Employee Engagement & Motivation through Shared Ownership | Post 1

James D. Ludema & Amber A. Johnson Care for people, Culture, Leadership, Return on Values, Values-Driven Leaders

How Do You Motivate & Engage Employees?

Motivate Employees | Coffee

 

 

 

Much of our research points to a powerful conclusion for those looking to develop highly engaged and motivated employees: fostering shared ownership will make your efforts most effective.

What is Shared Ownership?

Shared ownership is the concept that employees have autonomy and are trusted and empowered to lead within their area of responsibility; it may include actual ownership, through an ESOP or other equity structure, but it also includes circumstances where the employee is not an actual owner but feels a strong emotional connection in the company regardless, as is often seen in companies that practice Open Book Management.

When people feel like they are an owner of the business, they are more engaged, they make better decisions, they take better care of customers and each other, and they are deeply invested in the success of the business. Dave Price, chairman of the board at Fresno First Bank, identifies the benefits of an ownership mentality. “People work harder; less turnover; people enjoy coming to work; they feel they’re part of something big or this could be part theirs.” Price, in an interview with our colleague Dr. Kevin Lynch, used the metaphor of home ownership to explain, saying that you take better care of a home you own than one you rent.

Shared ownership is the concept that employees have autonomy and are trusted and empowered to lead within their area of responsibility.

Shared ownership doesn’t mean you need to turn over control of the company. While many of the companies we’ve studied some are actually employee-owned, in part or whole, most foster a shared ownership environment without relinquishing actual ownership. Regardless of the model, the companies who employ this philosophy do so through a unique combination of two things: education and autonomy.

We’ll cover education in this post. Watch for future posts on autonomy.

Creating an Educated Workforce to advance Employee Engagement

Often the phrase “educated workforce” implies college degrees and advanced certificates. To share ownership, however, the concern is focused less on the degrees earned, and more on the employee’s ability to understand the complexity of the company’s business model and values, mission and vision.

Let’s take those one at a time.

Business Model:

Do your team members know what makes your company profitable? You might be surprised. Some CEOs we interviewed shared stories of “moments of realization,” when it suddenly became very clear that employees didn’t understand the true business model the company operated under.

For establishing financial understanding, nearly half of the companies we’ve studied have employed the principles of Open Book Management (OBM) and the Great Game of Business. Leaders in OBM companies take a transparent approach to company financials and teach financial literacy to all employees, with the understanding that as a team member’s competency with the business financials grows, their decision making capacity will improve.

When Kim Jordan, founder of New Belgium Brewing, first adopted OBM she gave her staff a quiz, asking them, “Of every $100 we earn, how much of it is left after we pay for raw materials, staff, and other expenses?” On average, team members estimated $60 in profit from every $100 earned.

“Wouldn’t that be great!” she says. With the gap in understanding identified, Jordan set out to create an educated workforce. They trained their staff to understand the relationship between the balance sheet, the cash flow statement, and the profit and loss (P&L), as well as how earnings were reinvested in capital improvements. “That was really freeing because I realized that it was easier to be trusting and transparent,” says Jordan. With those understandings established, Jordan was free to engage her team members in more strategy development. Now, 22 years into the practice of OBM, her staff is educated and more than capable of making sound financial decisions on the company’s behalf.

Team members who understand the complexities of a company’s financial workings can contribute to the success of the organization. Rick Whitsell, former President of Fresno First Bank, summarizes the results the best: “Once they understand it, they have a responsibility to come back and be problem solvers, not be problem givers.”

“Once they understand it, they have a responsibility to come back and be problem solvers, not be problem givers.”

Values Statement:

Creating an educated workforce is not just about the business fundamentals – it’s also about the culture. When team members are well versed in the values of the organization, they are able to evaluate choices or nurture relationships according to the set of principles that the company’s leadership hold most dear.

Bob Hottman of Colorado’s EKS&H says this sort of ownership of the company’s values equips everyone, not just executives, to lead. “I personally believe one of our best leaders is our receptionist,” says Hottman. For him, it recalls the adage that if serving others is below me, then leadership is above me.  By creating clarity around the culture and values of EKS&H, the company has essentially created a team of people who care so much about the company that they act as leaders, regardless of their place on the org chart. “It’s not about a title. And we can have six hundred leaders out there and that makes a force that’s pretty hard to reckon with.”

One story from Chicago food industry firm Tasty Catering illustrates this perfectly. The company hires many high school and college-aged workers to serve at the summer picnics the company caters. At one such picnic, the service was not going well: it was a hot day and the beer was flat, the wine was warm. The crew leader that day was a college-aged woman named Ashley who had been well educated in Tasty Catering’s core values, including their principles of providing quality in all they do and meeting high customer service standards. She kept her cool even as the client’s anger grew, and offered to refund the client for the alcohol service.

“You can’t do that!” said the exasperated client, questioning the young woman’s authority to make the decision.

“Oh yes I can,” said Ashley. She called her boss, Larry Walter, a founder of the company. Walter immediately affirmed Ashley’s authority, and applauded her application of the company’s core values.

Educating employees on business fundamentals and the company’s culture and values is step one to sharing ownership and developing a workforce that is motivated, and employees who are engaged.

How CEOs Spend their TimeRead more another aspect, autonomy, of sharing ownership to create employee engagement and motivate employees in our next post in this series, How Autonomy Creates Engagement.

Or, find more on shared ownership in our eBook, Do Differently: How CEOs of Values-Driven Companies Spend their Time. Much of this article was excerpted from the book, which you can download for free at this link.

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Jim Ludema, Ph.D., is a professor of global leadership and the director of the Center for Values-Driven Leadership. Amber Johnson is the Center’s Chief Communications Officers. Together with colleagues, they serve on the Return on Values research team.

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