For many entrepreneurs, the ultimate goal is to take their company public. But for fashion designer Eileen Fisher, staying private and giving her employees a share of the business has allowed her to carve her own path to success.
Fisher personally owns 60% of the company that shares her name, while the remaining 40% is held by her 1,200 full- and part-time employees through an employee stock ownership plan (ESOP).
“Once we started having extra profit, the first thought was share it with the employees. They do all the work, it’s only fair to share, which I think all companies should have to do. I really do,” she tells CNN’s Poppy Harlow in the latest Boss Files podcast episode.
Under the program, which began in 2006, all employees receive a stake in the company. They can exchange their shares for cash at retirement or upon leaving the company. In addition, employees receive an annual profit-sharing bonus.
In the US, fewer than 7,000 companies have an employee stock ownership program in place, according to the National Center for Employee Ownership. The average employee who participates in one of these programs owns shares worth $134,000, according to a 2018 Rutgers University study.
“I think even 10% of the profits is good for morale and for people feeling like they’re really a part of this company. People speak up more when they see things that don’t feel right or if people are wasting money over there,” she says.
While there are currently no employees on the company board, Fisher says it’s something she would think about.
Turning a business into a movement
Fisher launched her namesake brand in 1984 with just $350. A trip to Japan and a fascination with the traditional kimono inspired her to create clothing with “simplicity of shape and movement.” She saw immediate success at boutique trade shows and department stores.
Fisher recalls pitching the fledgling business to rooms filled with men who were bullish on her quickly opening hundreds of stores. But she was concerned they only cared about profits.
“There was a moment we sort of entertained the idea of going public and what would that mean. But I was told I didn’t have an aggressive enough growth plan.”
Staying private allowed her to move at her own pace. “I was always like step-by-step. If I open one store and it works, we’ll open four, and if the four work, we’ll open eight, or something like that. We’ll just see what happens,” she says.
Today, Eileen Fisher is valued at $400 million and has more than 60 stores across the US, Canada and the UK.
Staying private has also enabled Fisher and her employees – a majority of whom are female – to be more vocal about issues that are important to them. Fisher says many of her employees feel a sense of ownership in the company and are not afraid to approach her with a problem or concern. This free flow of communication has helped improve her leadership style and sharpen her decision making skills, Fisher tells Harlow.
“I listen to everybody. I love to hear what people are feeling and thinking and that influences where we turn the company and what we do,” she says.
For example, Fisher has become a leading voice on sustainability in the fashion industry, launching a program that resells and recycles clothing. So when the US pulled out of the Paris Climate Accord, she felt compelled to speak out.
“Withdrawing from the Paris Agreement is the wrong decision at precisely the wrong time. We have 11 years to address climate change,” she posted on Instagram at the time. “Remember your vote is your voice.”
Fisher and the company have also spoken out on other social and political issues like gender equality, US-China trade relations and abortion rights.
“I think we’re actually a platform. I think it’s really, really important for businesses to speak to certain issues. In a different time, you would think the government would be holding those kinds of things,” she says. “So it’s sort of requiring us to step up more.”
Fisher says the US-China trade war has made it more difficult for the company to manufacture products and do business in China. The company has had to scale back its production there as a result.
“The trade war’s been tough for us. We have been looking at reconsidering our positioning in China, which makes me sad because we have been in China [for more than 15 years] and we’ve done a lot of good work in China.”
Fisher says the company won’t “completely pull out,” of China, though. “We stay because we feel like we can make a difference by being there.”
She says the company wants to help move things forward in China, which is currently facing pro-democracy, anti-government protests in Hong Kong and human rights concerns over the treatment of the Muslim Uyghur population.
Among other measures, the company has hosted training seminars at its factories in China to help workers identify signs of slavery and human trafficking, including recruiting practices and migrant worker issues, according to the company’s web site.
“We don’t want to be a divider. We want to be a healer, we want to help, we want to bring progress, we want to bring people together. So we’re very careful in how we use our voice,” she says.