By Bridget McCrea
For the last 17 years, Brad Hams has been helping companies adopt cultures of ownership. As president of Ownership Thinking in Denver, Hams’ philosophy is that companies can push performance to new levels through a combination of the right people, education, measures and incentives.
Hams, who works with companies of all sizes and across various industries – including distributors – says the organization that pushes employees to think and act like owners not only creates more opportunities and wealth for itself, but it can also help companies retain workers at a rate that’s 200% higher than companies that don’t.
“It’s not just about creating wealth and improving financial performance,” says Hams, who developed the model while serving as president of Mrs. Fields Cookies in Mexico in the early-1990s. “It’s also about creating extraordinary business cultures where people want to come to work every day.”
Four Easy Steps to Success
Implementing an ownership-oriented culture where every employee has some skin in the game requires a four-pronged approach, according to Hams. First, create an environment that promotes learning and development, while at the same time increasing visibility and accountability. “Your best people will excel,” says Hams, “and your poorest performers will generally be self-selected out by their peers.”
Education is the next step. Employees who are taught the fundamentals of business and finance, for example, tend to be better equipped to make financially sound decisions. Using the right measures is equally as important. Rather than focusing only on lagging financial measures, for example, place the emphasis on identifying the most important activity-based measures (Key Performance Indicators, or KPIs), and utilizing those KPIs to forecast results on a regular, formal basis.
Finally, the right incentive programs must be in place in order for employees to adopt an ownership mindset. And because the four-pronged approach typically produces new opportunities that result in financial gains for the distributorship, any incentive plans put in place are self-funding.
“The process of employee education and focusing on the right measures in an environment of high visibility and accountability will increase your organization’s profitability – guaranteed,” says Hams, who adds that a 100% increase in profitability within a few years is not uncommon for companies that adopt ownership-centric initiatives across their operations.
To create those incentive programs, Hams advises distributors to work toward a specific sales or performance goal, and then to figure out what percentage of that amount should be paid out to employees. A typical setup would find companies giving back 8-12% of a major sales increase, order, project, or other “win” back to employees as bonuses. It may sound like a lot of money – particularly for the company that’s never offered such incentives – but it’s also self-funded.
“If you can get from X to Y financially and gain profitability along the way, then you can afford to spread some of that financial gain around without impacting the distributorship’s bottom line,” says Hams. “Look at it not as an added expense, but as a way for the company and its employees to benefit from performance gains.”
It’s not enough to set up a new incentive plan and hope that employees buy into it and start working a little harder, smarter, and faster to help the organization achieve its goals. The transition to an effective ownership-centric organization takes time and requires solid communication with all employees and buy-in across all managers, owners, presidents, and other decision makers. Without that support, the program will fall by the wayside quickly and things will “return to normal,” says Hams.
When introducing the initiative, for example, Hams suggests doing a simple employee survey to find out what workers feel are the company’s key issues from a the financial, operational, external, and human resources standpoints. “Employees see things on a day-to-day basis that leaders miss,” says Hams. “This is your opportunity to gather a baseline of information on the company’s issues and weave that information into your plan.”
Surveys also make employees feel included early in the process and truly part of the team. “They help get buy-in and ensure that the program will be implemented successfully,” says Hams. Employee training is equally as important and should be orchestrated across the entire team – not just in the leadership and management ranks. Financial training is particularly important, especially for workers who may not have dealt with financial statements and other accounting documents in the past.
“Every employee should go through a financial acumen training program,” says Hams. “This gets them engaged and onboard with the initiative.” When employees, managers, and leaders are all in sync and working as one large “ownership” squad, the business rewards are measurable and significant.
Employee morale typically increases and turnover goes down, says Hams, while sales and profitability increase. “Employee turnover alone is a major expense for companies,” says Hams. “A fairly straightforward way to stem that flow is by creating a sense of ownership and buy-in across the entire enterprise. In most cases the results are pretty amazing.”
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at email@example.com or visit her website at www.expertghostwriter.net.Tagged with tED