July 1, 2022 | Boston, MA

Dear CTG Client,

I wanted to share some exciting news about our firm – Craftsman Technology Group (CTG). As of July 1, 2022, CTG has become a 100% employee-owned small business. As a mission-based firm, we felt employee ownership more fully reflected our values. Our goal in sharing this announcement is to answer any questions you might have as a client of ours.

First, it is important to note that Craftsman Technology Group, LLC has not changed for most practical/legal purposes. Our EIN remains the same. Our contract should not need amendment. Our business relationship and contractual relationships should not be affected by this change.

Background + History

I originally founded CTG in 2015 as an LLC. Over the years, we resisted the urge to sell some or all the firm to outside suitors. This is quite unusual for a services firm like ours. Many of our peers either sold their firm outright or attracted outside investment. From my view, it was clear that there is no such thing as “silent financial partners.” I watched as other firms grew recklessly to hit some arbitrary return on investment or sideline social sector work in favor of more lucrative industries.

I was able to bootstrap the firm. Over time, we built a steady base of clients and avoided outside financial entanglements. My goal was to create a firm I wanted to spend the rest of my career at – not to flip our company for near-term financial gain.

Over the years we have consulted many advisors on employee ownership. Our leadership had researched employee ownership models extensively and the firm is a participating member of the National Center for Employee Ownership https://www.nceo.org. In 2021, we retained the ICA Group (https://icagroup.org) to complete a feasibility analysis as to our suitability for  employee ownership and we felt we had the organizational maturity along with the capital required to complete the conversion. In 2022, we retained EOT Advisors (https://eotadvisors.com/) to finalize the design and facilitate the necessary legal filings to realize this change.

We originally anticipated converting to an Employee Stock Ownership Plan (ESOP). We spent quite a bit of time in discussions with other firms that had adopted this model. However, we ultimately felt that the ESOP model – widely recognized and regulated as a retirement plan – did not meet our needs or that of our workforce. The reality of our workforce is that many members of our team will spend a meaningful chapter (4-5 years) with us – but our sector is more prone to change than ESOP entities. We saw the incentives associated with the ESOP model as more consistent with the manufacturing sector where the workforce was likely to spend 10-20 years in one place. We sought to codify our social mission and approach to employee engagement but did not want the team to have to wait for retirement to see tangible benefits.

Ultimately, we opted to create an Employee Ownership Trust (EOT). The EOT model transfers the ownership shares into a trust that are held to the benefit of the employees. The trust document specifies that 2 members of our Board of Directors will be elected by employees among current employees. It codifies our social mission and preserves our commitment to working with nonprofit organizations moving forward. It also provides a profit-sharing structure for the employees. We are a modestly profitable enterprise, but where there are profits they will be distributed equitably among the team. This model is somewhat less common in the United States, though is the dominant form of employee ownership in the United Kingdom.

 Our goals for employee ownership can be encapsulated as follows:

1. Preserve the social mission of the firm. We wanted to be sure the firm did not wander from its purpose.
2. Attract and retain talented professionals. The trust codifies practices we have had in place around employee engagement. We wanted to ensure the team had a clear stake in both the strategy of the firm, as well as its financial well-being. We believe these practices will ensure we continue to attract and retain talented professionals to serve the social sector.
3. Ensure the continuation of the firm. The firm has always been larger than one person. Our founder expects to be a part of CTG’s work for many years to come – but wanted to be sure it outlived him or his involvement.

The move towards forming an Employee Ownership Trust is the culmination of years of discussion and exploration. Countless hours have been invested in discussions with our accountants and attorneys. Paperwork has been filed and filings have been made. We have taken a thoughtful, deliberate approach to this effort.

So, what has changed?

This is a situation where it feels as though everything, and nothing, has changed. We will continue to do the work as we do and strive to be better for the organizations we serve. We will continue to engage our team internally in strategy and direction. We will continue to be a workplace built around transparency, decency, and equity. None of that has changed.

But, there has been a seismic shift within. A “sense of ownership” has been replaced by “literal ownership.” The firm has always sought to benefit the employees here and the sector we serve. We are now bound by that in a real and lasting way.

Beyond the employee-elected directors, we are seeking independent board members that can help shape our future. We would encourage anyone that might be interested in learning more about board membership at CTG to please reach out to me. 

Summary + Conclusion

Thank you for the trust and confidence you have placed in us. We hope this news furthers that trust and confidence, and hope it points to a fuller realization of the partner we wish to be in service of the nonprofit sector. Please do not hesitate to contact me if you have any questions or wish to hear more.

BJ Cortis, CEO + Employee-Owner