A recent article in CGMA Magazine focused on the growing emphasis that owners of companies should share information with their employees. It appears that those companies that share information are achieving better financial results and growing the values of their business. In providing evidence for this advice, the article showed how employee-owned companies performed better. “ESOP companies have 25% higher job growth than comparable, non-ESOP companies over a ten-year period, according to the NCEO, and ESOP companies also experienced increases in sales, productivity, and return on assets. Research detailed in Harvard Business Review in 1987 showed that 73% of companies that instituted ESOPs significantly improved their performance(Amato, p.13).”
The purpose of this article is not to push ESOP companies but to ponder the question, why do these ESOP companies tend to out-perform others?
I believe there is one primary reason and that reason revolves around the word , Attention. Webster’s on-line dictionary defines attention as, “the act or power of carefully thinking about, listening to, or watching someone or something.” Employees who have a stake in the outcome will pay close attention to every aspect of the business.
Business owners know that those areas of a company that get the most attention get improved. Jonathan Byrnes in discussing managing change, used the image of working a garden. He said, “behind every beautiful garden is an amazing amount of hard work: planting, fertilizing, and endless weeding. A great business, like a great garden, requires constant work even to stay the same. An essential element, one that is very often missing, is the constant process of weeding. As the business evolves and its markets change, accounts, products, and services lose their profitability and potential. They must be weeded away. Only if this weeding process is a constant, on-going, integral part of the business can you start and grow new high-potential incentives to keep your company healthy(Byrnes, p. 216-217).”
If you want to improve any area of your business, give it the attention it deserves and the results will speak for themselves.
*Amato, Neil (June 2016), Opening The Books, Growing The Business, CGMA Magazine
*Byrnes, Jonathan L. S., (2010), Islands of Profit in a Sea of Red Ink