employee ownership

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The Peter Drucker Recipe for Creating Engaged Employees

October 5, 2009 in Book | No comments

Recipe for engagement An adaptation from a yet-to-be published book indicates that the great business guru identified 4 actions that are necessary to create engaged employees.
1. Careful placement and promotion
2. Demanding high standards of performance
3. Providing workers with information
4. Encouraging workers to acquire managerial vision

These are difficult to challenge, and appear straightforward enough. As with most things, however, the devil is in the detail, and there is definitely scope to expand on them. Let me add what I think are key embellishments to each of these, without which they are likely to be meaningless.

Careful placement and promotion begins with proper recruitment. Thus you need to ensure when recruiting that you look at the total person. This entails moving beyond the conventional checklist of competencies and looking at the broader talents that could add value that you had not anticipated – now or in the longer term. The ability to do the job now is not much good if the person doesn’t have the ability to adapt if the organisation or the job changes or to grow with your business in the future. Valuing people as assets as I propose will ensure you regard recruitment as an investment, just like any other asset purchase, and not just a pricing exercise.

The concept of high standards of performance is fine. However, the word ‘demand’ perpetuates the innate autocracy of traditional, “command and control” management, and may be one of the root causes of employee disengagement. From the time we first start becoming mobile, humankind is always looking to better itself, and an engaged employee is likely to be the harshest critic of their own performance. Remember too that performance – like success – is seldom, if ever, something that is under our unique control. Thus if you want an engaged employee empower them to figure out and affect the things that will enhance their own performance.

It goes without saying that you cannot expect to have fully engaged employees if they feel they are not trusted enough to know everything that is going on. In any case, how can you expect your employees to make the best decisions if they do not have all the facts?

So if you seriously want your people to acquire managerial vision, you have to keep them fully informed. As you would expect there is more to it than just this. Managerial vision requires:

  • A sound understanding of the business;
  • Knowledge of the consequences of actions and the steps to take if and when things go wrong; and
  • The ability to think and act as if they owned the business.

The solutions outlined in this book, thus provide the perfect means to follow through on Drucker’s remedy and build the employee engagement you are looking for and that is essential for your long term sustained success.

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Nobody is more engaged in a business than the owner – right?

September 9, 2009 in Book | No comments

I was writing something the other day when I made this headline statement. However, as I completed it, I found myself challenging it and realised that it was one that can be very easily challenged.

This was quite a shock, because the fundamental premise underlying everything I do, and all I am writing about, is that employee ownership creates the highest level of employee engagement. Nor am I alone, for that, after all, is the whole principle behind employee share ownership plans and share options. It is also evidenced by the superior service and mark-beating returns offered by employee owned businesses. So why was I suddenly questioning my own convictions so strongly?

The challenge actually arose from a little bit of perceptual positioning and a shift to the more objective role of impartial observer and reappraisal of the whole subject of business ownership. The obvious question then, was to ask how engaged the investor or share-holder owner is in a business. Needless to say the answer was most discouraging.

The undeniable fact is, shareholders of listed businesses – whether individuals or institutions – are primarily concerned with the yield on their investment rather than being interested in the business for its own sake. Their involvement is ultimately remote. They tend to only rally to action when they have specific concerns or when there is a sudden deterioration in performance and they realise their money is at unanticipated risk.

So who really has the long term interests of the business at heart? I think we all know that it is the employees. Consequently it seems entirely logical to give them a greater stake in the business. In fact a strong argument could be made that it entirely defies logic not make employees co-owners.

For quoted companies, making employees co-owners would ensure that there was someone taking a longer term perspective (thereby countering some of the proven excesses that caused the recent economic meltdown) and, paradoxically, providing better protection for investors. For the remaining majority, owners are generally actively involved and so more likely to be engaged and looking to their long-term interests. Nevertheless they would stand to considerably improve their overall performance, and their returns, through an ownership arrangement that instilled the same level of employee engagement that they themselves have.

The scheme I am proposing thus offers a win-win solution. It mitigates against the disengaged owner whilst engaging the disengaged employee. Surely then it makes good business sense and is better for all concerned?

Discuss.

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