organisational culture does it affect the performance of employee equity ownership? presented by...
TRANSCRIPT
Organisational CultureDoes it Affect the Performance of
Employee Equity Ownership?
Presented byLoren Rodgers
National Center for Employee Ownership (USA)
Investment
Return
What Makes ESOPs Work?
Investment
Return
Incentive Only
What Makes ESOPs Work?
Investment
Return
Incentive Only
Low to Medium
What Makes ESOPs Work?
Investment
Return
Incentive Only
Low to Medium
Low(-1 to 2%)
What Makes ESOPs Work?
Investment
Return
Incentive Only
Low to Medium
Low(-1 to 2%)
Culture + Incentive
What Makes ESOPs Work?
Investment
Return
Incentive Only
Low to Medium
Low(-1 to 2%)
Culture + Incentive
High
What Makes ESOPs Work?
Investment
Return
Incentive Only
Low to Medium
Low(-1 to 2%)
Culture + Incentive
HighHigh
(5 to 13%)
What Makes ESOPs Work?
Shared Capitalism Research Project
Four success factors:– High performance work practices
(employee involvement groups/teams, high training, job security)
– Wages (at or above the market for the region)
– Reasonable economic security– Low supervision
(high supervision → negative effects)
Richard Freeman, Joseph Blasi, Douglas Kruse, Shared Capitalism at Work, University of Chicago Press, 2010.
My point of view is taken into consideration in decisions about the general direction of the company.
Participation and Ownership Spirit
0% 20% 40% 60% 80% 100%
Champions
Skeptics
Disagree
Neutral
Agree
Business Literacy
“Open Book Management” means
– Employees understand the business
– Employees know the business’s key numbers
Research on OBM
NCEO Study (1997)
– 51 OBM companies
– Approx 200 comparison companies
– Outcome: OBM strengthens companies
Sales Growth
Employment
Growth
OBM only + 1.7% + 1.3%
OBM plus ESOP + 2.2% + 1.1%
http://www.nceo.org/library/obm_nceostudy.html
There is no ownership without
rights.
There is no ownership without
responsibilities.
Lens 2: Reciprocity
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
From Participation: Decision Making and Employee Ownership, The Ownership Culture Report, Cambridge, MA: Ownership Associates, Vol.
1, No. 2, Fall / Winter, 1998.
Rights Responsibilities
100 75 50 25 0 25 50 75 100
C om pany A
Com pany B
Com pany C
Com pany D
C om pany E
Com pany F
Com pany G
C om pany H
Lens 3: U.S. Experience
Six Necessary Steps
1. Creating a Plan
2. Understanding the Plan
3. Business Literacy
4. Information Sharing
5. Incentive Plans
6. Employee Involvement
Big Questions
1. Should government encourage ownership culture?
2. Should investors prefer employee ownership companies with strong cultures?
3. Are some companies better without employee ownership and ownership culture?
Questions?
Loren RodgersNational Center for Employee Ownership
1736 Franklin Street, 8th FloorOakland, CA 94612