Turning Your Employees Into Owners
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Case Studies

A corporate dashboard are navigational tools to help see the road ahead to allow you to anticipate what you need to do as a business leader to maximize success.

Ardent Group recently surveyed 134 small to medium sized companies throughout North America to determine the use of well-established business tools in operating a company.  63% reported having completed a strategic plan in the last 2 years.  42% have completed a customer survey and 48% have surveyed their employees in the last two years.  55% have a key metric dashboard.  Of those firms with a dashboard, 89% share budgets, 88% share quoting volume, 92% share sales, 93% share revenue and 88% share margin.  71% of firms responding report having a bonus program.  Of those with a bonus program 43% have a portion that is discretionary, 62% tie bonuses to individual performance and 67% tie bonuses to company performance.  63% of businesses report having a succession plan with 23% intending to sell to a third party and 41% intending to sell to an insider.  35% indicate a process is in place for business leaders to become owners.

If you have not participated in the survey, we encourage you to do so by clicking on the below link.

SURVEY

Creating a Shared Fate

As a business leader, I think it is helpful to create an all-for-one, one-for-all type mentality.  When I purchased my company, I used our first meeting together to talk about where the company had been and where it was going. But to make those plans a reality, I needed each and every member of the firm to be 100% invested in the future of the company. One of many factors that we used to align all of our values was to create the Shared Fate Program.

How Shared Fate Works

Each year’s earnings became the baseline for the next year’s profit-sharing program. We shared a portion of profits over that baseline with all employees. Each employee’s share was based on his or her position’s influence on the bottom line.

Every month, we calculated how much money would go into the program based on the average day’s outstanding on accounts receivable. We distributed the money monthly as well, the idea being that the team got paid when the company got paid. I wanted everybody in the firm to be exactly as pleased or as not-pleased as I was over the performance of the organization.

How Shared Fate Worked Out

The Shared Fate Program had a couple of outcomes:

  • When things were tough and we had to make difficult decisions, people were more supportive because they understood what we had to do and why we had to do it.
  • When we were bouncing back from the recession, people were more willing to work extended hours, including, sometimes, working over the weekend. They understood the importance of coming back slowly, instead of being in a rush to rehire a lot of people. Because we didn’t get trapped in overconfidence, and instead were willing to put in the extra work, the team as a whole benefitted.
  • The last outcome is a little more indirect. In a lot of companies, if people notice somebody is slacking off, they don’t do anything. They might say “hey, I can’t believe the leadership hasn’t noticed what Phil’s doing,” but they don’t see it as their problem. In our organization, the Shared Fate Program created a culture of accountability where if someone wasn’t doing their job, the others would say something to that person. People who didn’t want to pick up the pace would usually leave on their own because they didn’t feel like they fit in. The result was an organization where everyone was really working together towards common goals.

Key Takeaways

The Shared Fate Program created an all-for-one, one-for-all mentality that we all benefited from. By sharing information about money, as well as a portion of the money itself, we got a better-informed, more supportive, and more responsible workforce. When the leadership acted like we were all on the same team together, everyone else got into the act, too.

One of the questions any business owner faces is how and when to share information. I believe that sharing information openly is critically important, because employees want to feel involved and to know that what they’re doing really makes a difference for the company. How can you create such a collaborative, empowered environment without sharing the measuring stick of success—financial numbers?

There’s a whole cultural hurdle, a trust hurdle about sharing numbers, but I want to propose something a little different. Let’s talk about effective ways to share information so we can have authentic conversations with our team members and so they can understand where we’re going, where we’ve been and how we can make knowledgeable decisions to accentuate our strengths and maximize our successes.

Up is good, down is badrevenue

The traditional way to talk about numbers is the balance sheet or P&L, but not everyone in an organization knows how to read a P&L.  You need a more accessible way of disseminating information—like a graph. If the trends are going up, that’s good. If they’re going down, that’s bad.  With that simple metric of up is good and down is bad, everyone at every level of the company can help make knowledgeable decisions.

Looking over the bow and the stern

I’m a Coast Guard captain and I love boating. In the boating world, if you look over your stern and see that your wake is straight then you know you’re doing a good job steering—but that doesn’t tell you where you’re going.

The traditional financial tools we get from our accountant, such as a profit and loss statement, are like looking over the stern. That’s useful, but it doesn’t give us the information we need to strategize about the future. So, how can we look over the bow?

We can look at an economic report or economists’ predictions for our industry segment. We can also look at our own website traffic and how many inquires we’re getting, since inquiries may eventually become sales and then become revenue.   Our own data can help us predict what’s going to happen in our organization in six months or a year.

Creating your own “kitchen cabinet”

In the early 1800’s, President Andrew Jackson sought help and support from an informal group of advisers. His political adversaries made fun of this unofficial “kitchen cabinet,” but the President actually had a good idea. Support networks, even informal networks, are an import tool we can use to exchange information and ideas.

As CEO’s who are some of the industry professionals with which we as CEOs have working relationships?  By collectively sharing information we can fine tune our picture of where the industry is going. That will help us figure out how to work with our customers and suppliers in order to create holistic solutions that work for everybody.

The Bottom Line

The take-home message here is if you share critical information effectively including financial numbers, your company can work together as a team.

As business leaders our results impact more than our families, employees and customers.  In a recent USA Today article America’s fastest shrinking Cities, the demographic realities are impacting cities and businesses alike.  The U.S. population is increasing at a deceasing rate, just 0.82% in 2013 with the domestic birth rate at a multi-decade low.  Immigrants are less attracted to the US with immigration down 30% from 2001 levels.  Manufacturing has declined in the US 30% between 2001 and 2013 while employment in this category is down 57%.  This has had devastating results in communities that focused on manufacturing like steel and automobile industries.

The US has shifted to services making up 80% of the US economy.  90% of companies with less than 20 people are in the service industry.  Dave Gray suggests in his book The Connected Company, that product saturation, information technology and urbanization are driving the move to services. 

As business leaders we need to anticipate and react to change.  The options for passing the corporate baton to the next team is different than that of even 10 years ago.  The transaction is less focused on bricks, mortar, and equipment that produces, but on the intellectual horsepower of your team.  Investing in your team and turning them into owners is critical to your sustainability and future.  The fact of the matter is they walk out the door at the end of every day and your company must offer them something the others can’t or won’t so they walk in again tomorrow.  We are all in this together.  If we fail our community fails and vice –a- versa.

The closing ceremonies had barely finished in Sochi when the eyes of the world returned to this region to try and understand the impact of the Ukrainian Crisis.  As business leaders should we be taking action to plan for changes economically, politically, or internationally.  Alan Beaulieu with ITR Economics is a resource I have followed for years.  In his recent blog post he explains that the US economy is so large that any disruption will have minimal impact.  In addition, both Russia and the Ukraine need hard currency, so any disruption will be short to keep the cash flow going.  In summary, this is mostly a political issue.

To read the full article click the below link:

http://itreconomics.com/blog/economic-impact-of-situation-in-ukraine