Getting everyone to think and act like an owner will result in more of your people making day-to-day decisions with the best interest of the company in mind.
Getting new and younger staff to take ownership of their work goes a long way toward building a successful company. Encouraging actual ownership among young professionals, however, is the best way to sustain it. Every company needs young professionals to become owners. The early buy-in provides long-term sustainability when the founders or top-level leaders decide to retire or move on.
Young professionals often join companies because one person or a group of people saw something they liked in them. When the opportunity arises, they are usually eager to invest back into the company that took a chance on them. It is an opportunity for them to say, “I’m all in!”
The benefits of having younger employees with ownership stakes in the company are often linked to better company performance. When staff at multiple levels of a company are financially invested in its success, you create a culture where everyone is thinking, behaving, and making day-to-day decisions with the best interest and intentions of the company in mind. It also increases ownership representation and influence among multiple peer groups.
Getting employees at all levels to buy in to thinking and acting like an owner is invaluable because employee-owned firms have more stability, higher survival rates, less turnover, and fewer layoffs in recessions. Unfortunately, not every employee will be afforded the opportunity, or even have the willingness to become an owner.
The ultimate “golden nugget” for ownership is purchasing company stock. Direct purchase of stock often includes restrictions based on years of employment and can be impeded by younger professionals lacking enough personal capital to afford the buy in.
Employee stock ownership programs and profit-sharing plans allow the opportunity for all employees to benefit from the company’s financial success, often much more quickly than the direct purchase options. These programs also serve as attractive recruiting and retention tools and help build the ownership culture.
Having skin in the game not only allows the young professional to invest in themselves, but it gives them a voice in making some of the company’s biggest decisions through the ability to vote as a shareholder. It also helps your company with recruiting and retaining younger staff when they feel confident enough to relay their unfiltered opinions and know that more than one generation of leaders is making all the decisions.
The earlier a young professional invests increases the opportunity for a larger return. Dividends also provide more money to reinvest which makes it easier in the long run to buy additional shares and increase earnings.
Getting entry-level employees to understand that the decisions they make each day effect the bottom line can be a challenge initially. But when they see others in the firm with ownership stakes behaving and making decisions that are best for the company, they are more likely to follow suit. Learning the culture of accountability from owners closer to their peer group is invaluable.
Having young professionals become owners also helps immensely with transitioning out leaders at the top level. Many firms in our industry, especially first-generation firms, struggle with a top-heavy ownership structure.
For a company to continue after the founders move on, they have to sell out to a larger conglomerate, bring in someone with deep pockets, or have a plan to spread out their ownership over time to the next level of leadership within the company.
Programs such as an ESOP ease the transfer of ownership by dispersing a percentage of ownership across all employees. By selling off shares to that next level down, the company provides themselves with a plan to efficiently buy out top-level leadership and continue long-term viability.
When employees buy into their own company, they are putting their eggs into a basket they can influence. At Fleis & VandenBrink, the mantra is that stock is never given, it must be bought. Gifts can be taken for granted, but by writing that check for the purchase of stock, you tend to place a different value on what it is worth. The greatest benefit you receive with encouraging ownership among young professionals will come when everyone on your team truly understands that when one succeeds, you all succeed.
Getting everyone to think, act, and make decisions like an owner gets everyone moving in the same direction, toward the same common goals and for the greater good. It is never too soon to ask young professionals to take ownership and strategically help you get where you want to go. Your future success may depend on it.
Jon Parrish is an associate and director of the Marketing Group at Fleis & VandenBrink. He can be reached at firstname.lastname@example.org.Click here to read this week's issue of The Zweig Letter.