Employee ownership gives businesses an excellent opportunity to evolve the corporate social system, but simply plugging in an ESOP or becoming an employee-owned trust or corporative doesn't create a magical new mindset. Regardless of the employee ownership benefit, leaders must do the work to maximize the financial and social capital of the business.
In traditional business models, employees rent their labor and talent to a business in exchange for a wage and some level of benefit security. There may be opportunities for bonuses or some other monetary gainsharing program, and these are great. They are a financial incentive to think beyond the pace of the day toward building more short-term value. Despite decent benefit programs, there can still be a transient nature to these traditional jobs. With wage stagnation, the research is showing that to increase our financial worth, we need to find a new employer periodically. In other words, traditional intracompany merit increases do not grow as fast as our worth in the open labor market. In the traditional company context, we are renters. We have no reason to care about corporate performance beyond individual pride and self-interest.
Employee-owned companies experience many of the same challenges that traditional businesses do including retention, wages, and the general renter mindset. However, they have the additional tool of employee ownership. When the social engine of a corporation is running well, the horizon for the employee mindset is expanded beyond renting toward engagement in the business and longer-term value growth. In other words, they are a part owner in the value their labor helps to create. This change in the corporate financial and social system helps people envision a new framework for decision making that supports corporate initiatives and the strategic future. Job function is always important, but there is a new tool to ignite a broader perspective. It's not just about an employee-ownership (EO) benefit or dividend, it is a different management technique that brings together the potential of an EO plan, open book management, and servant leadership. This is the development of ownership thinking.
There is another level beyond ownership thinking that is the grail of employee ownership. It is the creation of a new business system and not a program or a tactic. This system enables employees to engage as corporate citizens. It is the civic engagement inside a corporation where all employees have a fundamentally different skill set and mindset. Some call this a democratic workplace and I fear that this label may politicize the idea rather than get to the core of the concept - a corporate democracy creates a more open system where the shareholder-employees influence the growth of system: dēmos = the people. In a civic corporation, people take their roles seriously because they know they play an integral role in creating the service or product. They also know that value can grow because of their contributions. However, moving a step beyond is where people understand that there is a greater good and a bigger picture that they must be a part of first.
For example - all businesses engage in commerce to generate cash and profit that can either be reinvested or distributed. In a manufacturing environment, a job may be eliminated because of a new robotics capability. The renter mindset will resist this evolution because they will no longer be able to rent their labor to the corporation and there is a real fear of job elimination. The owner mentality will know that they have the potential to grow their ownership worth because of the new capability of the machine and readily look to be retrained. The citizen mindset was an advocate for automating their role before the technology arrived and was already cross-training with a constant skill evolution mindset.
Another example is the process of strategic planning. The renter mindset is not involved in corporate planning. They may occasionally contribute to suggestion boxes, brainstorming, or minor continual improvement initiatives. The owner mindset will be included in planning, but often with more participation at the team level and may participate in all-employee open book meetings. The citizen mindset is not just participating, but is thinking on a two- to five-year horizon and may be giving insights about killing current processes and products to help usher in the new and meet the future consumer. The citizen respects expertise and stands shoulder to shoulder with their fellow corporate citizens to help the future emerge.
The citizen mindset may sound like a selfless process of putting the future ahead of self-interest, but this is not the view. The citizen mindset is one of high self-worth and belief in constant self-improvement in concert with the path of corporate growth. It is an attuned approach to self-leadership that moves beyond job to community-based entrepreneurship inside the company. It's not chaos, but highly ordered and the employees in the system play a role in creating the order. There are boundaries that support productivity, but those boundaries are adjustable to help the business meet the future. There are jobs because the allocation of human effort creates productivity and value. Being a valuable contributor for the future is highly self-interested, but it is not selfish.
How to start moving to a corporate-civic minded company?
1) Start with mindset.
Teaching social-emotional intelligence in the workplace is incredibly important. The civic-oriented corporation has debates and disagreements that can result in significant progress. It is a skill of every employee to be able to engage in conflict in a productive way. People with low self-worth or high egos will not be able to engage in this type of system.
Build mindset elasticity. In all companies high-quality, consistent products and services are critical. This requires a focused, narrow mind. Engaging with an owner mindset requires a mindset of nuanced choice-making where the daily/weekly/monthly individual and team choices are those that are going to support corporate profit. The citizen mindset is very focused on the future and using the social system to fortify our present and help our best future emerge. These are three different perspectives that can occur in one person. However, this mental elasticity is a skillset and mindset that must be developed. Episodic annual events are good. But, think of this like a marathon - simply running a marathon once a year won't work very well. Creating projects, group events, failure dialog, and managers who lead using a Socratic method will help build these elastic mental muscles to be in prime shape for the big moments that matter to the business.
Break old habits and conditioning. We all bring our past experiences to work with us. Managers in this system must be open to additional learning. Traditional managerial training in process management, project management, TQM, Six Sigma, etc. are still incredibly important. However, how a manager applies their skills is crucial. The application of their managerial tools must be in the direction of the corporate-citizen culture. Old traditional leadership skills must be broken. Servant leaders help everyone lead whether it is in structural leadership, informal leadership, or self-leadership. Maslow's hammer applies - leadership in ownership cultures and of corporate citizens have many tools, and they are gifted in their ability to use the right ones to help the company thrive. Many tools, not just a hammer, and people are not nails.
2) Build your social model.
Simply plugging in an ESOP or other EO benefit won't turn on the light of ownership thinking. Leaders must supply the electricity! Draw your table of what renters, owners, and citizens think and do. Isolate how people act. Performance is not a scoreboard. A scoreboard is the result of performance. Attitudes drive behaviors. Behavior drives performance. Facilitate different groups to construct their versions of a table. Ask your board of directions, executive team, people managers, and nonmanagers to build a table and compare and contrast the thinking. This contrast will help inform the best starting point of further action planning. Build your aspirational model and practice the tenants of the model for six months to a year. Then use the classic plan, do, check, act model of continual improvement. As a second phase, consider building a not-doing table based on what you learn over time. The book ends of what a culture is and isn't is very helpful to create understanding.
3) Have fun. Add levity. Enjoy the ride.
We spend a lot of time with our coworkers. A thriving workplace has joy, novelty, cleverness, irreverence, humility, and ingenuity. When you can see your company as a learning lab always stretching to being the best version of itself, the pressure to be perfect can be released. There will be a few bumps along the way to be certain. Learn from them and take time to enjoy the wonderful people around you.
Why is this critical for your business? Because your customers feel it. Our modern consumers are smart and they can sense the difference between an authentic brand and one that is disingenuous. Your social system, your culture, is at least a revenue stabilizer and at most a revenue source.
Jennifer Briggs, organizational development and HR executive consultant