The NMR ESOP Origin Story, Part 1
Every superhero has a dramatic origin story that motivates them to do good, whether itâs a painful lesson in responsibility and bug bites (Spider-Man) or a traumatic night at the movies (Batman). Without it, a comic book hero isnât worth the cape or mask they don.
Thankfully, an employee-owned companyâs origin story doesnât have to be quite as harrowing as a fictional superheroâs gamma radiation (The Hulk). The origins of NMRâs employee ownership through an employee stock ownership plan (ESOP) lie in a caring team of invested employees and their mission to create a better worldâa sort of justice league of energy-efficiency.
From the National Center for Employee Ownership (NCEO): âAn ESOP is a type of retirement plan, similar to a 401(k) plan, that invests primarily in company stock and holds its assets in a trust for employees. âŚESOP participants (employees) accrue shares in the plan over time and are paid out by having their shares bought back, typically after they leave the company.â
The benefits are clear: according to a 2018 survey by the NCEO, employees participating in ESOPs have more than twice the total retirement balance of the average American. This builds wealth, promotes happiness and employee retention, and increases productivity.
To tell NMRâs astounding tale, we go back to 2001, when Lynn Hoefgen and Ruth Harvey founded the company as a lean research and evaluation firm counting just one other employeeâRuthâs mother Jan.
âThis was truly a mom-and-pop operation,â Ruth says.
With Lynn as president and Ruth as clerk, the dynamic trio grew within a few months into a larger team of dedicated workers. The small, tightknit group of avengers demonstrated a natural leadership mentality in how it creatively and thoughtfully approached its work, its culture, and each other.
âThe employees of NMR took ownership of company culture and the way the company operated,â says Lynn. âThey generated and helped implement many ideas, including moving to our first physical office, getting an external IT support firm, curtailing after-hours communications, offering parental leave, and much more.â
That first brick-and-mortar office became a place where a team spirit developed naturally. Lynn and Ruth also conscientiously cultivated NMR culture through practices like individual check-ins called âRuth Chatsâ and Friday social hours.
As time went on, Lynn and Ruth began considering retirement. Though there had been offers over the years from larger third parties, âSelling to the employees was the only option we ever really considered,â says Lynn. âRuth and I figured that [a sale to an outside company] would effectively end NMR culture and most likely result in some employees losing their jobs.â
Thatâs where the concept of the ESOP came in, and both decided it was time to learn more. A conference for owners learning about ESOPs helped turn the concept into a real possibility. Then, as they always had, Lynn and Ruth turned to the wider NMR team for input. They, along with Kiersten von Trapp, Jared Powell, and now-president Tom Mauldin, attended the 2015 NCEO conference in Denver.
Tom says pursuing an ESOP was appealing to the team, but that the path was not clear before this conference. As executive vice president at the time, he saw in the NMR team what Lynn and Ruth had seen from the beginningâand, according to them, he was instrumental in the process. âBeing a smaller company filled with highly educated and engaged colleagues, many of us already acted as more than just employees,â says Tom.
Kiersten and Jared both note that NMRâs culture put them ahead of the curve in the ESOP process. âI went to a few [NCEO conference] sessions on how to create ownership culture, but it already existed at NMR,â Kiersten remembers, citing Ruth Chats specifically.
Jared agrees. âWe were already doing so many of the things that other ESOPs were describing having to start to do.â
At the conference, Tom was recommended the Beyster Institute at the University of California San Diego to perform an ESOP feasibility study. NMR took that next step in 2016, and the results were positive. The decision was made to sell NMR to its employees.
Thus ends our first chapter. Will our heroes realize their dreams of employee-ownership while retaining their values and sustaining growth? Tune in next week for the stunning conclusion!