rules, regulations, and costs associated. There are specialized ESOP attorneys, ESOP trust administrators, and ESOP valuation specialists. In the midst of the process — working with this host of advisors — we wondered if it would all be worth it. Ultimately, our desire to share ownership was so great that we dusted ourselves off and dove back in to make it happen. We’re so glad we made our ESOP dream a reality, but if you are considering this path, make sure to do your research and know what you are getting into.
ESOP companies often have a distinctive culture and operational approach. What makes your company stand out from others, thanks to the ESOP structure?
People are at the center of everything we do at Torani. Whether it’s our own team members, customers, partners, or the local Bay Area community, our goal is to build a circle of success for everyone. Torani became a certified B Corporation in 2019, which is also central to our company culture. We’re firm believers that businesses like ours can can be an everyday force for good, and when like-minded companies join together, we can make a greater collective impact.
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”?
- At its core, an ESOP is about setting up shareholder ownership in the company — it’s an intense effort for a very long-term commitment and should be considered carefully.
- When done right, an ESOP requires a labyrinth of partners and advisors to not only build the initial structure, but also independently guide it afterwards. This is not a place to cut corners. The company, leaders, and team members must all be completely confident, and this requires working with great partners.
- Communication is critical to an ESOP’s success with the team. Informing team members during the initial roll-out and continuing to educate them annually builds understanding of this benefit and can also increase their connection to growing your company.
- An ESOP can be a powerful wealth-building tool for your team members, but it’s important to consider what other long-term, wealth-building benefits you will offer. Profit-sharing? 401(k) with matching funds? Or will you put everything into the ESOP? Our view is that having both — an investment in the company we’re building together, plus investment in outside funds — is a diversified and healthy way for our team members to build long-term wealth.
- ESOPs require A LOT of patience and a real commitment to both making it a reality and the ongoing management… it is not for the faint of heart. You must firmly and genuinely believe an ESOP is important and the right thing to if you go this route.
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?
Financial literacy is vital for people to thrive inside and outside of work, and it also unlocks even more value in an ESOP. At Torani, we’re dedicated to helping every team member build their financial literacy skills so they can thrive in their personal lives and play an active role in helping the company flourish.
We host several training and informational sessions to help team members understand their wealth-building benefits, including profit-sharing plans, 401k plans, ESOP, and other benefits. This financial understanding is key to enabling our team members to build their paths to successful futures.
At the company level, we’re committed to open book management. Every quarter we share sales, forecasts, margins, and many of the details in between with all our team members. This information helps every one of us understand how we fit into the bigger picture and how we can each contribute to the company’s growth in our day-to-day work.
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?
Torani is a fiercely independent, people-first company with a culture centered around our core value of “Grow Baby, Grow.” This means growth not only for our company, but also for each us, our customers, and our community. This foundation has created a collaborative, committed culture for many decades, well before our ESOP launch. That said, plenty of studies indicate that ESOPs can lead to higher productivity, employee retention, and job satisfaction.
At Torani, it’s hard to say whether the ESOP has had a direct impact on these factors since they’ve always rang true, but it’s proven to be another way we can share our successes with our team. The ESOP has also created another avenue for team members to participate in our business and feel pride as part “owners.”
Recently, one of our warehouse team members swung by our CEO’s office after a town hall. He was interested in the details of the quarter’s financial results and wanted to better understand the calculations — we love seeing this level of interest and ownership from our team!
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?
In the today’s market, we’ve observed that job-seekers — especially the younger generation just entering the workforce — feel strongly about working for companies whose values align with their own. In this regard, offering an ESOP and other benefits that help people build long-term wealth has proven beneficial for Torani.
This was great. Thanks for taking time for us to learn more about you and your business. We wish you continued success!
About the interviewer: Chad Silverstein is a seasoned entrepreneur and thought-leader. With over 25 years of business experience, Chad’s entire career has been dedicated to creating a positive social impact in all of his enterprises. His entrepreneurial journey began while in college at The Ohio State University, where he founded Choice Recovery, Inc., which earned national recognition and was twice ranked as the #1 company to work for in Central Ohio. Chad is now a strategic advisor for Authority Magazine’s thought-leader incubator and an Executive Leadership Coach with Built to Lead, where he recently launched an online community for leadership development.
To learn more and connect with Chad, visit www.chadsilverstein.io
Melanie Dulbecco Of Torani 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.