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Give Employees A Stake in Company Performance

More than a century ago, Henry Peter Brougham remarked that "Education makes people easy to lead, but difficult to drive; easy to govern, but impossible to enslave."

His observation is valid in the business world as well as in the political arena, which is why I keep returning to the theme of an educated work force.

Educated employees will work with you, not for you. They will join management in the search for better methods, better ideas and higher profitability. They will become productive action takers, not passive order takers. They will form a partnership with intelligent leadership, but they will not be driven.

If employees are to behave as partners, they must learn to see themselves as part of the organization and not as hirelings who are paid to perform specific tasks.

You can tell whether your employees regard themselves as partners or as hirelings by listening to them talk. Do they refer to the company as "them" or as "us"? If the company is "them," then management has some challenging tasks ahead of it.

Benevolent company policies alone won't accomplish this attitudinal change. I've known of companies run by generous CEOs who took personal interest in their employees, provided scholarships for their children, helped them with their personal problems and kept people on the payroll long after their productivity stopped keeping pace with their pay.

These CEOs sometimes found that when they asked their employees to make sacrifices to help the company over rough times, the attitude was, "That's the company's problem, not ours."

Employees won't become partners of management until they perceive the company's problems as their problems, the company's challenges as their challenges, and the company's achievements as their achievements.

One way to bring about this attitudinal change is to give employees a stake in the company's performance. This means letting them share in the profits in return for sharing in the risks.

A couple of decades ago, a West Coast steel company experiencing labor troubles implemented an employee stock-option plan. It conferred 100% ownership on its employees and guaranteed them 20% of pre-tax earnings in profit sharing. In about five years, its market value had multiplied nearly 27 times. On top of that, its employees' average pay was 25% above the industry average.

You don't have to give your company to your employees. But you can make them partners of management by giving them a stake in its performance.

copyright Nido R Qubein

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