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How To Give Every Employee A Personal Stake In Your Company

For one thing, employees need to know and understand exactly how your business makes money.

How To Give Every Employee A Personal Stake In Your Company
[Photo: Flickr user JD Hancock]

If you’re a business owner, you want your employees to feel as personally invested in the company as you do–but you probably know that isn’t likely. Still, your management strategy can have a huge impact on how deeply invested your employees feel in the work you do together. And getting everyone on your team to think and feel as passionately as you do isn’t as hard as it sounds.

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All Hands On Deck

As an owner, your business is your baby. You watch over it obsessively. You make choices based solely on what’s best for it, even if that means pain in the short term. But I’ve been through the battles of running a business for 30 years, working with baby boomers and millennials, fax machines and iPhones. The most pervasive lesson learned through all those years was simple: Running a business is not a one-person job. You have to share the load.

If you try to do everything, not only will you exhaust yourself, but you’ll risk your staff–either intentionally or accidentally–pulling in the other direction. If it begins to look like the boss can handle everything, no one else will feel their own work is mission-critical. They’ll feel unimportant, and your whole team’s enthusiasm and investment will flag. Instead, make it known that you all share the same objectives, and it takes every single person’s contribution in order to achieve them.

Driving The Business Forward

Employees often want to take more personal ownership for the companies they work for, but leaders don’t usually have the time and energy to teach their entire staff what it takes to run a successful business–let alone demonstrate why that understanding is valuable. That leads to a vicious cycle: Employees may want more influence, but if they aren’t offered it, they won’t know how to contribute more.

One way employers are better motivating their teams is through the “pay-for-potential model,” which compensates employees based on the skills and experiences they bring towards achieving the companies’ future needs. This model turns sideways the familiar the notion that the longer you work with a company, the more your salary will incrementally rise. Some employers are developing methods to take the best from both models.

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In any event, rethinking how you invest in your staff has a few upsides: It lets them know where their salaries are coming from (transparency), defines the big-picture objectives the company is driving towards (vision), and rewards individuals who can help get it there (engagement).

Crafting A Better Culture

I spoke with the owner of an advertising agency that was doing “fine” but who felt his employees were never fully invested. No matter how busy they were, team members consistently said they felt overworked, bolted at 5 p.m., and were generally unsympathetic to colleagues who were really swamped.

The culture needed fixing, so the owner did three things:

  1. He set a monthly adjusted gross income (AGI) goal and publicized it.
  2. He announced that that year was the last year for the expected holiday bonus. Beginning in January of the following year, everyone was going to be part of an AGI-based bonus program.
  3. He gave an “agency math” presentation every month so employees could understand that gross revenue didn’t reflect how much money the agency actually made. At the first such presentation, the owner called out team members who had helped the company save or make extra money, showing statistically how their choices contributed to the month’s results.

Over the following three months, employees started to help each other wrap up projects so they could be billed that month and count towards the AGI goal.

They stopped asking for more teammates prematurely, because they understood that more money taken out of AGI for salaries meant less money for the profit pool. They also started to monitor expenses differently and tried to reduce overhead expenses so the profits–and the bonus pool–would be larger. Even better, employees started to care about new client acquisitions and help the team stay on budget.

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To be sure, this sort of approach won’t work everywhere, and it’s up to leaders to diagnose issues in their own company cultures that may require different solutions altogether. But the reason it worked at this ad agency was because it gave everyone a personal stake in the company’s success. With the whole team pulling in the same direction, the agency’s profit margins grew by more than 7% within a year.

How To Maximize Each Employee’s Potential

In my experience, these three tried-and-true strategies for giving everyone on your team a direct stake in the company won’t be going out of fashion any time soon.

1. Turn your company into a university. Employees need to know and understand how your business makes money. Set up mandatory seminars to showcase the economic structure of your company.

Teach your team where your revenue goes, and show them what they can do to increase profitability. Help them understand how the choices they make (e.g., using a freelancer instead of completing a task in-house, negotiating with vendors, budgeting client dinners) all impact the bottom line.

2. Publicize metrics and spotlight them. If it’s appropriate, set a monthly AGI goal, and post it where everyone can see it. Don’t let it go unnoticed. Have your accounting team provide updates throughout the month to tell you how close you are to hitting it. Base your meetings around that goal so you can get to the bottom of misses and celebrate successes.

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3. Tie rewards to those metrics. Creating a reward system tied to the goals you’ve set can give everyone on your team a stake in achieving them–and instill a new sense of vigor in your company culture. Stop giving away bonuses that aren’t tied to the company’s performance. Compensate your staff in a way that rewards their specific achievements and progress towards defined business objectives. In doing so, you’ll teach your team that when the company does well, everyone does well.

Drew McLellan has worked in the advertising industry for nearly 30 years, and he’s owned his own agency for 20 of them. He also leads the Agency Management Institute, which advises small- to medium-sized advertising agencies. Follow him on Twitter at @DrewMcLellan.

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