Articles—Issue 2, September 2005 Back to Article Index An Ownership Society: How to Run a Better Business ESOP, employee stock purchase plan, Uniform Franchise Offering Circular, Stock Option Plan, limited partnership… Aargh!! The forms of ownership come in many packages, but need not run up your legal bills. Are there many appropriate situations for the above mentioned structures? Absolutely! However, the definition of ownership that we will explore means having your entire team work as though they own the company. I start with the premise—exemplified by many organizations—that people perform better when they want to rather than when they are forced to. I am fond of performance measurement, scorecards, frequent feedback and even disciplinary action when necessary. However, as any dog trainer will tell you, you get better performance with positive feedback than a kick in the butt. My own experience in a branch based business agrees with that espoused by Rosen, Case and Staubus, authors of, Equity: Why Employee Ownership is Good for Business. Whether as a store manager or later as president of a large division, I always knew that I wasn’t smart enough to go very far without lots of help. Knowing that I had thousands of employees working toward the same goals that I had was a marvelous feeling. As a colleague used to say, "When we hire a pair of hands, we also get their brain." Think about the feelings that you have (or would have) toward your business as an owner: pride, concern, responsibility, worry, devotion. Wouldn’t you want all your employees to have those same feelings? Does ownership in the larger structure via stock options or an ESOP help? Sure. But breaking ownership down to bite-size chunks with local people having real or approximated ownership is hard to beat. Installing an "ownership society" in your company may seem like a daunting task. It is admittedly easier when you start this way. However, if you create a vision for what your organization might look like and how your employees might act and start building towards it, the benefits of ownership will start to accrue over time. Jack Stack wrote a marvelous book years ago called, The Great Game of Business that shows you how to make this transition fast. (A pending crisis sometimes helps!) Ownership is as much about leadership as structure. A word of caution at this point. If you do not have some inherent trust in your employees do not attempt this. If you do not feel that your team deserves some of the rewards (along with the sacrifices and speed-bumps) of the success that they help you achieve; take another path. If you need to hoard information and are queasy about sharing company data with your employees; find another way. There are many successful business models. While I believe in ownership (both real and in the broader sense) and collaboration, there are many companies that are successful without it. I obviously believe that one of the best ways to build a lasting company is to involve the hands, minds and wallets of your team. Coincidentally, the work environment is a heck of a lot more fun as well. My son works at Whole Foods. He is an hourly worker on the grocery floor, but he is treated with respect. Management shares their goals with him; in fact the schedule he receives identifies the labor goal for the period, etc. You have to be "voted in" by your team-members to be considered for permanent employment. In short, they treat him with a sense of ownership. The service level and obvious pride of the team in this store is palpable. (Because I like to cook, it also causes me to drive an extra 10 miles and pay premium prices for their food.) This is not all just fuzzy, emotional stuff. You need to have a reward system that is either actual ownership or an approximation thereof. You need to have communication tools to allow you to share the vision, goals and periodic performance of the company. You need to be able to train your employees to understand the reports that they receive and you need to expect them to act like owners. (Yes, performance management is a must as well!) Simple? In some ways. Easy? No. I’d suggest you find a mentor who is passionate about this concept that can help you on the transformation you will have to go through. (c)2005 by Tood Ordal. You are welcome to share this informational article with others. Todd Ordal is a business consultant helping executives struggling with execution. Prior to founding the consulting firm Applied Strategy LLC, Todd spent over 25 years in management and executive roles such as President and CEO. You can contact Todd at todd@appliedstrategy.info