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Developing a High Performance Ownership Culture The ESOP Association New South Chapter Fall Conference Orlando, Florida October 18, 2012 Alex Moss Praxis Consulting Group, Inc. Agenda Attendee demographics Success Drivers & Employee Ownership Foundation Ownership Culture framework & tools Discussion 1 TEA New South Chapter | Ownership Culture October 18, 2012 Who’s Here? Size: employees Over 1,000 Over 500 Over 100 100 or fewer ESOP % Over 20 years Over 10 years Over 2 years 2 years or less Board of Directors 100% Majority (50%+) Minority (under 50%) C-Corp / S-Corp Leveraged / Unleveraged 2 ESOP age Internal / external ESOP Trustee Internal / external Professional advisors Guests TEA New South Chapter | Ownership Culture October 18, 2012 ESOP Success Drivers Supportive legal / regulatory environment Well-managed ESOPs Public support Competitive ESOP companies 3 TEA New South Chapter | Ownership Culture October 18, 2012 Employee Ownership Foundation: Silent Auction Goal $4,000 Progress: $2,000, so far Drawing: coming right up! Impact Jobs research Other performance research, Kelso (& other) Fellowships UPenn CEO program Case studies: www.caseplace.org, CLEO Edmunson Scholarships 4 TEA New South Chapter | Ownership Culture October 18, 2012 Future Vision [From Southwest Chapter, September 2007] Imagine that it’s October 2012, and you are celebrating the past 5 years’ achievements under employee ownership In what ways does your company look the same? In what ways do we look different? Stories that illustrate our success? So: what are you learning? 5 TEA New South Chapter | Ownership Culture October 18, 2012 The Big Picture: Alignment Drives Performance Strategy High Performance Culture 6 Leadership TEA New South Chapter | Ownership Culture October 18, 2012 Employees Generally Value: Payroll Cash: today Security: next month / next year(s) Job quality Work environment: people, physical Learning / advancement opportunity Making a difference Short term benefits, e.g. vacation, health care, profit sharing, etc. Retirement benefits, e.g. Pension, 401(k) Ownership = ESOP 7 TEA New South Chapter | Ownership Culture October 18, 2012 Intrinsic Motivation: Daniel Pink “There’s a mismatch between what science knows and what business does.” Extrinsic motivators work for narrow, fixed, known tasks Intrinsic motivators work for the kinds of problems that increasing define our work and our economy Autonomy Mastery Purpose TED talk: www.ted.com/talks/dan_pink_on_motivation.html Book: Drive 8 TEA New South Chapter | Ownership Culture October 18, 2012 Ownership Culture Running your company so that employees think, feel and act like co-owners Employees at all levels understand who decides what and why have access to structures, training, information and management support for participation participate actively, effectively and appropriately to continuously improve company performance 9 TEA New South Chapter | Ownership Culture October 18, 2012 ESOP Governance…and Opportunity Shareholders Individual Owners ESOP Trustees are represented by ESOP Participants select elect Board of Directors appoint and oversee CEO / President hire and oversee when meet eligibility requirements Leadership Team hire and oversee ESOP Committee: Promote Ownership Employees 10 TEA New South Chapter | Ownership Culture October 18, 2012 We Know It Works: Sample Research Findings Dramatically lower job loss during Great Recession: ~4:1 Improved worker productivity Increased sales growth rate Reduced employee turnover Substantial individual account balances Better retirement benefits: ESOP + other 11 TEA New South Chapter | Ownership Culture October 18, 2012 How do ESOPs Affect Business Performance? Ownership 12 Participation TEA New South Chapter | Ownership Culture Improved Performance October 18, 2012 Bottom Line The ESOP creates an opportunity for you to share the wealth you help create The data is on your side: it can be very successful There are no guarantees, success is up to you 13 TEA New South Chapter | Ownership Culture October 18, 2012 What Kind of ESOP Do We Want? Level of Engagement Change Fantasy ESOP Culture Change Benefits Only 14 TEA New South Chapter | Ownership Culture Supporting Pillar October 18, 2012 How: Step 1 Formulate “Ownership Vision” linked to business strategy: what’s the value of being employee-owned, what does “good” look like? Finance Independence Operational What evidence would tell you that it’s working? 15 TEA New South Chapter | Ownership Culture October 18, 2012 How: Step 2 Clarify “Ownership Behaviors” What should employee-owners do? What do leaders & managers need to do to support this? Learning goals What knowledge & skills does each group need to support these behaviors? What will you track / measure? 16 TEA New South Chapter | Ownership Culture October 18, 2012 How: Step 3 Assessment & gap analysis What are we already doing that is most successful? What is consistent with ownership culture…we just don’t call it that? What do we need more of? What do we need less of? 17 TEA New South Chapter | Ownership Culture October 18, 2012 How Step 4: Planning & ongoing execution Education & communication Incentive alignment Participation structures / mechanisms Step 5: Monitoring & evaluation Periodically review data Corrective action Learning & continuous improvement! Step 6: Lather, rinse, repeat 18 TEA New South Chapter | Ownership Culture October 18, 2012 It’s a Balance Passion Planning Resources 19 TEA New South Chapter | Ownership Culture October 18, 2012 Discussion / Questions 20 TEA New South Chapter | Ownership Culture October 18, 2012 Contact Information Alexander P. Moss Principal Praxis Consulting Group, Inc. 9 West Highland Avenue Philadelphia, PA 19118 www.praxisCG.com [email protected] 215.753.0303 Article: “Building Long-Term Value: Developing a HighPerformance Ownership Culture” www.praxiscg.com/published-work/building-long-term-value-developing-high-performance-ownership-culture 21 TEA New South Chapter | Ownership Culture October 18, 2012