Vermont Employee Ownership Center 2012 Conference Burlington, Vermont June 8, 2012 Alex Moss Praxis Consulting Group Achieving the Performance Potential

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  • Slide 1
  • Vermont Employee Ownership Center 2012 Conference Burlington, Vermont June 8, 2012 Alex Moss Praxis Consulting Group Achieving the Performance Potential of Shared Ownership
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  • Organizational Performance Strategy LeadershipCulture High Performance June 8, 2012VEOC Conference | EO Performance 1
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  • Agenda for Today Part 1: Whats Required, Why Do More? What company financial information do / should you share with employee-owners? Why? Discussion Part 2: How Can You Do It Effectively? Getting started: outline of a sample program Sample Exercises & Discussion Turning education into action: participation mechanisms June 8, 2012VEOC Conference | EO Performance 2
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  • What are Your Burning Issues? Learn what I dont know Magic potion Employee wants to do what she can to help Balancing rights and responsibilities Culture through rapid growth Help people believe theres something of value to them, not just to sellers How to engage temporary employees to have a stake in ESOP Bounty for suggestions Community building in workforce Reengaging longer-term employees June 8, 2012VEOC Conference | EO Performance 3
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  • Part 1: Whats Required, Why Do More? Legal requirements for financial disclosure Research on employee ownership and company performance Your company goals: what do you want shared ownership to do for you? June 8, 2012VEOC Conference | EO Performance 4
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  • Legal Disclosure Requirements: The Framework The ESOP Trustee is the legal shareholder ESOP Participants are beneficiaries of a benefit plan under ERISA June 8, 2012VEOC Conference | EO Performance 5
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  • Individual Owners ESOP Governance ESOP Trustees select Leadership Team Board of Directors appoint and oversee elect hire and oversee Shareholders Employees CEO / President hire and oversee ESOP Communications Committee: Promote Ownership ESOP Participants when meet eligibility requirements are represented by ESOP Fiduciary Committee June 8, 2012VEOC Conference | EO Performance 6
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  • Implications The ESOP Trustee receives all information that is disclosed to shareholders ESOP Participants have clear rights to view certain ESOP information ESOP Participants have very limited rights to view company financial information ESOP Participants have no operational management rights June 8, 2012VEOC Conference | EO Performance 7
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  • Why Go Beyond the Legal Requirements? Bottom line: employee-owned companies perform better Research supported by Employee Ownership Foundation GSS: layoffs during recent recession Blasi & Kruse: impact of employee ownership on company performance in privately-held firms National public opinion survey Other research: see NCEO summary Ownership culture: strategies to link the fact of ownership to actual performance improvements June 8, 2012VEOC Conference | EO Performance 8
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  • The Role of Employee Ownership: How does it add to the mix? Sharing ownership by itself does not improve company performance Sharing ownership combined with participation significantly improves decision making and bottom line performance Ownership Culture strategies link these two factors We wouldnt be here if If couldnt work If worked automatically June 8, 2012VEOC Conference | EO Performance 9
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  • 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 June 8, 2012VEOC Conference | EO Performance 10
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  • How Do We Want Employees To Act: Ownership Behaviors Im going to do my own job really well & responsibly Im going to react & respond to others in the firm in getting their jobs done Im going to expect others to react and respond to my needs in doing my job well Im going to think about the whole, understand the bigger picture Courtesy of Don Hubbard, President, Niven Marketing June 8, 2012VEOC Conference | EO Performance 11
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  • Praxis Employee Ownership Performance Cycle TM June 8, 2012VEOC Conference | EO Performance 12
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  • Discussion Question 1: Link to Your Strategic Goals What are your strategic business objectives? What impact do you expect ownership to have in improving your company? How do you want employee owners to act, based on their increasing business knowledge? What information do you need employee owners to understand? Why? 13 June 8, 2012VEOC Conference | EO Performance
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  • Discussion Question 2: Current Status How well do your employee owners understand the business and the financials? What impact has this had on your business so far? What are employee owners doing? What works best today: tell a story about A specific company leader who did it right A specific employee-owner who demonstrated that they get it Impact of employee initiatives on performance operating metrics, profitability, stock value June 8, 2012VEOC Conference | EO Performance 14
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  • Discussion Question 3: Future Vision Imagine that its 2015, and you are back at this conference sharing your achievements over the past couple years What have you accomplished? Leadership initiatives Employee actions The Gap: what do you need to do more of in your company to achieve this vision? June 8, 2012VEOC Conference | EO Performance 15
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  • Part 2, How: What are the Pieces? Context Setup Initial planning Initial education: building a knowledge foundation Operational implementation Games and other ongoing tools Process improvement initiatives Evaluation and continuous improvement Future adjustments June 8, 2012VEOC Conference | EO Performance 16
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  • Context: Its a Whole Process Foundation: Leadership vision for how ownership should contribute to achieving strategic business objectives Making it work: 4 categories of activities Training, initial and ongoing teach the rules Communication show the score Incentives share the win Participation mechanisms let em play June 8, 2012VEOC Conference | EO Performance 17
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  • Initial Education: Sample Goals To engage employees in learning about our business To build awareness of The connection between your actions, the outcomes for our company, and your rewards Business and financial terms, so that you can be effective consumers of financial information Pay for performance, and the stock component of this in particular How the ESOP works, especially in relation to other incentives and stock plans Balance between social responsibility and business objectives To create readiness and knowledge necessary for future implementation June 8, 2012VEOC Conference | EO Performance 18
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  • Common Approaches Focus on financial statements Start w/ dollar bill, carve up Profit & Loss, Balance Sheet, Cash Flow Case studies of where the numbers come from and how the statements relate to each other Examples Companies Commercial product example: the Accounting Game / Lemonade Stand June 8, 2012VEOC Conference | EO Performance 19
  • Slide 21
  • Praxis Template Outline Initially: 3 sessions, 2 hours each, 1x / month Session 1: Our Business, and How We Make Money Session 2: How You Benefit through Profit Sharing, Ownership, Retirement Plans, Other Incentives Session 3: Factors That Drive Our Stock Value, and What You Can Do To Affect It Future: additional sessions and continuing follow-up at departmental and corporate levels June 8, 2012VEOC Conference | EO Performance 20
  • Slide 22
  • Agenda for Session 1 Income & expenses: the personal view Our business: the flow Our Profit & Loss statement (P&L): tracking whether and how we make money What if? scenarios: the impact of changes on our profits and stock value June 8, 2012VEOC Conference | EO Performance 21
  • Slide 23
  • Exercise 1: Personal Income & Expenses Income Expenses June 8, 2012VEOC Conference | EO Performance 22
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  • Exercise 1: Personal Income & Expenses Two rounds Round 1: Personal, your home budget Round 2: Our Company Questions Where does the money come from? Where does it go? If theres coming in than going out: what can you do with it, and how/when will you get it back? If not: what can you do about it? Who decides, and why? How does this relate to value and wealth? June 8, 2012VEOC Conference | EO Performance 23
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  • Exercise 2: The Flow of the Business Your basic business process: what are the steps? The exercise List functions & attach employee names Compare notes, pick 1 company [Make photos, big enough to handle: ~ 11x17] Put them in order Relate to the P&L June 8, 2012VEOC Conference | EO Performance 24
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  • Other Exercises in Session 1 Product P&L: big enough to count, small enough to understand Whole company P&L: sum of the parts What if scenarios: effect of operating improvements on the bottom line, hook to ongoing games June 8, 2012VEOC Conference | EO Performance 25
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