Reviewing our seven-step model of ESOP company development with the managers of a relatively new 100% employee-owned business at the firm’s annual planning meeting, I asked the assembled team what developmental stage they thought they were currently in.

“The honeymoon,” came the unanimous reply along with a couple chuckles.

After a major event, like a transition to partial or full employee ownership, companies often find themselves in the honeymoon stage.  During it, most people are optimistic about employee ownership’s potential while some take a “let’s wait and see” attitude.  But, as we all know, the honeymoon — alas — doesn’t last forever.  One day, we – literally and figuratively – roll over and realize just what we’ve gotten ourselves into:  that’s when unmet ownership expectations can rear their ugly heads.

How can you tell if your firm has moved beyond the honeymoon and into unmet expectations?  Here’s a few things we’ve heard over the last twenty-five years working with ESOP firms that indicate your ESOP has generated some unmet expectations.

  • See, I told you this ESOP thing isn’t what it’s cracked up to be
  • Nothing has changed around here, except they put employee ownership on the sign/business cards
  • I thought being an owner meant I’d
    – Be more involved in decision making
    – Have input on the company’s direction
    – Receive financial information about how we’re doing
    – Get to vote on ____ (insert employees’ favorite gripe here)
  • ESOP shmee-sop (or some variation on that theme)

Unmet expectations arise about the roles, rights and responsibilities of employee owners.  Just what does it mean to be an employee owner?  How does that translate into your organization’s culture?  What is your firm attempting to accomplish with employee ownership?  Is the ESOP a business transition strategy or a cultural tool for helping employees to think and act like business people?

Firms that fail to provide answers about what ESOP ownership means allow employees to reach their own conclusions.  Some conclusions will be an alignment with management’s ideas, but many others will not (like ownership gives me the power to fire that SOB I’ve always wanted to can).  In other words, not communicating what ownership means creates a ripe breeding ground for the growth of unmet ownership expectations.

To address those issues, the session’s hands-on activities focused leaders on defining what ownership meant and aligning ownership with the firm’s culture.  With a common understanding of employee ownership, leaders communicate a consistent ESOP message.  If your leadership team lacks a common understanding of what employee ownership means at your company, you ought to invest some energy building it and consistently communicating that message to employees.  After all, how can you expect employees to buy into something that leaders don’t have agreement about?

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To learn how to make the most of your ESOP, visit our website at www.workplacedevelopment.com or contact me at jbado@workplacedevelopment.com or 419-427-2435.