There is a growing debate on capitalism and what it will look like in the future. Most people would welcome the chance to build a significant amount of wealth for themselves and their families. The challenge is that the entry into capitalism requires an ever increasing amount of investment, that the vast majority of Americans do not have nor can they get access to it.
The world is not fair and that will not change. ESOPs are a vehicle that can allow the average american worker a shot at building wealth, pride, and create a bit of leveling in our wealth distribution. Chris Mackin gives a wonderful narrative about this in The Nation.
ESOPs are not perfect, but they are a viable alternative to the future structure of capitalism.
The failure of companies to provide a vision for the organization leads to employees that feel blind. They go through the motions with half hearted efforts that lead to apathy and poor results. If the company does not know where it is headed, then how can any organization expect the employees to know where they are going.
In many cases this vision comes from the top leader or leadership group. The vision statement is announced and everyone is expected to buy into the vision that has been handed to them. It may sound good, but it typically means very little to the employees.
A better method for creating vision is getting input from all employees and providing a process that is not controlled or manipulated by the leaders of the company. Leaders need to be involved, but giving up control of the process is key. If the employees of the company are the true creators of the vision, then the chances of the vision actually meaning something increase dramatically.
As humans, we want to be a part of something bigger. Something that has meaning and adds value to our lives and those around us. Understanding how we fit into the bigger picture of life and organizations gives meaning to what we do.
Creating a vision that has meaning is a great way to open the eyes of all employees to the true potential of the organization and how they can help make it happen.
Flickr photo by lupinehorror
One of the elements that employee owners in an ESOP must come to grips with is the short term vs. long term views of business. Educating employee owners on how the company balances these two views should be a priority and a regular activity.
The company may have great products, strong market penetration and high profits today, but maintaining this status typically requires investments in new products or services. These investments can be funded by internal cash flow or outside debt. Either way, these new ventures will diminish stock value in the short term with the hope that greater value will be created long term.
The timing of these new ventures in conjunction with when employee owners decide to leave the company can create an uncomfortable situation. Specifically, in a new growth cycle, the employee owner will receive a lower stock value for their ownership balance and may feel they are getting the short end of the stick.
To avoid these situations companies need to invest the time and effort in educating the employees on how a new venture will impact stock value and how the company has to look out for the welfare of employee owners today, as well as those five, 10, 20 or more years down the road. Educating employee owners gives them the information to make a better decision on when to the leave the company if they want the highest value they can get.
This is a balancing act that every ESOP company and every employee owner should become skilled at.
Flickr photo by Hotdog Photography
For most employees, work is not a choice. It is a forced action. This is one of the biggest obstacles to creating a productive and engaging work culture.
The requirements of money, family and benefits push people to a forced action versus a conscious choice of fulfillment at work. What were the real reasons you chose your current occupation? Chances are high that life fulfillment was not a priority at the start.
Once the routine of pay, benefits and work schedules have set in, the question of "why do I do this" sets in. This internal conflict keeps employees from being engaged and productive. It is not easy for a company culture to overcome this internal conflict and that is why many companies give up on culture.
Those companies that create a culture that allow employees the slightest chance of finding a sense of fulfillment perform well. Those that allow fulfillment to flourish blow the doors off performance. What culture will your company choose?
Flickr photo by H.R. Hatfield
One of the most important things for leaders to be conscious of, is their role in supporting the vision of the organization. It is much more than the written document, the poster on the wall, or a webinar.
It is a dialog with employees about their future and how they fit into the company's future. It is actions that lead the company towards the vision. It is the ability to incorporate vision into the day to day activities of everyone.
Leaders that practice these types of activities create environments that foster engaged employees. Engaged employees are the backbone to creating a vision that will succeed. A vision without input and buy-in is a recipe for failure.
During these times of rapid change and economic distress, it will be the leaders that rally their organization to a new vision that will ride the wave of recovery and success. These are the leaders that will be remembered for the positive impact they had on the organization and its employees.
It has been proven over and over that putting goals in writing increases the chances of success. It is a HUGE first step, but it is not the magic bullet to success. There are several key drivers that many organizations fail to implement that increase the chances of reaching the goals that have been written. Organizations that utilize and practice these drivers increase their goal realization significantly. They are as follows:
1. Involvement in setting the goals
2. Commitment to peers to achieve the goals
3. Regular progress reports
4. Emotional attachment to the goals
When people are involved in the creation of the goals they have a deeper understanding of the why and how of the goals. It reduces the noise that is typical of top down goal setting and moves the organization to action much quicker.
Commitment to goals done in front of peers can be uncomfortable, but it raises the stakes of meeting the goals. No one likes to let down their team.
Out of sight, out of mind. Without regular reporting and updates organziations will never achieve a rhythmic cadence for people to follow. Repetition leads to a change in habits.
If goal setting is done in a sterile, here we go again manner, do not be surprised that the organization looks like a zombie movie. The human nature is driven by emotion and far too many organizations forget this fundamental fact.
Finally, if the organization's leaders do not buy into these drivers, then do not expect improved organizational performance. Simply put - walk the talk.
Flickr photo by Cheryl Gebhart
Many companies do not recognize the role of governance in building a company's culture. Which by the way, improves the bottom line (study after study proves this).
I recently visited the John Lewis Partnership in England. They are an employee owned company that has 70,000 partners (employee owners in our terms) and is the largest retailer in England. Year over year they out perform their competition.
Within John Lewis's governance structure they have positions called the Registrar. The purpose of these positions is to ensure that the culture of the company is not comprised in the course of conducting business.
The role of the registrar roles up directly to the Managing Director (Board Chair in our terms). They are not hampered by the typical management system and have a direct link to the top. Not only do they have a direct link to the top, the Registrar system has the ability to remove the Managing Director if they are not supporting the culture of John Lewis. This is not some radical company, this is the number #1 retailer in England!
The structure of John Lewis has taken the typical leadership role and separated out the business/management role from the people/culture role. This allows each role to have a more intense focus, and both roles are included and integral in the governance structure. John Lewis has realized that business success and culture go hand in hand and they have put a governance structure in place that supports, enforces, and celebrates this relationship.
What is your link between governance and culture?
Flickr photo by Dawn Endico
© 2007 Victor Aspengren, All Rights Reserved.
