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August 2010

The Essence of Open Book Management

An article I read recently described Open Book Management (OBM) as "Doing Business in the Buff." The analogy is certainly a strong one and goes a long way towards depicting both the degree of openness that is required and the reason why business leaders find it so daunting.OBM

Yet, that begs the question as to why. Employees can be said to be investing their life in the business so surely that gives them the right to be treated with greater respect and trust? Isn't withholding this information misplaced elitism and a fear that 'ignorant' employees will kill the golden goose by demanding a greater share for themselves when they see how well the business is doing?

Even the most ardent proponents for OBM admit that it only works if you have some kind of profit-sharing arrangement. The argument is that "tying in profit-sharing with open books is crucial because you share what the company makes." This is unquestionably true. However, any claim that this in itself will create more motivated, engaged employees needs to be challenged.

Certainly if the emphasis is on the word more, the statement is probably indisputable. But whether it eliminates the deepest vestiges of employee disengagement is debatable. This is because the methods for distributing the profits all too often remain inequitable. Human nature is such that no matter how much better off you are as a result of something, if the method of sharing is inequitable, you will feel hard done by and become jealous and resentful.

This may be why, despite the increase in employee share ownership plans and profit sharing schemes, employee engagement surveys continue to show that employee disengagement is spreading. Profit sharing will only have a minimal effect in countering employee disengagement as long as the profit sharing is inequitable. Perhaps, this very inequity is also why owners and managers are so reluctant to open their books - and do see it as "stripping off."

But there is more to it even than that. Peter Drucker wrote, "The worker should be able to control, measure and guide his own performance ... The worker will assume responsibility for peak performance only if he has a managerial vision…" (The Practice of Management) How can employees have such a vision without any understanding of how their actions affect the business and how the business is doing?

Thus to have the level of employee engagement that will ensure the sustainability of your business you must have:-

  • Universal employee ownership i.e. every employee having a stake in the business
  • The employee stakes must be equitable with concomitantly equitable returns
  • Every employee being in a position to "control, measure and guide their own performance"
  • Everyone understanding how the understanding the business works and how it is doing

These are the 4 essential ingredients of OBM and if you are missing any one of them you have a problem and a potential recipe for disaster.

How to Beat Conducting an Employee Engagement Survey

Surveys are the epitome of "lies, lies and damned statistics." A survey of a few thousand extrapolated across a population of many millions is hardly absolute, no matter how much statisticians would have us believe it is. Yet we place an almost religious faith in them and use them to shape organisational and political policy. Do we give them too much credibility?Question Mark

This question becomes even more pertinent when the topic is personal and the results thus likely to be highly subjective. Employee engagement surveys are likely to be particularly susceptible to this.

Certainly my misgivings have been sharpened by a fresh look at the Gallup Q12 - the list of 12 statements which underpin the Gallup Employee Engagement Survey. To see why let's just look at the first of these statements.

I know what is expected of me at work

Now no-one could take exception to that. Of course we would all rather work in a situation where we know exactly what is expected of us, but does that knowledge really make us any more engaged? After all, the slaves building the pyramids or rowing a Roman galley would have known exactly what was expected of them. That, however, would not have made them feel engaged in what they were doing!

And what if you had moved into a new role just prior to the survey being undertaken, and you were still finding your feet?

Suddenly your employee engagement survey, which is in any case a costly and time-consuming exercise, looks more of a subjective exercise assessing a moving target. So how reliable is it? Is the cost justified? In light of this, do you think you would prefer to find a more effective way to assess your employee engagement levels?

Well, the good news is that you do have an alternative. Because employee engagement is so important and significantly affects your bottom line, you can look at the possible consequences of employee disengagement and, by examining their prevalence in your organisation, ascertain the state of your employee engagement.

That is precisely what the Zealise Assessment Programme offers you - a business-focused assessment of employee engagement levels in your organisation. Don't you think it is worthwhile investigating as a viable alternative to conducting an employee engagement survey?

How Serious is the Employee Engagement Problem?

A Conference Board report published last January identified that job satisfaction levels were at their lowest level in two decades, since they first starting measuring it. You will find this quite frightening in light of the focus on employee engagement and the "war for talent" that has been waged for the past 10 years or more. No organisations can realistically expect to survive with such low employee engagement levels. War for talent

Perhaps you are inclined to regard it as an inevitable consequence of the recession and the stress that this has caused. Or even to shrug and think the statistics don't apply to you. But they have to apply to someone. And the latest CIPD report, that 32% of employers are planning further redundancies, is clearly BAD news. It would suggest the situation is only going to get worse.    

Either way, the report begs the question, "Why are employee engagement efforts not more successful?" If you are one of those organisations running extensive and costly employee engagement initiatives, you should be concerned.

However, rather than questioning whether your focus on employee engagement is misguided, perhaps you should be asking yourself whether your approach is wrong. Could it be that your organisational structures and fallacious traditional management thinking are actually undermining your efforts? If you are not sure of the answer, then perhaps it is time you found out. After all the costs of employee disengagement are too significant. How much longer can you survive if you have a flawed model?

If Employee Ownership is Good for Business ...

"Equity: Why Employee Ownership is Good for Business" is the title of a book written by Corey Rosen, John Case and Martin Staubus and published by Harvard Business School Press in 2005. It more than hints at the fact the authors think that employee ownership is a powerful business force. 

The point of the book is made very clear in the first few pages when the authors state, "Even people who should know better - Human Resource professionals and stock plan consultants for example - often view ownership of shares or stock option plans as just another tool in their kit bag of benefits ... They haven't understood just how powerful a notion ownership is or how it is capable of transforming a company."

Absolutely! And their model is predicated on equity ownership where employee ownership is synonymous with employee share ownership plans or ESOPs. Now most of these employee ownership plans entail employees buying their shares, whether directly or through discounted share options. So, unless the shares are held in trust on behalf of the employees, this makes it very unlikely that all employees will be shareholders and so consider themselves to be owners. Yet if employee ownership makes people act like business owners and delivers the kind of significant difference to performance improvement that the authors say it does, can you imagine how much bigger the difference would be if you were to make all your employees owners?

How powerful then do you think an employee ownership scheme would be that offers you the option to make all your employees co-owners:

  • Without shares?
  • With no cost to your employees?
  • With no cost to you and without any making them feel that they are the recipients of charity?

Well, that is what my approach offers! If you are looking for the benefits of employee ownership, just imagine how much better they would be with this innovative, new approach. So what are you waiting for?