Retailer Richard Kessler outlines his grand succession plan
Richard Kessler, owner of Kesslers Diamonds—an independent fine jewelry retailer based in Germantown, Wis.—hopes that in roughly five years, he won’t own a shred of the company he founded 35 years ago. Why? A slow transfer of ownership is central to his personal succession plan. The bustling business, which will open its sixth and seventh locations (in downtown Milwaukee and Grand Rapids, Mich., respectively) this year, instituted a 401(k)-style plan for its staff in 2011 that will gradually transfer full ownership from Kessler to his employees. And soon, more staffers will benefit from the perk. “We have a very aggressive plan for expansion over the next few years,” explains the 63-year-old Kessler. “We could triple the size of our company and have 300 employee owners. That would just be a marvelous thing in my world.”
Why did you choose to bring your employees into the company’s ownership?
Fifteen years ago, we started involving employees in the business—by giving them 10 percent of the profits. That meant we had to open our books to them and teach them how the business is run. In 2011, we finally formed an employee stock ownership plan [ESOP], where we basically turned over 49 percent of the company to the employees. It’s part of a long-term succession plan for me. Every year we put shares from the ESOP trust into employees’ accounts.
How has forming an ESOP changed your business?
Employees end up taking care of the business as though it were [solely] their own. There’s an investment there. When we hire people, they go crazy when they hear about it—to think you’re going to work for a company and get to own a part of it right away. Some senior people don’t love it quite as much because it’s a long-term thing. It’s the young people who will benefit from it the most. But you can’t please everyone.
Your daughter, Monica, is a big part of the business—she didn’t want to eventually own it?
No, not at all. She loves what she does and wants to keep doing it, but owning the business is not her thing. She’s part of an executive team that’s almost all women. Women are much smarter than men. I’ve been around for a long time, and that’s what I’ve come to believe. They’re definitely smarter than I am.
You have a history of approaching jewelry retail in innovative ways. What are some things that make Kesslers different?
I spent the weekend with [self-help guru] Tony Robbins, who told me to change my belief system. I came back to Milwaukee and said, “If I was a consumer, what don’t I like about this experience?” We began to change things gradually. I don’t like the crappy music most stores play, and I don’t like that they all wear suits and ties and look down their nose at you. So I forbid ties in my stores—we dress like our consumers. And we listen to good music.
You also have a “no sales” policy, correct?
Yes. What I noticed in every jewelry store were big red signs that announced sales. As a consumer, you don’t know what things really cost. So we have a sign in every one of our cases that says Don’t Wait for a Sale, There Isn’t Going to Be One. We lowered our prices, and we haven’t had a sale in 20 years. We try to build long-term relationships with customers. I don’t think you can build a relationship by tricking someone into thinking they’re getting the deal of the century when they’re not. But the biggest thing we did was change our warranty. All maintenance on jewelry is free, period—even if you lose or chip the center stone. There’s no small type.
You seem to be undaunted by change, Richard.
I’m ADD. When you’re ADD, you love change—bring it on! I always want to feel like I’m on the side of the hill climbing to the top. I never want to get to the top. That is the loneliest place in the world to be.
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