Turning Your Employees Into Owners
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Talk Favorites

There are a number of increasable resources sharing information that can help us in our professional and personal lives. These are some of my favorites.

Like it or not, much of life is a negotiation. Living in a democracy as we do, many of us just assume that compromise is as natural to negotiation as it is to politics.  One master negotiator thinks otherwise. 

Chris Voss started off his career as a street cop in Kansas City, MO and became the FBI’s lead international kidnapping negotiator.   In his line of work, “splitting the difference” and other forms of compromise mean you might get two hostages back alive instead of three.  Not a good outcome.   

Mr. Voss’ book Never Split the Difference” is a profound guide to the realities of negotiation based on the core idea that the situation is the adversary, not the person sitting across from you at the negotiating table and maintains that for most executives, “everything you’ve learned about negotiation is wrong.” 

If you don’t read anything else in the coming year to make you a better executive, be sure you read this book.   In addition to the book, check out this interview with Mr. Voss

 

NYU professor and marketing guru Scott Galloway has penned a book that explores the current and future impact of a group of companies that many call the “new four horsemen of the apocalypse” because of the cataclysmic effect they are having on many industries and many business models.

 

Galloway’s book The Four: The Hidden DNA of Apple, Amazon, Facebook and Google is a well-researched, well written and well thought out book about the impact of these four players on the current and future economy and upon both B2C and B2B companies.  This book should be read by everyone because your business and personal lives will both surely be affected by the new Four Horsemen even more than they already have.

 

If you prefer movie to a book, this 48 minute video made by Mr. Galloway just before the book was published will convey much of its major points.

 

Required reading and required viewing!

 

Every CEO wrestles with the compensation issue. How do you motivate employees to succeed? How do you meet the expectations of the labor market? How do you create a sustainable business plan and culture?

When I purchased the firm from my father, the very first day I implemented a shared fate program. I identified our historical earnings and I said that for every dollar over that we earn, we’re going to share a portion of that with every employee in the firm from the receptionists on up.

I wanted a very formulaic approach, where each person would earn an amount based on their roles’ ability to influence the profits of the company. The team wanted a discretionary portion so, I as CEO, could give extra to certain people based on my judgment. I resisted that because I felt it would dilute the purpose of the shared fate plan.

Why Didn’t I Want to Be in Control of Bonuses?

There is actually research out showing that sometimes the more you pay someone, the less well they work (Daniel Pink’s “Drive“). That is, for tasks that require some kind of creative engagement, where the worker is not just following a set of instructions over and over, a sense of pride and accomplishment is really the best motivation. You get the best results by paying enough that your employees don’t have to worry about finances and then stepping back and let them work. If you pay large bonuses and make it about the money, that creative engagement turns off.

Of course, there is a conflict here because you have to keep compensation competitive for your industry or you won’t attract the talent you need. But the point is it is ultimately a sense of meaning and purpose that motivates people to do their best work.

We shared our earnings in order to give everyone in the company an investment in the future of the firm. I was extremely invested because I had essentially mortgaged my family’s future in order to make that business work and I couldn’t do it alone. I needed the rest of my team to be invested too.

The shared fate program wasn’t so much about giving people extra money for better performances. Instead it was a tool to give everyone a sense of ownership in the outcome of their work and to foster that creative engagement I was talking about.

Two other unique things we did to attract the best of the best—we gave our people ownership of the deliverable and ownership of our culture.

What Is Ownership of the Deliverable?

Most companies are what I like to call benevolent dictatorships, where directives come down from on high and everyone just does as they’re told. I don’t think that 1950’s style of management is going to work for much longer because it doesn’t give people a sense of control over the outcome of their work. It doesn’t provide that sense of meaning that you need for creative buy-in.

Today I think we need to look to our team members for ideas, not just to the leadership at the top. Now there are a lot of different ways to get those conversations happening, but the key takeaway here is that when an individual joins your organization they have to be able to influence what they’re doing and how they’re doing it. You have to give them the best possible tools and allow them to apply those tools in the best possible way to meet the needs of their customers. You don’t want to treat your employees like puppets.

What is Ownership of the Culture?

Ownership of culture is the ability of individuals to change how things happen within the organization. As CEOs, we’re really managers of change. Some CEOs embrace change, others resist it.  For some, letting other people change the organization is part of that sheer terror zone I wrote about earlier.

The Bottom Line

The benefit of a compensation program that isn’t just based on money but is also based on shared ownership of the deliverable and of the culture creates a desirable place to work. When the word got out that we had a fair work environment that empowered the team to achieve their best and to contribute individually, we found that people from our competitors—the best of the best of our industry—started to seek us out as the place where they wanted to spend their career.

In the latest Be Human Salon hosted by Bigwidesky, David Grey author of The Connected Company shares his observations of the divided company and the connected company.  The divided company responded to the needs of the industrial age, creating a division of labor, Interchangeable parts and mass production.  They made on thing, very well and a lot of them.  However, in today’s world change is happening at an increasing rate.  What worked yesterday does not work today.  The connected company is responding to this need for change.  These organizations are flexible, morph, and respond quickly to change.  Unlike the divided company, these companies structure facilitate cross communication and support from different areas.

The challenge for business leaders is should and / or how should culture be changed.  Mr. Grey defines culture at habits that your form as a group over time.  As small portion of the culture is observable, however a majority is under the surface.  What are the levers or incentives to drive behavior?  What do we value?  Do we say we have an open door policy, but cringe when someone takes us up on it?  What are our belief regarding our outcomes that drive the organization.  There are startups constantly challenging the status quo in our beliefs.  Are book stores the only way to get a book?  Are music stores the only way to get music?  Are grocery stores the only place to get groceries?  Is film the only way to keep memories?

So as a business leader it is your job to manage change.  There are opportunities for a divided company to continue being very successful, however, it is critical to no be something you are not.  Mr. Grey uses the example of Nokia that was a great phone manufacture but tried to be an Apple type company of creating its own operating system.  Samsung on the other hand focused on phone manufactures and commands a significant market share today.  In Louis Gerstner, Jr’s book Who Says Elephants Can’t Dance?  He observes that changing the culture is a last resort but can be done.

Watch David Grey’s insightful conversation.

 

Yves Morieux presented his TEDX talk titled, “As Work Gets More Complex, 6 Rules to Simplify”.  The presentation is a little hard to understand, but well worth the effort.

Historically, there have been two pillars of management.

Hard: Structure, Processes, Systems

Soft: Feelings, Interpersonal Relationships, Traits

These pillars result in complex systems that work around the problem.  The secret sauce of management today is cooperation.  Cooperation allows the team to work through the problem.  When people cooperate they use less resources.   Tenents of management that focus on cooperation include six principles:

  1. Understand What Your People Do
  2. Reinforce Integrators
  3. Increase Total Quantity of Power
  4. Extend The Shadow Of The Future
  5. Increase Reciprocity
  6. Reward Those That Cooperate

Criticism should not be management’s response for failure, but for failing to help or ask for help.

At Ardent, we believe it is important to have the difficult discussions to result in decisions that foster cooperation.  Without a commitment to mutual trust, a complex, bureaucratic system fills the gap resulting in a dysfunctional organization.

I strongly urge to you watch Yves Morieux’s presentation.

 

The historical approach to business leadership has been to tell the team what to do and how to do it.  It my belief that to build the trust required to turn your employees into owners, everyone must understand the why.  Simon Sinek presented his “How Great Leaders Inspire Action” at the TEDEX in September 2009.  This talk hasbeen viewed over 16 million times which is the most watched presentation in the history of TedX.

To see Simon Sinek’s presentation use the below link:

http://on.ted.com/c06sz

Does the worker or the leadership define the corporate culture? Historically, the different generational norms have greatly influenced the corporate culture.  For the veteran it was hard work, respect, and sacrifice.  For the baby boomer it was being a workaholic and achieving personal fulfillment.  Generation X was self-reliance and skepticism and generation Y was multi-tasking and goal oriented.  The millennial skill set is also having a profound change on business culture and management.

Eliot Frick recently spoke at the TedX Gateway Arch on business’ need to change to save itself.  He explains how holocracy is one new business model that is taking business forward and adapting to change.  I encourage you to watch this truly incredible presentation.

Geese from Bottles: Saving Business by Making It More Human