In the past few years, Mark Barnes and wife, Perri, were excited to prepare for their retirement from the lawn care and snow removal business, Barnes Inc., that they founded in 1981. But there was one thing that worried them: What would happen to their 145 employees — 175 during winter months — after they stepped down?
"I didn't want the legacy to be that we walked off into the sunset with a bunch of money," says Mark, the company's CEO and president. "I realized the sale to a third party was going to mean that a lot of these people were going to lose their jobs.... It was likely their positions would be implicated by a parent company that would have bought us out.
"My wife and I realized that's not what we wanted," Barnes adds.
The couple then identified one potential group of owners that would be just as invested in the company as they were — its employees. So they offered them a chance to the buy company.
In June, Barnes, Inc. sold 100 percent of company stock to an Employee Stock Ownership Plan. Under the structure, each employee is given an annual allotment of shares, spreading out the ownership among all of them. New employees gain full access to these shares after working at the company for six months.
According to Loren Rodgers, executive director with the National Center for Employee Ownership and an expert on the national job market, there are 7,000 companies in the United States that have an ESOP, including 500 that are privately owned. It's not a common practice, but it is an idea that's gaining traction for younger generations.
"[NCEO] just did a study on the wealth impact of ESOPs on millennials," Rodgers tells Isthmus. "Millennials have 92 percent greater net household wealth if they are employed with an employee-owned company."
Although Perri has already retired, Mark Barnes will remain a presence at the company for the next three to 10 years in his current capacity and assume the position of Chairman of the Board. So there won't be any immediate, visible changes to the company's structure and operations.
Barnes says a large benefit of an ESOP is that it helps employees prepare for retirement because they all have an investment in the company. A majority of the company's employees are young, single males who don't tend to prepare for retirement.
"Everybody gets shares based on what they earn in a given year," Barnes explains. "This is a retirement vehicle for people who are just unable to [save]."
And with how today's generation is set to struggle with an uncertain financial future, Barnes says this is his way of giving back and doing his part to help.
The ESOP additionally allows Barnes to leave the company gradually, ensures Barnes Inc. will remain in the Madison community, makes the current management team the successor in business operations and guarantees opportunities for career advancement.
Barnes says he feels fortunate to have been able to form his own company. He hired his first employee in 1983, who is still with Barnes Inc., to this day.
"I think what's been lost in the last 20 years is that businesses are supposed to work for everyone in that business and not just for those at the top," Barnes says. "There's been this gigantic increase in the disparity of wealth... and that's always bothered me. This is my way of trying to tighten that up and make it less visible here."
Mike Wenkman, who has worked for Barnes for 22 years, says the company has nourished a culture of community. As manager of the lawn division, he oversees more than 90 people.
"I like to find out what makes them happy and what makes them tick," Wenkman says. "It's about making them a better version of who they are... giving them a challenge and having them succeed and feeling like they are a part of something big."
Wenkman started at Barnes mowing lawns as a summer job, but it quickly evolved into an unexpected career. "I've raised a family at this place... a lot of my coworkers have," Wenkman says. "As time has gone by, it's become more of a family."
Barnes hopes that the ESOP plan will continue to nurture this culture. It's designed to incentivize new and current employees to feel more passionate about the work they are doing, he says.
"Just because this is now an employee-owned business, the same culture should apply," Wenkman says. "This place is different [from] anywhere else... it's a good environment to work in with a lot of different people with different backgrounds."
During Isthmus' brief tour of the company's main office, one employee jokes that the company is now "socialist." Rodgers counters that although this ownership structure is not socialism, it's a different breed of capitalism: "Some see it as more of a social form of capitalism."
Written by Emilie Heidemann and seen in Isthmus magazine.