berkus_ventures_300ppi copy

Berkonomics

Do employees value their options as ownership?

How about employees all the way down the line and through the corporation?

How do we align them to the goals and strategies of the enterprise?  Obviously for the appropriate individuals, a bonus program aligned to the department’s goals is appropriate. But how about awarding stock options to all employees?

The argument FOR…

I discovered the power of ownership early in my management career, establishing an employee stock ownership plan (ESOP), once popular as incentive compensation as well as a tax write-off for corporations and even a way to slowly transfer ownership of a company from the founders to the employees.  These plans are not as popular today because of their complexity and difficulty to manage, lost in favor of simple stock option plans.

How to leverage an option program:

Each month, at the monthly company lunch for all at the main office, I’d greet everyone with “Hello shareholders”, and proceed to show the assembled throng slides of high-level financial statements, pointing out progress against plan.

Show everyone financials?

[Email readers, continue here…]    That form of open book management surprises many, but if the employees are stakeholders with a taste of equity, why not underscore the value of that equity by treating them as cohorts?

Yes, sometimes the news is not good.  

They should know this, and from you not from the rumor mill. Your fear that the confidential information may get out to the industry competitors should be tempered by the fact that you are not giving out the secret sauce, just the results of the past period’s performance.

After all, for some it is a requirement.

All public companies, including your public competitors, must do this in greater detail each quarter, and it rarely damages their ability to sell into the marketplace.  Would bad news drive your best employees out the door?  Perhaps. But it is my experience with many companies that empowered employees, treated with respect and shared knowledge, will go far beyond expectation in remaining loyal to their associates and their employer.

And think of the time saved around the virtual water cooler if there are far fewer rumors to pass among your employees.

  • I can’t agree more – I forget all the “open book” tomes of years back that supported the simple idea of getting every employee (whether they liked it or not or understood it fully or not) to participate in some way BEYOND the daily grind and the paycheck. This thinking is key to the strong genetic code of the organization. IMHO any growing company that does not do it or reverts away from it invites future breaks and mutations of the genetic code that allowed it to grow healthily from the start.

  • Harley Kaufman

    Great reminder! Even though 501-c-3 not for profits are required to have all the results filed annually and publicly available, I just started making available to share the weekly revenue numbers. Just line up at a convenient and our GM or CFO will go over them with the staff member. Staff already enjoyed what was almost a “doorless” policy (as opposed to ‘open door’) and this was the next logical step. Love reading the newsletters.

Leave a Reply

Your email address will not be published. Required fields are marked *

Share

Sign up for
Dave's weekly emails

Most Recent Posts

Category