Newberry hands off company to employees
A look toward long-term viability
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| Roy Sykes photo -- Brenda and Maurice Newberry (standing and seated in back right corner) talk with their employees, who are now owners of the company. Newberry Group Inc. recently shifted its ownership strategy to make for 100 percent employee ownership. |
Employee-owned companies are not a new concept. In the United States, the concept has been around since the mid-1970s. Interestingly enough, the origins of employee stock ownership plans (ESOP) are in Marxism, but that hasn't kept free market advocates from embracing the concept.
"Founders can't act as though they're going to live forever," Brenda Newberry, the company's chairman and chief executive officer, said of the decision to shift ownership to employees.She says the move is about the future of the company - not next quarter, but once she and husband Maurice, the company's president and chief operating officer, leave the business (which, by the way, she says is not in their immediate plans).
But there is reason to believe, too, that the move will have immediate effects. The Newberrys aren't the first to try their hand at ESOPs, and many of the 1,400 American companies that are part of the ESOP Association decide employee ownership is advantageous for other reasons.
According to ESOP Association statistics, 82 percent of its members have reported that motivation and productivity increased as a result of employee ownership. Other studies, such as one published by the Journal of Financial and Strategic Decisions, suggest that the impact is uncertain.
Newberry Group is an information technology consultation firm, located at 2510 Old Highway 94 South in St. Charles, with contracts across the United States and in Bahrain. The company focuses on data security, application development and network management for clients such as the U.S. departments of agriculture and defense.
Some Newberry associates say they expect their partial ownership to change their habits at work.
"I think it does change mind-sets," said Richard Berry, a senior computer systems analyst in Newberry's security practice. "I believe people are just a little more responsible about wastefulness and thinking about the future of the company when they have this direct stake."
Under the arrangement, employees won't buy stock, but will receive a stake in the company proportional to their salary among the company's payroll. Like a 401k, should an employee leave Newberry, they can roll over their stake in the company for retirement.
A veteran of corporate security practices who came to Newberry from information technology stalwart EDS, Berry expects employee ownership to help the company's future recruiting efforts, as well.
"I believe that for recruiting top-notch people, it gives us an edge," Berry said.
He also thinks it's a selling point, giving potential clients the assurance that Newberry's employees are committed to the job at hand.
And, of course, it doesn't hurt the bottom line. Because the company is entirely employee-owned, Newberry is a tax-exempt entity. That, Maurice Newberry says, gives the company additional capital to grow. But the company could have also made a public stock offering to achieve this. That, the Newberrys say, was never in the plans.
And to ensure the ESOP excitement doesn't fall by the wayside, an ESOP committee will meet regularly to ensure that employees are educated about what being employee-owners means.
Nicole Berndt, a human resources generalist with Newberry, says that communication is what will ensure the success of employee ownership.
"This is where we say, 'Hey, we have this power,' and it's really about keeping that (on everyone's mind)."
