Realityworks moves to 100% employee ownership

The Eau Claire-based educational products company recently announced it has transitioned to a 100% employee-owned enterprise through a sale to the Realityworks Employee Stock Ownership Plan.

The company previously was owned 22% by employees, but the majority owners decided to take the rest of the plunge, making the announcement at the annual shareholders meeting earlier this month. Realityworks' ESOP was established in 2011 when founders Mary and Rick Jurmain sold the first shares to the plan.

"We have been working toward this for a number of years," said Timm Boettcher, president and CEO. "We have such a culture of employee ownership already that this is just a natural fit for us."

Boettcher sees the ESOP structure as a way to give its 81 employees a larger stake in the company's future because their personal wealth grows in parallel with the company's value.

The ESOP is essentially an extra retirement plan in addition to the traditional 401(k) that Realityworks and many other companies offer to employees.

"But it's not coming out of my paycheck," Boettcher said. "It's coming out of the blood, sweat and tears that I put into the company on a daily basis."

Mary Boettcher, the company's vice president of finance and chairman of its ESOP board, didn't reveal specific dollar amounts but said she would anticipate that balances in employees' ESOP accounts are likely to overtake the amount in their 401(k) accounts over time.

Realityworks is one of about 6,300 companies in the United States with an ESOP, representing more than 14 million participants and holding assets of at least $1.4 trillion, according to the National Center for Employee Ownership. The center indicates Wisconsin has 179 ESOPS with 63,363 participants.

With many employers struggling to find enough workers amid a labor shortage, Mary Boettcher also expects the ESOP to be a great employee recruitment and retention tool.

"It's above and beyond what most companies offer," she said.

To a person, employees working Wednesday morning in the Realityworks building at 2709 Mondovi Road expressed appreciation for the move.

"I think it's very exciting," said Samantha Forehand, the company's marketing and communications manager. "Working at an ESOP company means you have a little more skin in the game."

Forehand maintained the ESOP status is one factor that makes the staff so passionate about the company's products.

"We control our own destiny," said engineering manager Jeremiah Bauer, who started with Realityworks as an intern in 1999. "We earn shares over time, and our payout is dictated by how well the company does."

Communication specialist Emily Kuhn, who has been with the company for seven years, said the company's culture encourages feeling connected and engaged.

"But now with this announcement I really feel literally and figuratively invested in the company," Kuhn said.

To Peggy Banchy, a testing technician who has been with the company for 10 years and was working Wednesday with electrical engineer Yarshun Jayakumar on some baby simulator prototypes, "It feels like you're working for yourself."

The ESOP was one of the benefits that attracted Jayakumar to the company, as he said he sees it as a way for employees to financially benefit from their hard work and innovation. Employees become eligible for the ESOP after accumulating 1,000 hours with the firm.

Realityworks, which is best known for its infant simulators, offers about 170 products in family, career and technical education, the majority of which were developed in the past six years.

"We've been thinking as employee owners for a very long time. This is just taking it to the next level," Timm Boettcher said, referring to the shift to full employee ownership.

Other benefits, Mary Boettcher said, include that ESOPS offer an exit strategy for company owners beyond selling the business or passing it along to children and that the structure promotes employee engagement in business operations and understanding of its strategic plan.

Though employees are owners and are encouraged to share ideas to improve efficiency and profitability, the ESOP doesn't change the way the company is governed. Management still makes day-to-day decisions under the oversight of a board of directors.

As seen in the The Leader-Telegram, and written by Eric Lundquist.