Utah County auto shop’s unique business model is empowering employees and paying dividends

SPANISH FORK — Driving by any of the Clegg Auto shops around Utah County, one could easily assume it’s your run-of-the-mill automotive shop.

But Clegg Auto sets itself apart from other automotive shops, and almost every other business in the country, through a unique business model that empowers and gives back to every single employee, from the janitorial staff to the managers.

But the story of how the business got there can be traced all the way back to the 1950s when Clegg Auto began as Clegg Car Care in Orem, said Kevin Clegg, CEO of Clegg Auto.

Eventually, Clegg’s uncle sold the business to his son and Clegg’s brother. While Clegg was a full-time college student then, his brother eventually approached him about coming back to the family business — which he did, albeit for a short stint.

“We opened up the Spanish Fork store in 1998, and that was our first store opening. After our first year, I got accepted into grad school and left the business and went and got a master’s in organizational behavior and then from there ended up being in the corporate world working with large companies … working with them on how they organize and lead their teams of people and the results they get,” Clegg said.

In 2011, Clegg’s brother again approached him about returning to the business and Clegg obliged — under one condition.

“I told him, ‘Let’s do it. But if we do it, when we decide it’s time to exit, we have to exit to employees. I’m not going to sell to anyone else besides employees if we build together, because we take all this time and we get to know our teams, and they sacrifice their time and efforts and energy as we build up this business. It just doesn’t seem right to sell it to anyone else,'” Clegg said.

His brother was on board and in 2020, they got serious about it. But instead of exiting completely, they decided to stay on while transitioning the business to an employee ownership trust model.

An employee ownership trust “ensures employees have a share in profits, a voice in governance and that the mission of the business — and its jobs — can be preserved for generations to come,” according to the nonprofit Project Equity.

Clegg and his brother opted against transitioning to an employee stock ownership plan — the most common form of employee ownership in the country — for a few different reasons.

“Because ESOPs are ERISA (Employee Retirement Income Security Act of 1974) governed, (and) there’s a lot of regulations that exist. If you receive an offer for your company that’s in excess of its value, then they can deem it’s in the best interests of every employee of the company to accept that offer and to get bought out,” Clegg said. “At that point, you’re no longer an employee-owned company. You’re owned by whoever bought you out and literally everything you’ve built, everything you worked for could go away.”

In the summer of 2022, the company was put into a trust. This model also ensures Clegg Auto will never be sold, even long after Clegg and his brother are gone.

“It’s written into the bylaws, into the trust agreement, that it would all go to charity. So there’s not an incentive for anybody to ever try to change what we’re doing,” Clegg said, adding that the company already puts 10% of its profits toward charities, something he said gives the employees a sense of connection and impact in their communities.

It’s not just a theory, either. The employees feel a sense of community and connection within the business.

Right now, the distribution of wealth is skewed the wrong way. Instead of many people being lifted, there’s fewer and fewer people being lifted and more and more wealth in the hands of few people.

–Kevin Clegg, Clegg Auto CEO

Cortney Allan has been with Clegg Auto for two years as one of its assistant managers. She met Clegg two years ago and as someone who’s worked in automotive since 2012, she instantly knew she wanted to be a part of what was being built.

“It’s always been very corporate, very — you’re a number, you know?” Allan said. “We’re a whole. When we look at Provo’s number or American Fork or reviews, we’re like, ‘That’s awesome.’ Like, we are all doing great, but I think it is because you literally just take it so personal. You want to be the best. You want to be different than anywhere else.”

This type of company-wide vibe has also paid dividends when it comes to the bottom line. The last fiscal year before the company switched to an employee ownership model, they were able to share $40,000 in profits with employees. After the first fiscal year under the new model, that number ballooned tenfold, to $400,000 — all without raising prices, something Clegg said he doesn’t want to do.

And while Clegg is no stranger to the fact that he’s operating his business within a capitalistic society, he thinks the model doesn’t pay enough attention to sustainability.

“You look at what capitalism has done in our country, it’s done a lot of good. It’s lifted a lot of people along the way. But at a certain point, if there’s not continual tweaks to things, that can go sideways on you,” Clegg said. “Right now, the distribution of wealth is skewed the wrong way. Instead of many people being lifted, there’s fewer and fewer people being lifted and more and more wealth in the hands of few people.”

Clegg said he hopes his family business can serve as an inspiration and success story for other companies in the area and country to consider shifting to an employee ownership trust model, which isn’t as popular in the United States as they are in places like Europe, for example.

“In business school, you’ll hear about companies being built to last and most are built to be sold,” Clegg said. “In our structure, we can say … ‘We may not be traditional owners where we’re building something to sell it and receive the rewards. But instead, we’re steward owners or we’re looking at this for the long haul. We want to be good stewards, taking care of everybody.”