Success: IT firm sees gains in sharing the wealth

Staff shareholding has benefits - but Intergen's Tony Stewart wishes it was simpler to administer. Photo / Mark Mitchell

Intergen's staff have a direct stake in the company's impressive growth record.

Economic inequality is the hot topic at the moment. Even traditional free-market institutions such as the International Monetary Fund (IMF) have urged governments to adopt a more even-handed approach to taxation and labour policy. Sustained economic growth and reduced inequality are "two sides of the same coin", argue the IMF's Andrew Berg and Jonathan Ostry.

Many commentators have picked up on their findings to argue that the regulatory pendulum has swung too far in favour of the holders of capital, at the expense of the labour force.

Tony Stewart, managing director and founder of IT services company Intergen, agrees with that argument. But then he would, given that Intergen is owned by its staff, who share the rewards of a successful company.

Intergen's ownership structure reflects its beginnings: it was a management buy-back of Glazier Systems, of which Stewart was co-founder. The company had been sold to Advantage Group in 2000 for $7.5 million, and was bought back in June 2001 for an undisclosed amount.

There are practical reasons beyond fairness, which Stewart believes is important, for sharing the wealth among Intergen's workers: when people have skin in the game, they're more likely to give 110 per cent, and the retention of skilled staff is is vital, says Stewart.

"We take a very commercial view to sharing [company wealth]," he says. "They buy shares [in a closed tender], they receive dividends and they sell their shares."

Staff cannot sell their shares externally, however, and there is a 50-shareholder limit because of complications related to the Securities Act and the Takeovers Code.

When staff leave, for example, they are compelled to sell and "whenever you do a transaction, you have to produce a whole lot of information and make it available to the shareholders", Stewart explains.

"There's a lot of paperwork, it is expensive [and] it's quite annoying. We would like as many staff as possible to be shareholders [and the act and the code] does limit the number of people who can have shares - but [limiting shareholder numbers] keeps us out of trouble with the regulators.

"It would be really nice if it wasn't so complicated," adds Stewart, a trained accountant who formed Glazier after running Ernst & Young's IT division.

But Intergen shareholders have been well-paid. The company has grown 25 per cent, year on year, since its inception in 2001. It recorded $3.5 million revenue in 2001 and, Stewart says, will exceed $40 million this financial year.

Then there are the proceeds from several successful side-ventures. Search press clippings for news about Intergen and you won't find a single decent profile of the company, but there are dozens of references to its investments in start-up firms.

"We've done a few things in the past that haven't been successful," Stewart admits, citing a credit card-clearing system the company built. But small business consultancy Aptimize, for example, was sold last year to American firm Riverside for an amount that Stewart describes as lucrative, though he won't disclose how much.

Bigger things are expected of its investment in Parts Trader, a crash repair industry marketplace.

"It's sponsored by the insurance industry to ensure they get the best price for the best parts," says Stewart. "We now have an opportunity in the US, sponsored by a major US insurer, to do the same thing. The US market is pretty interesting for us; it could be huge."

One-off returns on investment are fine, but Stewart also expects revenue growth to accelerate: "We only did $2.5 million out of Australia last year and we've been bidding for work that would double that amount in a single project. Our objective is to be at least as big in Australia as we are in New Zealand within five years."

The project work is prosaic to a non-techie - providing IT applications and bespoke developments, finance and customer relationship management systems, intranet, reporting, business intelligence and website integration.

But some of the IT stuff is dead glamorous. Intergen works for Microsoft in Redmond, Washington, including building the demonstration models for the latest Microsoft applications for the new season.

"It's a little like making a movie; it starts with a storyboard and we build all of the code that glues those applications together, so [chief executive Steve Ballmer] can wow the audience," says Stewart, who likens the process to hosting the Golden Globes.