WorldBlu winner committed to employee ownership
‘Everything we do that is successful is because of this type of model’
Thursday May 28, 2009 -- Camille Jensen
Chroma Technology president Paul Millman says there’s a common tie binding staff members at the Vermont-based manufacturer of optical filters and that is the company’s commitment to employee ownership.

A recent winner of the WorldBlu List of Most Democratic Workplaces, the company has been employee owned since its inception 18 years ago, a fact which co-founder Millman says is directly attributable to its growth and accomplishments.

“Everything we do that is successful is because of this type of model,” explains Millman, who has been quoted as saying he founded the company on the belief that if he wanted to be an owner, everyone else must want it, too.

Each employee must be with the company for one year before becoming an owner, at which point they are allotted a group of shares, distributed equally among staff members annually.

Under this model, Millman says the company has been able to function with fewer people because of higher productivity. Chroma Technology has grown from six founding members to more than 80, with annual sales of US $20.4 million. The four remaining founders now each hold nine per cent of the company, which makes Millman proud.

“We are incredibly productive (this) way because it’s our company and we are working for our collective good,” he says, adding employee ownership is well received by the public.

“We market ourselves to the world as an employee-owned company and I think that creates a greater amount of trust in our customers because they know it’s our company and they know what we do well reflects upon us, and what we do poorly reflects upon us.”

While the company's dedication to employee ownership has remained constant throughout its development, how the company organizes itself — including how owners exercise their authority over the decision-making process — has continually changed to reflect new circumstances.

For instance, during the company’s first 10 years most decisions were made by consensus at meetings attended by all staff members.

As the company grew, the process evolved into town-hall-style meetings where if consensus could not be reached, each employee would vote on a one-person, one-vote basis.

Since those times Millman says he’s learned to weigh democracy with other factors, such as experience, knowledge and interest. Because the company is much larger, Chroma Technology recently went through a restructuring phase to create more defined roles and authority.

The company still believes in self-management whenever possible, but has the board of directors appoint the executive committee and steering committee, which conduct most of the operations of the company.

The board of directors consists of four founders and three staff members who are elected by shareholders.

According to Millman, this model creates greater decentralized decision-making and authority. There are also a number of sub-committees developed for departments such as finance, personnel and new business development.

“If you decentralize decision-making you tend to make better decisions because nobody has the expertise to make all the decisions,” he says. “I do not believe in business geniuses.”

To learn more about Chroma Technology, click here.

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