[Futurework] Back to the Future of Work

[Karen Watters Cole]

I’m adding a section from the transcript excerpted below, discussing Employee Stock Ownership Plans.  For those interested, please note the question from San Diego, and the summary remarks.  - KWC Leadership for a Changing World website info below.  Minneapolis Can you describe the attributes of a business that make it a good candidate for employee ownership? Are there certain industries that are easier to convert, e.g. high tech vs. low tech, local market-oriented vs. national or international market-oriented? John Logue The basic characteristics of companies that we look at to see if they’re good candidate for employee ownership are pretty much as follows. One, is the company profitable or otherwise worth owning? Two, is the owner willing to sell? Three, do the potential employee owners have the expertise and knowledge to improve the business? Four, is there a good management team on board or can the selling owner be kept in for some years to train a new management team and pass on his or her expertise? When you have a company with employees who believe it’s worth owning and have got the knowledge and experience to improve operations and an owner who wants to sell and willing to sell gradually to the employees over a period of time, you have an ideal situation. On the other hand, employee ownership doesn’t work very well in companies where your employees are transitory, the skill level is minimal, the boss is a rank exploiter, and nobody wants to continue working in the company. Employee ownership works best where the employees see these jobs as jobs they want to work in for years. In terms of industries, we have seen employee ownership work well in practically every industrial sector. It seems to work equally well in old-line manufacturing and in new high-tech industries. As far as we can see, it works particularly well with “knowledge workers” who take the company capital home with them when they leave at 5 o’clock. Employee ownership makes them real owners of the assets of the company they work for, which are their own knowledge and expertise. On the local versus national or international market question, we have seen companies succeed as employee-owned companies in all markets. It may be somewhat easier for employees to understand local and national markets than international markets, however. There are also days when the Fortune 500 companies seem not to understand the ins and outs of currency hedging and other international market problems. On Friday, October 31, Leadership for a Changing World hosted a live, online interview with John Logue, Director of the Ohio Employee Ownership Center, and a 2003 Leadership for a Changing World award recipient.  Below is an excerpt from the interview: ~~~~~~~~~~~~~~~~~~ Marietta, GA The idea of employee ownership is very interesting. But what evidence is there that employee owned companies outperform traditionally-structured companies?   John Logue Since the US General Accounting Office did its pathbreaking study of Employee Stock Ownership Plan (ESOP) companies in 1985, EVERY study that has looked at the internal structures of employee-owned companies has found that companies that encourage employee participation in decision-making outperform those which do not.   What seems to work is the combination of employee ownership with employee participation in decision making, open communication of information about how the business is doing, and enough employee education to understand business information and use the participation system effectively. It's what we can call "informed employee participation."   To take just one example, our Ohio ESOP study found that only 3% of ESOP companies that did not increase "informed employee participation" improved their profits relative to their industry after becoming ESOPs. On the other hand, 48% of those that made full use of "informed employee participation" increased their profits relative to their industry.   Those are pretty compelling numbers.   Interestingly, we also found a high correlation between having non-managerial employee representatives on the board of directors and improved performance. If you are interested in more evidence, have a look at our recent book The Real World of Employee Ownership (Cornell University Press, 2001).   ~~~~~~~~~~~~~~~~~~ To read the complete transcript of Leadership Talks with John Logue, go to http://leadershipforchange.org/talks/archive.php3?ForumID=19 To view the complete Leadership Talks archives, go to: http://leadershipforchange.org/talks/ The next Leadership Talks is scheduled for Friday, November 21 with Marilyn Smith, Executive Director of Abused Deaf Women's Advocacy Services, in Seattle, WA.  http://leadershipforchange.org/awardees/awardee.php3?ID=124 __________________________________________ Leadership for a Changing World Advocacy Institute 1629 K St., NW, Suite 200 Washington, DC 20006-1629 p: 202-777-7560 f: 202-777-7577 e: [EMAIL PROTECTED] w: http://leadershipforchange.org