SPANISH FORK — Driving past Clegg Auto Shops around Utah County, you might easily think it’s just your average auto shop.
But Clegg Auto sets itself apart from other car dealerships, and nearly every other company in the country, through a unique business model that empowers every employee, from cleaners to managers, and gives back.
But the story of how the business got to this point can be traced back to the 1950s, when Clegg Auto started as Clegg Car Care in Orem, said Clegg Auto CEO Kevin Clegg.
Clegg’s uncle eventually sold the business to his son and brothers, who asked him to return to the family business, although Clegg was attending university full-time at the time. Clegg did return for a short period of time.
“We opened our Spanish Fork store in 1998. That was the first store we had open. After I finished my first year, I enrolled in graduate school, left the business and got a master’s degree in organizational behavior. Then I went into the corporate world working for large companies. I worked with them on how to organize and lead teams and how they perform,” Clegg said.
In 2011, Clegg’s brother again asked him to return to the business, and Clegg agreed, on one condition.
“I said to him, ‘Let’s do it, but if we do it, when the time comes to exit we’ll have to sell to our employees. We’re not going to sell to anyone other than our employees if we’re building it together, because we’ve taken the time to get to know the team and they’ve sacrificed their time, effort and energy to build this business. It just wouldn’t feel right to sell to anyone else,'” Clegg said.
His brother joined them and they got serious about it in 2020. But rather than quitting altogether, they decided to stay on while transitioning the business to an employee-owned trust model.
According to the nonprofit group Project Equity, an employee ownership trust “ensures that employees receive a share of profits, have a say in management, and ensures that the company’s mission and their jobs are sustained for future generations.”
Clegg and his brothers decided against moving to an employee stock ownership plan, the most common form of employee ownership in the country, for several reasons.
“ESOPs are governed by ERISA (the Employee Retirement Income Security Act of 1974) and there are a lot of regulations. If you receive an acquisition offer that exceeds the value of your company, it may be determined that it is in the best interest of all of the company’s employees to accept the offer and be acquired,” Clegg said. “At that point, the company is no longer employee-owned. It becomes owned by the acquirer and literally everything you’ve built and everything you’ve worked for could be lost.”
The company was placed into a trust in the summer of 2022. This model ensures that Clegg Auto will never be sold, even after Mr Clegg and his siblings pass away.
“Our bylaws and trust deed say 100% goes to charity, so there’s no incentive for any of us to change the way we do things,” Clegg said, adding that the company already gives 10% of its profits to charity, giving employees a sense of connection and impact in the community.
It’s not just theory: Employees feel a sense of community and connection within the company.
Currently, the distribution of wealth is skewed in the wrong direction: instead of the many getting wealth, fewer and fewer are getting wealth, and wealth is concentrated in the hands of fewer and fewer people.
–Kevin Clegg, CEO of Clegg Auto
Courtney Allan has been with Clegg Auto for two years as an Assistant Manager. She discovered Clegg two years ago and, as someone who has worked in the automotive industry since 2012, immediately knew she wanted to be part of what was to come.
“It’s always been so corporate, so… I’m a number, you know,” Alan said. “We’re one. When I see the numbers and reviews from Provo or American Fork, I’m like, ‘Wow,’ like we’re all doing great. But I think that’s because I literally take it so personally. I want to be the best. I want to be different from anywhere.”
This company-wide vibe is also paying off in terms of profits: In the company’s last fiscal year before it converted to an employee-ownership model, it was able to distribute $40,000 in profits to employees. After its first fiscal year under the new model, that figure has grown tenfold to $400,000 — without raising prices, which Clegg said he didn’t want to do.
Clegg is well aware that he operates within a capitalist society, but believes that model doesn’t give enough consideration to sustainability.
“If you look at what capitalism has done in our country, it’s done a lot of good things. It’s lifted a lot of people up in the process. But at some point, if we don’t continually tweak things, things could get worse,” Clegg said. “Right now, the distribution of wealth is skewed in the wrong direction. Instead of lifting up the many, fewer and fewer people are being lifted up, and wealth is concentrating in the hands of fewer and fewer people.”
Clegg said he hopes his family business can serve as an inspiration and success story for other companies locally and nationally to consider moving to an employee-ownership trust model, which is less common in the U.S. than in places like Europe.
“In business school, they teach you that companies are built to last, and most of them are built to be sold,” Clegg said. “In our organization, we can say, ‘We may not be traditional owners who are going to sell something and make a profit, but instead we are steward-owners and we’re looking at this for the long term. We want to be good stewards who look after everybody.'”
