Employee ownership is secret sauce at rapidly growing Burns & McDonnell

Gene Sieve, a native of Adrian in southwestern Minnesota and an engineering graduate of South Dakota State University, spent his first decade in business working for Burns & McDonnell in Kansas City, Mo.

Sieve left the engineering and consulting company for a decade to work for a couple smaller firms before B&M offered him a management job in 2007.

"I said, how about an office in Minnesota," recalled Sieve, 50. "We had done work here since 1913. And my heart was always in Minnesota."

Put together a business plan, was the response from the B&M brass. Sieve opened a two-person office in Bloomington a few months later.

Thing have worked out. The Twin Cities office generated $21 million-plus in revenue from 90 employees last year.

"We've captured market share because we've got really good people," Sieve said. "My goal is to double in size here by 2025 to 200 people. Our entrepreneurial people will make that happen."

Burns & McDonnell's total revenue from engineering, architectural services and construction last year topped $2.6 billion. The Minnesota office's revenue is growing at a double-digit pace, and the company overall is growing faster than the industry.

You won't find B&M as the named general contractor on sports stadiums, huge shopping malls or other sexy projects. In fact, it was ranked No. 84 nationally as a general contractor in the 2016 listing of Building Design and Construction Giants 300.

According to various industry rankings, B&M is No. 1 among industrial electrical design firms and among the Big 20 in designing and engineering things like military installations, green buildings, solar energy and wind-energy installations, and electric transmission infrastructure.

B&M die-hards say the secret sauce is 5,300 employee-owners dedicated to its 30-year history as an employee stock ownership plan (ESOP) firm that builds wealth over careers as the company grows more profitable.

"Everyone here is an owner," Sieve said. "The partners. And the receptionist."

ESOP evangelists say employee ownership, in addition to fair wages and benefits, is one of the only ways for working folks to build six- and seven-figure wealth over the long-term. Moreover, studies have found that companies that are at least partly owned by employees tend to outperform other companies, share the wealth more proportionately across the workforce and tend to have higher employee retention rates.

B&M was ranked No. 16 last year on Fortune magazine's list of the 100 top firms for which to work.

According to Denny Scott, chief financial officer of B&M, the company in 1985 was owned by a troubled steel company that needed to divest to save itself from insolvency.

B&M management beat an offer from a German manufacturer in 1986 with a plan to gradually sell the company to its employees.

"They felt strongly that the long-term viability of the firm would be best secured in the hands of active employees," Scott wrote last year in an ESOP industry publication. "During the [2008-09 recession] that depleted many retirement accounts, our ESOP remained afloat and even thrived. Employee ownership drives performance. Our people are successful when the company is successful."

The ESOP Association, the largest ESOP industry group, this year lauded B&M for employee communications, which are critical in helping workers understand the benefits and responsibility of ownership.

ESOPs hold stock in trust for employees, who incur no out-of-pocket expense. Management is charged with running an "open-book" shop in which policies and finances are widely disseminated.

If the company performs well over the long-term, employees can sell back their stock at increased value upon retirement or departure. B&M has done well lately in Minnesota with its focus on industrial, energy and infrastructure projects.

For example, B&M designed and engineered the 68,000-square-foot office and manufacturing center expansion for Cirrus Aircraft, which needed more space to produce its new single-engine Vision jet. The $12 million facility, completed in 2016, was financed partly by the city of Duluth on airport property. Cirrus is adding 150 production jobs to the 750 employees it employed last year at its Duluth campus.

"We selected Burns & McDonnell for the design work because of their extensive history of successful aviation projects, long-standing connection to Duluth, and expertise that stretches across diverse disciplines," Erik Birkeland, Duluth property and facilities manager, said last year. "Their dynamic plan had creative approaches and value engineering that balanced the project's budget while providing Cirrus with a fast-tracked construction timeline."

Other local projects that the Bloomington office has completed or is working on include:

• The Ben Franklin Readiness Center in Arden Hills for the Minnesota Army National Guard.

• The Aquatic Invasive Species Lab on the University of Minnesota's St. Paul Campus.

• Delta Air Lines' Hub Control Center Remodel at MSP International Airport.

• The St. Marys Hospital expansion that is part of the Mayo Clinic in Rochester.

• Multiple steam-energy upgrades at the University of Minnesota.

• Multiple Xcel Energy overhead power transmission and substation projects.

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.