Unaverage Leadership

October - Employee Ownership Month

The month of October is recognized as "Employee Ownership" month by The ESOP Association.  Companies across the United States will be celebrating the fact they are employee owned.  This is a great opportunity to give more attention about what employee ownership means in your company and it also is a time to expose others in your community to the concept of employee ownership.

One of most important activities for a company to consider is inviting a representative from congress to their company to help celebrate employee ownership.  It is important for these representatives to see ESOPs in action and how they benefit employee owners and communities.  It is important that these members of congress support the legislation that keep ESOPs alive and well, as a vehicle for business succession and a method to share the wealth with all of those who help build it.

If you have not had a visit from a representative from congress before, visit this link for tips and advice on how to do it.  By starting today, you will have a greater chance of obtaining a visit from your representatives in congress and sharing your success story of employee ownership.

A Bird In The Hand - Is Worth Two In The Bush

In too many instances ESOP companies believe that the value of an employee owner's ESOP account is a motivating incentive.  The issue with the ESOP account value is that it is viewed as the bird in the bush.  The view of the ESOP is similiar to the bird in the bush - Will I get my ESOP money (can I catch the bird)? - Will the ESOP account be there when I leave (will the bird stay in the bush or will something else get the bird)? - The ESOP is a scam (two birds in the bush, unbelievable). 

A cash incentive is the bird in the hand.  It allows the employee owner to really feel success.  One could say it teaches people how to catch the bird in the bush.  A good incentive plan is self funding and it teaches employee owners how to increase the value of their ESOP accounts.  If the incentive is being paid, chances are the value of their ESOP accounts will increase. 

Putting a bird in the hand of employee owners may well give you two birds in the bush, but if you do it right you may have a whole flock of birds in the bush!

 

Where Is My Money?

Employee owners are provided a statement at least once a year that shows them what their ESOP account balance is worth - $10,000, 100,000, maybe a $1,000,000. At some point in time all employee owners will eventually ask the question (sometimes out loud, many times to themselves), "Where does the money come from to pay out my ESOP account?"

A legitimate question, that in many cases is given little attention or is avoided all together.  Companies that do not address this question, but want employees to act like owners, create a somewhat hopeless situation.  It could be compared to the response of someone looking at their future benefit statement from the Social Security Administration.

How employee owners get their ESOP money is discussed often.  Sadly, the discussion on where the money will come from does not happen often enough.  Their is risk in this type of discussion, but there is also great power if handled well.  

Keep Our Jobs In Iowa

Finding a job is no easy task in this economic climate.  There is a lot of discussion on creating new jobs, but in many cases the preservation of jobs is forgotten until there is a crisis.  Only then, do local communities and state agencies scramble for strategies to keep the business from closing.  This is a reactionary response instead of proactive one.

A proactive approach is selling the business to the employees.  It allows the owner to give something back to the employees and communities that helped build the business, if you are an owner you will work harder to grow the business and keep the business viable, and sharing ownership allows wealth to be accessed by a greater number of people. 

Iowa's local, regional, and state agencies should be well versed in the different forms of employee ownership as a proactive strategy to preserve jobs.  Let's hope that the strategies and discussions of employee ownership are alive and well in Iowa!

 Flickr photo by District Weekly

Creating ESOP Shelf Space

If you want someone to learn a new idea, then you have to give them a reason to want to learn the idea.  Yes, there are those that will automatically want to learn the new idea, but for most it will take time and patience. 

In the marketing world "creating shelf space" is a big part of creating success.  This concept is not associated with intense training or high pressured sales and marketing tactics.  It is about creating a mental space for an idea, concept or product to gestate.  This creates an opportunity that when the time is right, the person will "take the book off the shelf and start reading it". 

This technique lends itself to self development, which is the most efficient and effective style of learning and the bedrock for change.  What are you doing to create ESOP shelf space in the minds of your employee owners?  If there is no shelf space, then ESOP is just four capitalized letters.

Flickr photo by practicalowl

Company For Sale

The economy is slowing coming back.  People are beginning to realize that the values that existed before the crisis will not be seen again for some time.  The new values of homes, businesses and the stock market are not going to be over inflated as before.

Business owners that were thinking of selling their companies are starting to test the waters again.  The value of their businesses may not be what they once were and the values are based on a new market reality.  Owners are realizing that it is time to move forward.

When looking at the impact of our financial crisis and how it impacted everyone's net worth, employee ownership is one of the best ways to transfer ownership of a business.  One employee ownership methods for transitioning ownership of a business is an ESOP (Employee Stock Ownership Plan).  The following is a short list of the benefits of using an ESOP as a strategy for selling a business:

• Owners of C corporations can realize significant tax savings if they sell at least 30 percent of the company to the ESOP.
• S corporations that are 100 percent ESOP pay no corporate tax (providing certain state laws).
• The equity of the business is spread broadly to all employee owners.
• An ESOP is a qualified retirement plan that is governed by the DOL & IRS (giving some comfort to employee owners that there are rules to play by).
• ESOP companies, with participatory cultures, will out perform their non-ESOP competitors
• Employee owners have greater control over the value of their accounts in an ESOP as compared to an IRA or 401k.
• The owner gets the satisfaction of sharing future equity with the employees who helped build the business.

Any business owner that is considering selling his or her business would be amiss to not evaluate if an ESOP would work for them.  There are many more benefits than those listed above and there are disadvantages that need to be considered.  An ESOP can provide benefits to the owner, the business and the current and future employees.

Real Ownership or Psychic Ownership: What Works?

There is a lot of interest in sharing ownership with the employees of a company.  The belief is that sharing ownership increases the performance of a company.  I say maybe.

Why?  I believe that there has to be a high level of psychic ownership that goes hand in hand with real ownership.  Even better, the psychic ownership should precede the act of real ownership.

You can call an employee an owner, but if they have no means to give input, never see their input influence the company, do not understand the finances of the company, and have no idea how the ownership value in increased - it is a dead end street.

There are many companies where the employees have strong psychic ownership.  If you were to visit one, you would swear that they were owners.  The world of business forgets far to easily that the power of the mind and emotions will dominate the "facts".  Employees have to believe and feel they are owners before real ownership can make a difference. 

This is a current debate in the employee ownership world.  To see more on the debate go to this Linkedin discussion.

What Is Your Brand?

This may well be a topic that a marketing guy like Drew McLellan would cover.  So you may be asking why a culture/ESOP guy is talking about brands?

Because today a brand is truly only as strong as the culture it represents.  In today's world, people look at brands as an experience.  With quick access to information, consumers can quickly determine brands that are not true to form. 

People will quit buying a product if they sense hypocrisy and deceit.  A company may have a great product, but consumers quickly notice how companies treat their employees or how the owners or CEOs represent the brand. Do unplanned layoffs and super sized bonuses ring any bells!

The brands that will survive this economic downturn will be those where the culture fully supports and reflects the brand.  There are a host of brand "items" that all you have to do is replace brand with culture, and you have a great list of how to enhance your company's culture. 

A strong brand breeds loyalty by consumers and employees.  It is not just a mark or saying that people follow blindly like a bunch of sheep.  A strong brand represents something that employees and consumers internalize and it becomes part of their belief system.  When people truly believe, they will endure.

Teaching Employees The Business

Now is the time to teach all of your employees the business.  They need to understand the numbers and how they relate to sales, profits, cash and share value.  With the dire economic conditions you need everyone focused on the business, not just the management team.   If your employees understand the business, then they are better prepared to face tough decisions and not be surprised by them.

There have been and there will continue to be, hundreds of thousands of employee that will be laid off completely surprised and with little or no explanation of why, other then business is bad.  How would you like to be one these lucky people?

If your employees do not understand the business, then you are ignoring the knowledge capital that exists within your employees.  I promise you that if employees understand the business, you will see a huge influx of new and innovative ways to improve your business.  If you were dying, would you rather have 100 doctors working on your diagnosis or just three or four? 

I personally lead a company where the employees were taught the business.  Once that happened, the business saw significant growth in sales, profits, and share value.  Tough decisions were still made, but the employees were not freaked out because they understood the business.  During one tough decision, people volunteered on their own to be laid off to preserve other' employees jobs and help the business!

Jack Stack the CEO of SRC Holdings in Springfield, MO has written a book that relates to teaching employees the business -  "The Great Game of Business".  Here are the facts.  If you invested $10,000 in 1983 when SRC was founded during tough economic times, it would be worth $23,400,000 today.  SRC taught employees the business from day one, and they continue to do so today - 26 years of it.

If this post seems ridiculous, if you do not believe me, then at least take the time to read Jack Stack's book.  Learn the lessons from a real life business stor

    

The Power Of Engagement

A new page has turned with the election of Barack Obama as our new president.  Old barriers have been torn down and we are all anxious to see what the future holds with his leadership.

I have discussed in many posts the value of engaging your employees.  You have to admit that Barack Obama engaged people, and that was the power to his success.  He changed the history of how states traditionally voted, he engaged the younger generation, and he rallied a voter turn out as should be expected in a democracy.  When was last time a presidential candidate drew crowds of 50,000 or more. He did.  Now do you believe me when I tout that engaging your employees will get you bottom line results?

Barack tapped into the emotions of America to drive success.  You to can tap into the emotions of your employees and then drive that success with facts, financial information, and some type of ownership.  As humans we thrive on emotion not logic.  The power of love, hate, hope, faith, and fear have changed the face of the world a million times - some to the good, some to the bad.

When someone (new employee, customer, vendor, et cetera) walks into your company, what emotion will they experience?  Is it fear, hate, loathing, envy, or maybe nothing at all OR... is it love, kindness, concern, hope, pride, and a sense of welcome.  Maybe it is time for you to change the face of your company as you look to the challenges of the future.