employee ownership

Turbo-Charging Transformation & Performance Improvement

Turbo-charger www.123rf.com_37618271_sIt is encouraging to know that employee ownership is becoming increasingly popular and more widespread. According to Chief Executive Magazine the number of worker-owned businesses in the US is growing around 6% per year and such businesses now account for 12% of the private sector workforce. Apparently, this is due to initiatives “to empower their workforce employees by selling their stock to an ESOP or similar worker-owned arrangement” and/or “from founders wishing to reward employees while cashing out of their business.”   

Yet, notwithstanding such developments, difficulties remain. The article identifies 2 major dilemmas:

  1. Private companies lack the public trading capability that listed companies use to motivate employees;
  2. Governance “challenges” if subsequent owners are unwilling to continue running the business.

Then, presumably as solutions to these dilemmas, the article offers two case studies. The first describes the transformation effected by a shared compensation system at Johnsonville Sausages; and the second reveals how, over 30 years,  Burns and McDonnell, grew from 600 to 5,500 employees (816%) and increased revenues from $40 million to $2.6 billion (6400%) as the result of an ESOP (Employee Share Ownership Plan.) Then, despite this example of extraordinary growth that most organisations can only dream about, the article simply concludes by identifying the upside and downside of ESOPs. So let me add to the subject.

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A Better Way than Worker Cooperatives and ESOPs

I have recently noticed a spate of material on the subject of worker cooperatives. The most interesting was the Forbes article “For Some, Worker Cooperatives Emerge As An Alternative To ESOPs” which made me wonder if worker cooperatives were a new trend.  If so, it certainly provides food for thought.  

The article suggests that worker cooperatives are a result of changing demographics and a means of addressing the disruptive effects of generational change. Perhaps, but their providing a solution for only “some” implies that ESOPs (Employee Share Ownership Programmes) are the only other option. While history certainly entitles both to be options, being the only two suggests rather limited thinking. After all, both have their shortcomings, which – at the very least – warrants exploring other possibilities.  

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PS How to Effectively Align Your Performance & Rewards

My regular blog last week was inspired by Part 1 of an article by Andy Rice from Black Box Consulting, entitled "Performance (Mis-)Management." I therefore feel it is rightfully incumbent upon me to follow up and also share Part 2 with you. This second part identifies 3 questions you need to ask yourself about the design of your performance measures.

I am happy to report that, although expressed in different words from those I used, the basic principles are the same as in the 3 questions I recommended. The article, however, does nothing to question the validity of rewarding performance as an effective management tool. I therefore think my points remain valid and I stand firmly behind them as something every organisational leader should at least be considering.  


How to Effectively Align Your Performance and Rewards

As someone who aims to be an effective organisational leader, do your ever wonder why you have a performance related pay/incentive remuneration scheme? Certainly, if you are one of the nearly 15 million people who have watched "The Surprising Truth About What Motivates Us"  that is a question you ought to have been asking yourself. Or is it something you haven’t dared asked yourself, simply because performance related pay is virtually ubiquitous? When nearly every organisation – regardless of type or nature of business – has such a scheme, you would be bucking the trend and possibly damaging your employer brand if you didn’t.  

If that is the case there are still a number of criteria that you should be looking at to ensure that you have performance measures and remuneration and reward structures that optimise organisational performance. When it comes to effective performance measures and rewards you naturally need to ask yourself 3 questions.

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What Is The Future of Work?

With 3 in 10 jobs in the US held by the self-employed and their sub-contractors there is no doubt that the workplace is changing. (Source)  It is hardly surprising then that 2 out of 5 (40%) of people around the world believe that traditional employment “won’t be around in the future.” Thus the most recent issue of Management Today with its feature section on “The Future of Work” makes for interesting reading.

Some of the key points it makes warrant highlighting and further comment.

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Why our approach is all wrong

Bride and Groom - 123rf.com 21173805_sLast Saturday I was privileged to be part of my niece’s wedding. It was a memorable occasion, on a beautiful sun-drenched day with joy, love, and fun extending throughout the day and the late-night dancing and celebration. Sunday, however, was different, despite being just as beautiful a day. It was as though the goodness had gone on honeymoon with the bride and groom, and, the weeks’ of planning and preparations now over, the rest of us were left feeling unfocused, flat and purposeless.

This contrast exemplifies the way our attitudes and expectations shape our experience. Nothing had really changed, yet the world felt different. It is undoubtedly a better place when love is prevalent.

Reflecting on this I started questioning why it takes a wedding to bring out all that latent goodwill, fellowship and friendship. Yes, a wedding is a formal declaration of love and common purpose between two people, but it is merely symbolic. The substance exists without it and, apart from formalising it and providing a legal and/or moral framework for the union, the ceremony intrinsically changes nothing. So why isn’t it more evident in everyday life?

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Addressing and Mastering “The Issue of Our Time”

It's happening. In the last three weeks alone, Foxconn announced it will replace 60,000 factory workers with robots, a former CEO of McDonald’s said given rising wages, the same would happen throughout their franchises, Walmart announced plans to start testing drones in its warehouses, and Elon Musk predicted fully autonomous car technology would arrive within two years.  

Artifical Intelligence 123rf.com 6383792_sWhether it's worker displacement, the skills gap, youth unemployment, or socio-economic stratification, the impact on society will be staggering. I’ve said it on multiple occasions and believe it even more so every day: creating economic opportunity will be the defining issue of our time.”

Those are the words of Jeff Weiner, CEO of LinkedIn, taken from his publication of his email to all LinkedIn employees announcing the company’s acquisition by Microsoft. Like Weiner, I am concerned about the proliferation of artificial intelligence (AI) and its implications. Thus I am delighted by his recognition of the phenomenon and its impact. It is undoubtedly the defining issue of our time, not only because of the need to create economic opportunity but because of the dangers inherent in failing to do so effectively. 

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Mastering “The Paradox of Being Human”


The whole conundrum around the struggle between selfishness and selflessness, with its biological roots – or what Simon Sinek calls “The Paradox of Being Human” – gives us so much more to ponder than just the innate conflict between individual and organisational objectives for which I proposed a solution last week.  The biology – summarised again in the table below – is also significant because it suggests happiness or satisfaction is situational and is therefore transient, which implies that “the pursuit of happiness” is a futile exercise: at best a fleeting goal. 

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“The Paradox of Being Human” and Its Implications in Organisations

“The Paradox of Being Human” is how Simon Sinek refers to life’s constant conflict between selfishness and selflessness: between “me” and “we.” We spend our lives vacillating between the two perspectives; zigging towards our own wants and zagging towards pleasing others. Yet our survival depends on our ability to juggle these opposite, apparently mutually-exclusive, demands. And always has.

So much so that, as I wrote last week, humans are biologically programmed for it. The table below illustrates the paradox and provides a succinct summary of this biological balancing.

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Why Employee Engagement Efforts Aren’t More Effective

In his book, “Leaders Eat Last,” Simon Sinek expounds on how the human species has been biologically programmed for survival. He describes the chemical stimulants that the body produces under different circumstances. He identifies 6 different chemical reactions and the situations in which they are produced. These are, briefly, as follows:

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