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Pumping Up Communication About Stock Performance at MPD, Inc.

Cathy Ivancic

April 1998

Imagine you are riding a stationary bicycle attached to a special machine that allows you to increase stock value in your company. You start pedaling and the machine's "Stock Price Meter" shows you how you are affecting company performance. The meter rises to $1 per share and then you pedal some more and the stock goes to $2. After some more effort, then it is up to $5 per share.

The harder you push yourself and the smarter you are about using your energy, the more the stock value goes up. If such a machine existed, you would be able to see the direct connection between your actions and stock value. You could modify what you do every day to affect performance.

At MPD Inc., a 100% employee-owned business in Owensboro, Kentucky, employees are learning more about the real connections between their actions and the value of their stock. Through a commitment to employee education and open-book management, MPD is developing into an employee stock ownership plan (ESOP) company where people understand how they contribute to performance. This manufacturer of electronic components and equipment for avionics, police radar, breath alcohol analyzers, and other electronics established an ESOP in 1997.

At the kickoff meeting for the ESOP, MPD had one of these machines that allow a person to "pump up" stock value. The ESOP Stock Price/Action Meter is a thermometer-like tube that fills up with green (money-colored) liquid as an exercise bicycle is pedaled. Admittedly, the contraption doesn't actually affect stock value at MPD. However, the machine did teach some important lessons about what employees can do to affect performance.

During the employee meeting last July, the president and CEO of MPD, Gary Braswell, invited an employee from the audience to test their skill on the machine. Bruce Law, a drafter at MPD climbed on the machine and started pedaling.

One would expect that Bruce, a marathon runner, would have the endurance and strength to make that stock value go through the roof. But just when things were going well, he encountered "other factors" that caused the big tube to sprout leaks, spewing green liquid all over the place. These factors were holes in the tube, representing things such as product rejects, customer returns, and absenteeism that had a negative impact on stock value.

Although Bruce's coworkers cheered him on, his efforts were futile. The green liquid continued to spray out the holes and the stock value level wavered and fell. As one employee summed up the message of the demonstration, "No matter how hard you pedal, if there are too many holes you'll never get anywhere."

"We wanted to give people a real picture of how actions and teamwork affect performance," noted Bob Hill, V.P of Human Resources. "If a picture is worth a thousand words, then a moving live demonstration ought to be worth several thousand more," says Hill.

The MPD Stock Price/Action Meter illustrated two messages about stock value:

The value of the stock can be improved when employees work smarter, harder, and more efficiently.
There can be other "forces or factors" that can negatively affect the price of MPD stock. Many of those factors employees can have a lot of control over.

Alone, one person working very hard probably can't make stock value go up but working as a team, employees can have a stronger impact. "We all need to understand the importance of working together and the personal rewards we share from our success," notes Braswell. Through monthly meetings on financial performance, business education, and linking local objectives to company-wide performance, employees at MPD are learning to understand how their actions really do pump up stock value at their company.

Cathy Ivancic is a consultant and co-owner at Workplace Development Inc. Since 1985, she has helped more than 100 ESOP companies enhance ESOP communications and develop an ownership culture. She is active in national organizations that promote shared ownership and has served on the NCEO's board of directors and as an officer of the Ohio chapter of the ESOP Association.She can be reached at civancic@workplacedevelopment.com.

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