Unless you are born with the talent of Tiger Woods or discover oil in your backyard, the surest way to build wealth is by growing a great business. I know very few one-owner/employee companies of any significant size, so for most owners, this means that they will need to accomplish their business goals of profit and growth with the help of employees. As entrepreneurs quickly find out, most employees don’t necessarily share these same goals. In its simplest form, employee-employer relations involve the basic trade of the employee’s time, energy and effort in exchange for some of the company’s money. In an era of “Me Inc.” with employees often having multiple jobs and careers in a working lifetime, it is a daunting challenge for owners to build a growing and sustainable enterprise.
The dilemma is that the attitude and actions of owners and employees is often dramatically different. While these are obviously generalities, employees tend to think short term versus long term, tactically versus strategically and paycheck-oriented versus profit focused. These dichotomies create tensions in organizations that, in the extreme, can lead to labor strikes or lockouts. The solution is to encourage employees to think like owners of the company. Ask any business owner or HR specialist and they will share just how hard this is in practice versus theory. I am always skeptical of business theories that are not backed by solid data, but I can assure of this — creating a culture of ownership in a business has been repeatedly shown in studies to have a direct impact on the performance of an organization.
SmartSynch Inc. is a great example of a company that has been successful in developing a culture of ownership. The company, headquartered in Jackson, was founded in 1998 and is the largest provider of public wireless commercial and industrial Smart Meters in North America. In very basic terms, the company has developed a Smart Grid intelligence solution that is based on IP (Internet protocol) and open standards that significantly improves energy efficiency. SmartSynch, as a provider of Smart Grid solutions to the utility industry, is poised to ride the massive wave of investment in “clean tech” technologies. Clients include some of the largest utilities in the country including Detroit Edison, Florida Power & Light and Duke Energy. The company’s growth and success has been noted nationally when it was named as one of the Top 10 Smart Grid “Companies to Watch” by Clean Tech Revolution and locally by the Mississippi Technology Alliance as an Innovator’s Award recipient.
Stephen Johnston, a Mississippi native and former investment banker, serves as CEO, and Matt Thornton, another Mississippi native and former Price Waterhouse international consultant, serves as head of all business operations. Johnston and Thornton are both friends and professional colleagues and have purposely created a culture of ownership at SmartSynch, which they attribute in great part to the company’s success. According to Thornton, “We are committed to the concept of empowering each employee to think and act like an owner of the company.” Every employee is incented with stock options, and the company has also adopted an “open book” management style in which core financial and business information is shared with all employees.
Many may remember that during the “.com” days of the 1990s, numerous companies used stock options to attract and keep talent in their organization. However, studies have shown that stock options alone are not enough. To truly create an ownership culture like SmartSynch, there are some additional key ingredients required. First, the employee equity stake must be significant enough to actually create the feeling of ownership. Second, core business information must be shared with the entire team. This can be done in e-mail updates or team meetings and should be provided on a routine basis. In order to enhance the value of this knowledge sharing, companies should educate their employees on financial literacy to help them derive the most meaning from the information shared. Third, companies should teach their employees the key business drivers and explain how each employee is an individual contributor. An effective way to accomplish this is to emphasize core business metrics that are prominently displayed in the office and frequently updated. Lastly, management can learn to truly listen to their employees more, which is a remarkably powerful method of empowerment.
Creating a culture of employees who have an “equity attitude” is a sure way to maximize the contribution of your team. While developing this type of culture is not easy, the rewards are great as you unleash the true potential of your organization and partner with your employees for success.
Martin Willouhby is a business lawyer in Jackson. He can be reached at email@example.com.