On June 25, 2017, I'll turn 60. While this is a milestone for all of the usual reasons, there's also a more unusual reason this date is looming large. At 60, all shareholders in the company I lead, FORREC Ltd., are required to sell their shares. They don't have to leave the company – they are still encouraged to play a vital role in helping the business succeed – but we want them to make room for the next generation.
I was one of the people who created this rule. This was almost 20 years ago, when I was in my 40s, and 60 seemed a very long way away. Now that it's here, I have a unique opportunity to reflect on the intentions of this policy, and what it means for both me and the company I'm passionate about.
FORREC is a global entertainment design company. If you've been to Universal Studios, Canada's Wonderland or West Edmonton Mall, you've seen our work. Globally, we've led projects including Happy Magic Watercube (a water park in Beijing that shifts in personality from day to night), the Centara Grand Mirage (a five-star, 500-room luxury destination in Thailand) and Neptune's Living Point in Mumbai. I spend my days developing theme parks, water parks, retail and mixed-use developments, resorts and visitor attractions – it's fair to say I love my job. In many ways, I could do this work for the rest of my life, very happily. But I also know that making the transition from a shareholder role is still the right move for the company, our employees and our clients.
In 1985, we made the decision to incorporate FORREC – an unusual move in the design world, where most businesses are set up as partnerships, and where securing a "partner" title is considered the ultimate metric of success. But we wanted a structure that offered more flexibility than "partner" or "not a partner" for our employees. And as a corporation, we could offer an employee the opportunity to become a shareholder with as little as 1 per cent ownership in the company. At the time, we had 10 shareholders – all of whom were employees in the company. Today, 16 employees are shareholders: more than 10 per cent of our entire work force. Our goal is to make it as easy as possible for employees to become shareholders. And so when employees are first invited to be shareholders, they receive a discount on a percentage of their first shares as "sweat equity" as well as the option of a one-time loan to help with the purchase.
At the same time, we decided that the makeup of those shareholders had to be fluid. We had seen firsthand the effects of founding partners at competing firms holding onto their ownership for far longer than they should have – or choosing a sale of their company as the only logical exit when they were ready to retire.
And so we created the policy that all FORREC shareholders would be required to sell their shares beginning at age 60, with all shares sold within five years. This enables the next generation the opportunity to buy shares and increase their own personal stakes in the company. And we created a structure that ensured that shareholders weren't just reaping a financial benefit from their position, but were real decision makers in the company's future. And we wanted to continually be making room for the next generation of leaders. We weren't the first organization to create this kind of "sunset clause," and while some companies have struggled with it over the years (I've been watching with interest, for example, the succession challenges facing Couche-Tard), I still maintain that it's the best decision we've ever made for our business. Here's why.
FORREC is bigger than any one person. FORREC is led by its shareholders – even my role, as president, is shareholder-elected. We're not building Gordon Dorrett Ltd., we're creating an organization and a structure that lives beyond me and offers incredible opportunities to everyone who works here. I get excited when I talk to junior team members or potential employees about what it means to work at a company where shares are continually becoming available as existing shareholders hit 60. There are almost limitless opportunities for smart, motivated people.
We hire, train and promote differently. We've been thinking about my 60th birthday (and the upcoming 60th birthdays of a few of my fellow shareholders) for several years now, and it's caused us to examine our team in a way we never would have done before. Instead of just assessing employees based on how good they are at their job, we're examining – and helping develop – the leadership potential and management skills in people at every level as we prepare the next generation of shareholders.
We look for leadership everywhere. We are a design company, and almost 90 per cent of our employees are designers. But you don't have to be a designer to lead our company. Any FORREC employee is eligible to become a shareholder – from HR to finance to IT. Leadership looks different through this lens.
There's no question that the biggest challenge with this transition will be personal. I've spent more than half my life at FORREC. I plan to continue to have a role with the company that lets me make a contribution – advising and consulting on projects, and continuing to counsel the team on how to embrace the boundary pushing that's always made FORREC great. Yes, it will be a dramatic change – but change is good, I keep reminding myself – for me, and for FORREC. Ask yourself: how would you change your company, if you could?
Gord Dorrett is the president of FORREC Ltd. For at least 340 more days.