Businesses are better when employees are part-owners

Posted by  $  blarman 3 months ago to Business
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Facepalm. This is not a ground-breaking development, people!

Hewlett-Packard used to be this way and was splitting its stock every other year. (I contend that their troubles began when they started eliminating their employee benefits programs.)

Southwest Airlines operates in this manner and is one of the most friendly, profitable, and on-time airlines in the industry.

Winco (a grocery store chain) has the best prices and service in my area and have grown to include most Western States now.

That they are treating this like some kind of revelation, when really it is a simple principle: people work with their own self-interest in mind. It isn't hard to want to put in a few extra hours or step up your customer service when you know you're going to get financial remuneration if you do.
SOURCE URL: https://www.bostonglobe.com/business/2018/06/08/for-more-boston-restaurants-staying-business-means-being-open-book/RnUFyfbOScp36j9GpLGkbP/story.html?event=event12%20


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  • Posted by  $  Ben_C 2 months, 4 weeks ago
    Actually, I know Ari, one of the founders of Zingerman's. He was over to our home two weeks ago. He is an out of the box businessman. He writes in his book that when he first entertained the notion of starting a deli in Ann Arbor, MI he was told it would fail as all others had failed. He learned very quickly that if his advisers said "bad idea" he would do it. If they said "good idea" he would back off. His family of businesses made 40 millions last year - maybe more. What he has done is get his employees to have skin in the game plus set up his exist strategy. The man labels himself as a "lapsed anarchist." His books are a good read and he lectures at the Ross School of Business at U of M plus world wide. Outwardly he appears to be very liberal (it is Ann Arbor) but inside he is more conservative than most conservatives.
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  • Posted by mia767ca 2 months, 3 weeks ago
    E.S.O.P.....created by the democrats in the 1960s...I tried to get elected head of the American Airline pilot union to establish an ESOP and take the company private...owned by the employees...could not drag them kicking and screaming into ownership...it cost them their 7 figure retirement check....I left before it was lost...sad....
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  • Posted by lloydwr53 2 months, 4 weeks ago
    My wife and I owned and ran a coffee from 1992-97, we ran it open book, and profit shared with our employees. Our employees took good care of us, they would even "fire" a bad new hire. The principle worked well.

    Turns out that my wife's uncle was a VP at Hewlett Packard and was very surprised at how we choose to run our coffee house because that style of management was new and in practice at HP.

    Turns out I was an Objectivist before I knew about Ayn Rand. I read Atlas Shrugged years later in 2006, needless to say I was stunned at the depth of her understanding of human nature.
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  • Posted by  $  jlc 2 months, 4 weeks ago
    We tried it. SOOO did not work!

    Jan
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    • Posted by  $  2 months, 4 weeks ago
      Can you elaborate? Would be very interested to discover what pitfalls you ran into.
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      • Posted by  $  jlc 2 months, 4 weeks ago
        Profit sharing. Stock. Did not matter a whit to any of them. Not one more erg of energy; not one more whit of caring. It just gave the employees who left the company a severance benefit and those people who stayed with the company an occasional magic bonus.

        These employees are brilliant and behave well - graciously and ethically - in their personal lives but they have no ambition. They would be just as happy in a socialism; probably happier. They would be glad to trade freedom for security. But they would save your baby from a burning house, or give you back a million dollars you had put with them for safekeeping (and not have stolen a cent).

        Needless to say, we have stopped doing both stock and profit sharing. We take care of them; they take care of us. That is working.

        Jan
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        • Posted by  $  2 months, 3 weeks ago
          Thanks very much for sharing!

          Your post reminds me of a chart I saw in my MBA classes. It was a "suggested management style" based on two components of an employee: their knowledge level of their position (one axis) and their ambition (other axis). Maybe we need to amend the profit sharing idea to reflect this reality as well. Maybe profit sharing only really works when the employees have a sufficient motivation level! Great contribution!
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  • Posted by Herb7734 2 months, 4 weeks ago
    Owners often see it as merely giving parts of their business away. But if it increases the bottom line, so what? That's, after all, what its all about, isn't it?
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    • Posted by  $  2 months, 4 weeks ago
      What many shortsighted owners see is "their" profits going to someone other than themselves. What they should be recognizing is that the closer one can tie wages to performance, the better off everyone is. Those who want to perform well will get paid more for doing a better job, improving even in small ways the way they get things done. These small improvements add up over time to higher productivity and lower costs, which can result in higher profit margins. On the customer service side, these small but incremental improvements are critical to customer retention, which is the key to long term stability and lower costs because in general it costs 10x as much to get a new customer than it does to retain an existing one.
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