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Monday, Jul 22, 2024

Employee Ownership Equals Success at Eastridge

STAFFING SERVICES: Company Grow Initiatives Boost Earnings, Markets

Eastridge Workforce Solutions is growing on the power of its people.

Seth Stein
Eastridge Marketing Services

The staffing and workforce management company last year implemented several strategies – including becoming a 100% employee-owned through an Employee Stock Ownership Plan (ESOP) – that led to 13.8% year-over-year growth in EBITDA (earnings before interest, taxes, depreciation and amortization) and a 27.8% growth in the employee-owned stock, during a year when the S&P 500 was down 19.4%.

“The thesis is that if you have happy engaged employees, and if you treat them well, the clients will experience that,” said Eastridge CEO Seth Stein.

Going 100% ESOP

Happy employees have been a part of Eastridge’s DNA since it was founded in 1972 by Bob Svet, who Stein said had a mantra that guided his leadership of the firm: “Make this a great place to work, and if we do, we’ll beat the market.”

Svet passed away in 2017 and the company was then led by his son Adam. In 2019, the Svet family became interested in diversifying their assets and decided to preserve Eastridge’s company culture by “taking some chips off the table” and becoming employee-owned, Stein said, adding that “the first big deal” for employees was taking a 43% stake in the company.

“[Employee’s owning a stake in a company] is different than just a job, and it’s different than just hiring a colleague, and different than just serving a client and generating revenue,” he said.

In 2020, Stein was named CEO of Eastridge after serving as president since 2013. He said his decision to bring full ownership of the company to the employees was based on wanting to preserve Eastridge’s strong culture and his “growth mindset” for the company that included bigger investments and more acquisitions.

“I wanted to bet on our team and bet on the company,” he said.

Rather than risk the Svet family’s 57% stake in the company and rather than selling it off to private equity or merging with another firm, Stein took out a loan to purchase the Svet’s ownership and turn the company wholly over to its employees.

“I’m always sensitive about taking on debt but I thought it was the right thing to do,” he said, adding that he has since prioritized paying down company debt which was significantly reduced in 2022.

Strategic Growth Initiatives

The employee buyout of the company is only one of the strategic growth initiatives Eastridge took in 2022.

The company reorganized its business into five service lines – temporary staffing, direct hire, employer of record/payrolling services, recruitment process outsourcing and MSP& VMS (managed service provider staffing and vendor management system) – from a previous collection of business groups and acquisitions. (Eastridge acquired Abbott Staffing Group in 2009 and Operon Resource Management in 2017.)

The company added to its C-suite with new hires – Chief Marketing Officer James Krouse and Chief Growth Officer Rodrigo Alcaine – to bolster messaging and market opportunities.

Eastridge also expanded its physical markets size by 33% in 2022, which Stein said was initiated “typically around people.”

“We’ve been able to identify opportunities because our staff has dispersed,” he said, adding that Eastridge was “ahead of the curve” that COVID brought because the company’s existing infrastructure was set up for remote hiring and that it accelerated its geographic expansion. New markets for the company include the Allentown, Pennsylvania area and the state of Oklahoma.

Stein said that he expects 2023 to be a down year for Eastridge, due to a general downturn in direct hires and executive recruiting and because “people aren’t paying the placement fees they did a year ago.”

The focus of the staffing industry right now is on the temporary hire market, Stein added, although in all major sectors Eastridge is beating the market.

“We’re beating some of the major indices by 13% this year,” he said.

Eastridge Workforce Solutions

Founded: 1972
CEO: Seth Stein
Headquarters: San Diego
Business: Staffing services and workforce management platform
Revenue: Undisclosed. Eastridge was named to Staffing Industry Analysts’ 2023 largest staffing firms list, which only includes firms with revenue over $100 million.
Employees: 300+
Website: www.eastridge.com
Social Impact: CEO Seth Stein signed the CEO Action for Diversity and Inclusion Pledge to “cultivate a trusting environment where all ideas are welcomed, and employees feel comfortable and empowered to have discussions about diversity and inclusion.”
Notable: Eastridge was awarded the Best of Staffing Client Satisfaction 2023 award by ClearlyRated.


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