RSM McGladrey ESOP Blog

Capitalism Through ESOPs

There is a growing debate on capitalism and what it will look like in the future.  Most people would welcome the chance to build a significant amount of wealth for themselves and their families.  The challenge is that the entry into capitalism requires an ever increasing amount of investment, that the vast majority of Americans do not have nor can they get access to it.

The world is not fair and that will not change.  ESOPs are a vehicle that can allow the average american worker a shot at building wealth, pride, and create a bit of leveling in our wealth distribution.  Chris Mackin gives a wonderful narrative about this in The Nation.

ESOPs are not perfect, but they are a viable alternative to the future structure of capitalism.

Flickr photo by boetter

We Need To Believe In Something

I watched a great movie called Second Hand Lions with Robert Duvall and Michael Caine.  In the movie these two great uncles raise their nephew, and in one of the scenes Michael Caine says to his nephew, "People have to have something to believe in.  It is what keeps us going".

What do your employee owners believe in?  Have you given them something that they believe in, something that they will follow passionately? 

Take some time to think on this - for yourself and for your ESOP company.  Belief in something bigger than ourselves gives us a purpose.  It gives us something to focus our energy on.  It adds meaning to our daily lives.

I would love to hear what your employee owners believe in.

Make a Choice

Are you a victim?  The vast majority of people in the workforce today feel like victims.  The reason: they are afraid to make choices.

It is easier to sit back and point the finger at your boss, the company, your spouse, and a host of other scapegoats.  The saying, "When you point your finger there are three fingers pointing right back at you," is so true.  We do not want to own up to the choices that we have made and for good reason.  It may take some serious thought as to where the original choice was made that enables you to be the victim. 

Somewhere in your past you made a conscious choice - you alone - no one was there to twist your arm.  Maybe you did not spend the time or get the information that you needed to make a good choice - but you chose that scenario as well.  At some point in our younger years, we are evolved enough to know that we live with our choices.  Too many people go to the grave still choosing to be a victim.

A short list of important choices:

• Getting married
• Having children
• Buying new instead of used
• Eating a donut instead of an orange
• The attitude I will approach my day with
• To exercise
• Getting a divorce
• To quit feeding my brain and my soul
• Using credit cards
• Not taking vacation
• Buying a home
• Last but not least - NOT TO BE A VICTIM

The Authentic Owner

So as an owner, are we authentic or fake?  An article by Jay Walljasper of Ode magazine, gives an interesting view on authenticity and how it is impacting our world.  He states that people are looking to match what is inside of them with what they are doing on a daily basis.

I believe there are many companies that claim and brand themselves as employee owned, but with no authenticity.  When you talk to these employee owners, they speak and act as most employees in any company - blah, bored, and tied to the job.

Authentic employee ownership starts with these important traits:

• Leaders that walk the talk
• Practice open book management
• Employee owner communications committee
• All employee owners have a path of input into the business
• Opportunity for personal growth
• An environment of laughter and fun

So how does your company stack up?

Understanding Safety

I strongly believe that the biggest hurdle to organizational change and employee engagement is the issue of feeling safe.  I recently had a conversation with an employee owner of an ESOP company that dealt specifically with this issue.

The key comment that struck a tune with me was "I am not going to stick my neck out at this time.  It is too risky and I need my job."  This person was passionate about change, employee engagement, and the entire ownership idea, but only to the point of her safety.

Imagine the power of an organization where the employee owners are fearless.  If this was the case, I guarantee you that you would get more innovation, productivity, and honest feedback.  It would also curb the internal politics which waste so much time and energy.

Take a good look at yourself.  Really evaluate how safe you feel in your work situation.  Remember that safety can relate to many aspects of our lives - money, housing, relationships, health, food, and many more.  Now put yourself in the shoes of those you have power over and try to think of how they would view their safety.

I hope the light bulb just turned on for you.  Start today - define what safety means to you, your fellow employee owners, and the organization. 

Technorati Tags: safety, company culture, engaged employees

Participation - A Foundation for Ownerhsip Culture: Part 2

So if participation is so great, why do we not push for it?  At the National Gathering of Games Conference this last March, I facilitated a session on how ownership can change society.  The audience consisted of owners, upper management, and rank/file employees who covered a wide range of ages.  I asked them this question, "How many of you feel that you can impact government and politics in today's world?"  Now hold on to your shorts - not one single person raised their hand - not one!  But wait... this is democratic America we are talking about - the land where we can control our destinies through participation in the democratic process.  According to this cross section, that last statement is a bunch of bull.  Why participate in a process where you feel you have no impact?

With this knowledge, I had to ask another question: "How many of you feel that business can impact your politics and government?"  Hands went flying up all over the room.  Now follow me here - as individuals, we have no impact on government and politics, we have no impact in most companies.  Would this lead us to believe we have no impact in our family, or even worse no impact in our own lives?  I think we all know too many people who feel this way.  They hate the government, hate the companies they work for, hate that they can not impact their family's lives, and hate their lives period.

So where can change be implemented that can break this cycle?  You guessed it - the workplace!  the place where we spend most of our lives.  What is the change?  You guessed it again - participation!  It can drive profits, it can provide individuals with an avenue for political/government impact through their company, and it allows individuals to directly impact issues that affect their families and themselves.  Now go out and spread the word.  Start the discussions, find your allies, make a difference - participate!

Technorati Tags: employee participation, business culture, employee ownership

Participation - A Foundation for Ownership Culture: Part 1

The post for today and tomorrow is a duplication of an article that was printed in the ESOP Report Magazine, a publication of The ESOP Association.

Can businesses be more successful through employee participation?  Absolutely!  The examples of businesses that use this strategy are numerous - Gore Companies, New Belgium Beer, Foldcraft Companies, Reflexite, Cirtronics.  Yet, the vast majority of workers in the U.S. work for companies where participation is a swear word.

Company executives are there to tell you what to do and make sure that they are taken care of - and, in so many cases, at the consequences of those who slave under them.  The organization does not want your input, only your sweat.  Yes, they offer a wage, benefits, and maybe even some other perks that draw us in.  Then, in short order, we are reduced to being treated like mindless idiots and asked to work more, work harder, and give up our identity.  If you are not in a power position, no one really cares what you think.  Soon we are just part of the numbing crowd which shuffles in and out the company door where we leave our brain in the street sewer that is in view of this door.

These companies go out and recruit the best of the $75,000 educated college graduates.  They must have the best.  Companies spend millions of dollars in resources for the educated brain.  The brain grows through new experiences; it stays sharp through practice - maybe we could just call this participation.  What a novel idea!

Participation was the foundation for Ancient Greece, Rome the Iroquois Nation, and let's see, Oh Yeah - the United States.  The history of the world has proven the power of participation and I must say the power of the one - Napoleon, Hitler, Stalin and the multitude of Kings and Queens, Geronimo, and so many more.  Yowza - I just contradicted my entire argument.  Or did I?

Maybe we just need to realize that both dictatorship (traditional business) and participation (those businesses who dare to believe in their workers) are a fact of life.  Success can happen either way from the big picture view, but when you boil it down to how it impacts individuals, families, and societies, there is something more in participation.

Technorati Tags: employee participation, business culture, employee ownership

ESOP Committees

What is an ESOP committee?  For some companies, the ESOP committee directs and/or operates the plan.  These types of ESOP committees deal with the technical side of ESOPs.  For other companies, the ESOP committee is there to communicate the expectations of what it means to be employee owned - these are the committees I love to work with!

Let's dive a little deeper into this second type of ESOP committee.  At the basic level, these committees tend to be a T-shirt and party committee.  It is all about fun and the assumption is these types of activities will create ownership.  They do have an impact but it is very short lived.  They do not change the company's culture.

The advanced ESOP committees will have budgets, conduct surveys and implement training, even to the extent of being a part of the senior management evaluation process.  Some of this may seem pretty scary to you but it does work if the organization wants it to.  Even more specifically, the top leader must believe in the value of this type of ESOP committee.  The leader allows this committee (with little guidance) to direct their own affairs and allows the committee to evolve over time to take on more significant activities.

Why would a leader want to go down this path?  To me it is very simple.  Do you want to have your key people tied up with maximizing employee ownership all the time or do you want them using their paid expertise to drive the company's performance?  Every company pays a high wage for knowledge and skills that are key to their business.  This does not guarantee that they are great communicators, are consensus builders, or understand how to evolve a company's culture.

I believe that everyone has the ability to want to make a company better.  It does not have to fall only on the shoulders of senior management.  It provides an opportunity for other employees to experience a different side of the business.  Let me share a true story with you.

A company had an ESOP committee that was planning a summer picnic.  They implemented a rule that at least six people needed to sign up to help or there would not be a picnic.  They did not get six people to sign up and they canceled the summer picnic and used the budgeted dollars for other activities through out the year.  One of the employee owners went to the CEO and said, "This is a bunch of bull.  We should have a picnic and you and the management team should make it happen."  The CEO replied, "The ESOP committee is charge of this and it is up to them.  If you want to make sure we have a picnic, then I would suggest you get on the committee."

This was not the only employee that felt this way and ever since that one cancellation, there has always been a summer picnic.  Why?  The one individual did get on the committee, and it really was up to all the employee owners to decide - not management. 

Does your management team deal with conversations that really should be held by others in the company?  I firmly believe that management should be spending more time doing the things that others cannot do - utilizing their expertise.  It really is amazing what people are capable of if they are given a chance.

I will delve deeper and share more insights into ESOP committees in future blogs.  I would love to hear your stories and/or questions on this topic.

Technorati Tags: ESOP, communication, culture

ESOP Association day two

I missed yesterday, but wow did I get pumped up.  I met with an esop committee group from Dakota Supply - Jay, Stan, and Cameron.  What a great bunch of dedicated employee owners. 

They were engaged, believed in their company, understood the finances of the business, mutual respect, creative, and best of all they challenged each others thinking.  Imagine an employee challenging another employee that they dropped the ball - hard to do since it rarely happens.

I had the privilege to experience this first hand with this group.  What happened? Most of you are thinking yea.... a juicy conflict, verbal abuse, screaming, maybe even a fight.  Not with this group.  The challenge was made respectfully, the response was not defensive, and the individual owned up to the fact they dropped the ball.  If fact, not only dropped the ball, but a statement that they let themselves down.

What would you give to have entire company of people that behaved like these gentleman?  So many of us just think this is wishful thinking.  It does not have to be that way.  Employee ownership can initiate a change in the culture of a company.  A culture where service is not just a priority to customers , it is a priority to serve your fellow employees.  Which leads to what you may ask?

Higher profits, higher stock value, and more wealth for all of the employee owners.

Technorati Tags: employee ownership, participation, communication

Day one - Annual ESOP Conference

Day one of the ESOP Associations Annual Conference has just began.  It starts with an awards ceremony called the AACE awards (Annual Award for Communications Excellence).  This dinner will have over 350 employee owners and professional ESOP advisers in attendance. 

This event is a celebration of best practices by ESOP companies in promoting employee ownership.  The companies that enter this contest are believers in participation. They exhibit this through written materials, videos, special events, and most importantly how they live employee ownership on a day to day basis.  If you ever wanted a way to get easy access to a bunch of great ideas, boy are you missing out!

It is a shame that this conference does not make the newspaper, radio, or even better yet television coverage.  I believe that if the masses were truly aware of the power of employee ownership you would see a lot of activity in our government to promote it.  Employee ownership can be a driver for individual wealth, understanding the state of the business (meaning you are not shocked if things are looking bad), and a more fulfilled life.  Being an owner changes your view on the workplace.

So what gives me the right to speak these things?  I was a former CEO of an employee owned company, I have been a judge for the AACE program, I am member of the Board of Governors of the ESOP Association, I am a chapter officer of the association, and I was a former Board of Directors member of the association.

I encourage you to mark this blog as a favorite, if you believe in employee ownership or if you have any curiosity about it at all.  This blog will give you ideas, challenge your thinking, and if I really do it well - create more employee owned companies.

Tomorrow will be day two of the conference and more insights - I can not wait to share it with you.

Technorati Tags: employee ownership, participation, news, conference