Monday, September 26, 2011

Ownership Culture Without Ownership

Last week I was at the Midwest ESOP Conference. (For those who don't know, ESOP is Employee Stock Ownership Program and is a specific way that ownership transfers to the employees--now employee-owners--of a company.) Usually, in my consulting business, I talk about creating an ownership culture. An ownership culture is when the employees are engaged, caring about the success of the organization and committed to taking action to further its success. It's an easy concept for people in an ESOP to grasp.

For the non-ESOP's, I talk about job security. An ownership culture can exist if the leadership engages with the employees, teaching them about how to help the company win. The number one thing that employees typically desire, and won't trade off for other things (like higher wages, better benefits, safer environment, work-life hours, etc.) is job security. By showing them how to improve their own efforts and contribute to the success of the company, they are creating their own job security--as much as anyone can.

At breakfast at the conference one day, a female owner asked me how do I know engagement is high. First, it starts with the depth of the leadership's engagement with the employees. (Okay, don't get hung up on the paradox of high levels indicating depth.) If the leadership is seeking employees' inputs to critical issues, and open to questions and suggestions, they will reciprocate the engagement. You'll see them make spontaneous improvement suggestions, and not just from the "usual suspects" but from the silent majority and formerly apathetic. You'll hear complaints. You'll get questions about aspects of the company that indicate it's not winning--and not just changes in business demand but other internal factors like expenses, inventory, lengthening customer terms, customer loyalty rewards, etc. You'll see employees being accountable in all the meanings of the word: aware of a problem and taking responsibility for it and making sure something happens; admitting if something didn't go well; offering to repair whatever damage occurred; willing to change and try harder.

But leadership still has to engage in the system. It's not the employees that are broken if you don't see those things changing. They are behaving and responding to the same actions, behaviors and decisions that the leadership makes. So, if leadership hasn't changed, they won't. They won't engage more till leaders engage more. This means taking a look at all aspects of the system that hinder their involvement and ability to create successes.

You can see it when you walk into a place. I've heard that before about my companies. People sense that something's different. I heard it last week at the conference too about other companies. There's a buzz. When I was certifying suppliers, I could tell if we were going to have problems just by walking through the front door and the factory door. If people were suspicious or upset about the interruption, those were a sign that the management wasn't good. If people were welcoming and glad to show you what they were doing, there would be very few problems--and if there were problems, they would be addressed.

You know engagement when you see it.

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