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Creating Ownership When You Already Have Participation

Virginia Vanderslice, Praxis Consulting

An increasing number of companies are finding themselves in the position of beginning to share ownership after having already established participative cultures. Many open-book management companies, for example, recognize that giving employees a financial stake in the business is a natural extension of their corporate culture. For these participative companies, the introduction of an employee ownership plan requires particular attention to helping employees understand the plan and how their efforts can help it grow from the outset.

At some point, employees in companies that have participation without ownership begin asking themselves: "Why should I participate? What's in it for me?" While short-term programs such as profit sharing or productivity incentives are a key component to motivation, ownership adds an essential long-term incentive and perspective. It helps employees understand the necessary balance between short-term profit taking and long-term growth needs.

If they want to create a high performance ownership culture, companies need to make sure that:

Employees understand the meaning of ownership. They move beyond "I'm an owner" to the notion of a community of owners.
Employees can communicate openly in all directions.
Employees understand and are committed to the company’s business goals.
The company provides extensive financial education and gives employees ways to affect corporate outcomes.
The company's needs and the individual's needs continue to be balanced as employees understand how individual actions affect the company as a whole.

Core Challenges

A key challenge that exists in every employee ownership culture is aligning ownership expectations: what do people think ownership is? This challenge is especially interesting for companies that are already highly participative because employees may already think they have some of the attributes of ownership. What is it that is different about being an actual owner and how should behaviors change? Another challenge is to identify gaps in what is already being done to encourage participation, to determine what else will maximize on the opportunities that adding ownership provides.

Telecare, a company in the mental health field, recently faced these challenges when it added its ESOP to an already highly participative culture. The company works with the severely and persistently mentally ill population in California. It has a diverse staff of 1,600 employees with widely varying levels of education. Employees are highly valued in the company and inclusion has always been a core concept.

Prior to setting up the ESOP, the company provided educational assistance; profit sharing; employee satisfaction surveys; brown bag lunches with the CEO; 360-degree manager reviews; and cross-functional committees, which worked on strategic planning, communications, employee recruitment, safety, and quality improvement. Employees from all levels of the company are involved in each of these areas.

Two of the first challenges Telecare faced upon adopting the ESOP were educating employees about the new ownership plan and how it would benefit them, and linking current behaviors to ownership. To begin the education process, the CEO and the V.P. of Human Resources went to each of the 33 programs and led a reenactment of the ESOP transaction, with employees taking on the roles of the various players involved: Uncle Sam, the selling owners, the employees, the trustees, the bankers, and so on. They moved money and stock around to demonstrate how the transaction worked. They began with questions like these: As the family, why would you want to sell the company? If you don’t sell to the employees, where else can you go? Then, people playing the role of employees were asked what they thought.

A Q&A handout was created to answer such anticipated questions as: When will I get my money? Why can't I get it right away? What's different now that I'm an owner?

The company also created a hotline where employees could pose questions, which are answered in a weekly newsletter. Their quarterly communication, Teleclarion, also carries a column that answers hotline questions. The company plans to extend the role play game to begin to build linkages between ownership and individual actions. One possible way to help employees understand how they affect the bottom line is to ask them to create hypothetical situations and then find the best solutions in terms of the long- vs. short-term trade-offs.

Every two years, the company surveys employees on issues such as employee satisfaction, fairness of pay, and professional opportunities within the organization. Each site’s data are compared with the overall company data. Committees at each site review data; wherever they score low, the committees devise a plan to increase the score. With the ESOP creating new challenges, the company created a one-page survey on the things they were about to initiate such as: Do you feel like an owner? Are you getting enough information about the plan? The results will be used as a baseline and the questions will be incorporated into the larger survey to map long-term results.

For Telecare, maximum inclusion at all levels of the company has revitalized the company and increased trust levels among employees. The ESOP is another spoke in the wheel that helps them continue the journey towards realizing their mission.

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