Equipment manufacturer turns to employee ownership to extend 87-year legacy

Harold Beck & Sons began in Philadelphia in 1936 with a goal of improving the temperature of large industrial furnaces.

In the almost nine decades since, the company has evolved to sell electric actuators to position valves and dampers in 14 industries, including water, with installations in over 70 countries. And it has remained true to its roots under the helm of grandson Doug Beck. 

But as the latest Beck looked toward retirement, and with no fourth generation to leave the company to, he decided to pass it along to his employees (pictured right) with an employee stock ownership plan, or ESOP. 

“Employees are like family to me,” said Beck, who joined the company as president in 1996. “And this move seemed like a natural progression, to keep the company culture intact and to keep the employees in place in the community. When you sell to a third party, there can be benefit cuts, layoffs, relocations, and I wanted to avoid all of that.”

In the mid-1970s, the U.S. Congress formalized ESOPs, allowing companies to provide stock ownership to each employee without requiring the employee to spend any money; instead, employees invest time and effort to make the company profitable. Companies take on debt to buy out the owners and divide the shares among employees. Over time, the loan is paid off and the price of shares goes up. 

“It’s a retirement plan that will make their retirement even more secure,” Beck said. “They see the fruits of their labor.”

Harold Beck & Sons, an American Water Works Association service provider member for more than a decade, became 100% employee owned at the end of 2021. The company met with its 140 employees several times before finalizing the ESOP to discuss the change. More than a year later, Beck said the plan has helped improve an already impressively low attrition rate and loyal workplace culture. 

“We’re sharing detailed financial information with employees, which we’ve never done before, and that helps build trust and commitment,” he said. “We effectively have 140 owners rather than one. Everyone has a motivating stake.”

“It was a tough decision. This is a family business, and I’m the first family member to sell the company,” said Beck, who will stay on as CEO until he retires. “But I thought this would be a great opportunity to show appreciation to my employees for their years of excellent work, and it would be a nice way to retire and still see the company succeed. I think it’ll keep all the good things going, keep the culture intact and we’ll see the company continue to grow.”