As the saying goes, two heads are better than one. But why stop there? Why not three or four?
Why not 1,500?
That’s the line of thinking that led VGM Group, Inc. to become 100% employee owned 15 years ago. Today, VGM has not just one but more than 1,500 owners across 37 states. And while it sometimes seems as though things couldn’t get any better, VGM shows no signs of slowing down.
About employee ownership
Employee ownership describes any arrangement where employees own shares or a right to their value in that company. The most common form is through a type of retirement account called an employee stock ownership plan (ESOP), which is how VGM is structured.
Of the approximately 11 million companies in the U.S., roughly 6,500 have an ESOP. Even fewer are 100% owned by employees like VGM, which is the largest 100% employee-owned company in the state of Iowa.
People are also reading…
“This concept of employee ownership is foreign to most people,” said VGM Group CEO Mike Mallaro, who was the primary architect behind VGM’s ESOP in 2008 when he served as CFO.
“It’s a rare situation for American workers, but one that comes with unique opportunities.”
Unlocking potential
One such opportunity for VGM employee owners is the power to positively impact the business. It’s a concept VGM calls the Power of One—that one act, one idea can make a difference.
The Power of One is everywhere in the company’s day to day, but the concept is on full display during VGM’s Pitchabaloo event. Pitchabaloo invites every employee owner to pitch an idea they think would make a difference at the company to a panel of senior leaders.
Winners of Pitchabaloo receive a cash prize and the opportunity to see their idea come to life.
First prize at the company’s latest Pitchabaloo went to a concept that could help solve VGM’s growing need for talented developers. The pitch? Develop a coding boot camp, where employee owners looking for a change could learn the skills to become — and then become — a developer at VGM. And the boot camp is actually slated to launch in the coming months.
Ideas like this are proof of the power of employee ownership. The coding boot camp is a gamechanger for VGM. And there are thousands of other ideas coming to the table every day, from employee owners who are looking to make a difference.
“When you give the power to 1,500 people, you unlock potential you simply cannot unlock with one person,” Mallaro said. “There was a hope, in 2008, that we’d see that potential unlocked.
"Fifteen years later, I can say that we did, and beyond what we ever imagined.”
Unexpected benefits
Part of the magic of that potential is thanks to the ESOP. Employee owners know all that extra hard work ultimately benefits them, not one or two owners at the top.
At VGM, employee owners have a standard 401(k) plan with a 3% company match. However, they also have another retirement plan—one made up of company stock and cash contributed entirely by VGM. This means, employee owners have a vested interest in their customers’ success. And it seems to be working well so far.
In the past four years, the average contribution to employees’ ESOP accounts has been just over 25% of their total compensation. So for every dollar they make, VGM contributes an additional $0.25 of value to their ESOP accounts. For comparison, ESOP contributions at other companies average between 6% and 10%.
Employee ownership brings other benefits you might not expect, too, though — because when you own your place of work, you can make sure it works for you. Some of these include flexible work schedules, free health clinic, on-site fitness facility, and an on-site child care center, which opens this winter.
“For years, a significant shortage of child care options has put undue pressure on many working parents in the Cedar Valley, including our employee owners,” said Sara Laures, VGM Group’s chief people officer. “We wanted to be part of the solution, and we are excited to offer much- needed support to families by helping address child care needs.”
Building a future
VGM employee owners are empowered to focus on the future, to transcend the status quo, and to build something they can pass to the next generation. Over the past 15 years, VGM has shown the power of employee ownership. And it’s just getting started.
“We’re destined to become a lot bigger than we are today,” Mallaro said. “And it is through this power of employee ownership, of each of us VGM employee owners doing the best we can every day. That makes a difference.”
Learn more about the power of employee ownership at www.vgmgroup.com/esop.
