The Power of Ten

ESOP companies perform substantially better when they get their employees involved in making decisions about everyday work issues. When a lot of people are coming up with a lot of ideas, the impact on the bottom line can be dramatic. Jerry Gorde, the founder of ESOP-owned VATEX, a supplier of embroidered and imprinted promotional materials, provided a telling example at a recent meeting. "Our industry runs by dozens," he said. But a dozen is an awkward number ("Quick," he said, "how many is 27 dozen?"). Inaccuracies in box counts were causing a high rate of returns, an expensive proposition in a low-margin business. So employees suggested shipping by tens instead. Errors dropped substantially and profits grew significantly.

The VATEX example perfectly illustrates an NCEO maxim about the relationship between employee ownership and corporate performance. Getting people to work harder (trying to work faster with fewer distractions on counting by dozens, for instance) adds only a little to the bottom line; giving people the tools, incentives, and structures to make smarter decisions adds a lot.