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Ownership + Engagement = Organizational Alchemy

“Thinking like an owner” is structural as well as attitudinal/behavioral.  

The vast majority of private entrepreneurial companies in North America and elsewhere are closely held.  This means that only those people who actually gathered their resources for the specific purpose of founding the company, often putting all they had on the line — or those who later purchase the company — are those who legally own the company’s capital resources.  Fair enough.  And ownership brings a particular perspective.

In a minority of circumstances, factors have aligned, internal and external to the organization, such that the company has been, or is about to be, purchased by its employees.  For simplicity’s sake and for purposes of the present discussion, we’ll limit our focus on those companies majority owned by its employees in the form of an Employee Stock Ownership Plan (ESOP) with its associated accounting requirements and tax advantages.

Only under an ESOP or equivalent circumstance can organizational ownership and employee engagement be fully integrated, not only in theory, but also in practice.

This is to say, only under these particular circumstances can organizational ownership and employee engagement represent two sides of the very same coin.

Organizational ownership and employee engagement as two sides of the same coin

In each and every conventionally owned or closely held company, organizational ownership and employee engagement represent two dynamic elements of the company that are in some manner intertwined and leveraged to advantage, more or less.  This has been and continues to be completed in myriad varieties of ways, as evidenced by human nature and the variety of private human enterprises all around us.  Some business approaches tend to work better than others, industry by industry, for short- or long-term business advantage.

Only when structured as an ESOP or equivalent will organizational ownership and employee engagement represent two sides of the very same coin.

Transforming company “coins” (i.e., the company’s working capital) from common metals into gold:

When organizational ownership and employee engagement actually represent two sides of the very same coin, a particularly dynamic form of “organizational alchemy” can occur.

Organizational Alchemy!

By “organizational alchemy” I mean successful leveraging — through greater integration of one’s company resources, physical and human — to create significantly much more than the mere sum of the company’s “parts” or components, thereby transforming the company’s working capital, broadly defined, “from mere common metals into gold” in a manner as is uniquely required by that business enterprise. 

Only when organizational ownership and employee engagement truly represent two sides of the very same coin can the very most dynamic “organizational alchemy” occur. 

ImpactsOfEO,Logue,WashDC,2007

“Organizational alchemy” under ESOP conditions is not, however, a given.  Not all ESOPs thrive or succeed.

In fact, it can be argued that many non-ESOP firms

successfully develop their own kind of organizational alchemy.

Organizational Alchemy?

If performance based “organizational alchemy” is not a given, what can get in its way?

To begin, true “organizational alchemy,” as we define it here, is not automatic.  It is the result of strategic, intentional, and integrative actions that are co-created, co-measured, co-celebrated, and co-maintained. 

In ESOPs, this alchemy can include and surpass the “best practice” goal of conventionally-owned firms, that where company leadership and company culture represent two sides of the same coin.  ESOPs can include and surpass this “best practice” goal, because of the added structural integration of ownership and engagement.

First and foremost, to maximize success it is always important to take a practical perspective.  

We are prudent to begin by asking, “What is the company performance issue?”  

We do not want to focus on “culture,” per se, because a generalized focus on company culture represents a bottomless pit of investigation, since culture touches arguably everything. 

Culture matters to the extent an organization is or must be adaptive.

“If culture is like personality or character, then it matters in the sense to what extent is the culture adaptive to both the external and internal realities. If it’s not adaptive, it matters a lot. If it’s adaptive, it doesn’t matter much, people don’t notice it, they just go along their merry way. So culture really only matters when there is a performance problem to be addressed that cannot otherwise be solved by simpler means. In the same sense that personality only matters when things aren’t working right for you. Otherwise it’s just there. It’s part of you.” ~Edgar Schein, as interviewed by Tim Kuppler.

So, “culture” is only an issue if there is a company adaptation problem that can not be addressed by simpler fixes. 

“Culture” is much like “personality” — both are bottomless pits for generalized intellectual focus. 

“Culture” only becomes a issue for sustained constructive focus if there is a performance problem that can not be attributed to a more circumscribed and “easier” solution. 

It is imperative to focus on a noticeable and important company adaptation issue.  This will guide us in our focus on company performance.

It is important to ask early on, “What ‘easier’ performance issues can and should be first addressed?”  “Easier” solutions are often be addressed by means of a technical/process solution.  These issues should be addressed, wherever possible, up front.

This then allows the question to responsibly become, “What is the ‘ownership adaptation’ issue?  Why focus on ‘culture’?  Is ‘culture’ the real company performance issue here?” 

In this spirit, we will want to find out what both the company’s current and desired cultures are. 

We want to look at these in relation to the company’s actual adaptation and performance values and needs, so that desired goals and values can guide all efforts.  

In all culture improvement efforts, it is important to possess a good compass, a roadmap, and an experienced guide for optimal success and to enjoy the fewest errors and headaches as you proceed. 

Each are imperative as resources for you and your teams.  This is every bit as much true if you want to succeed in an “ESOP alchemy” journey of cultural and performance transformation over time.

Start with your company’s specific history. 

Most ESOPs do not start from the ground up, but are created out of what was formerly a privately-owned or closely held enterprise.  This is natural, given the nature of most aspiring entrepreneurs and the birthing requirements of most private entrepreneurial enterprises.  (See Edgar Schein, 2012 for a succinct description of relevance here.)

…Organizations have defined histories…  When we have access to historical data we should use it…  To analyze organizational cultures we [can] reconstruct their histories, find out about the values of their founders and early leaders, look for the critical defining events in their evolution as organizations and be confident that when we have done this we can indeed describe sets of shared assumptions that derive from common experiences of success and/or shared traumas (Schein, 2012).

EdgarScheinPicDr Schein, arguably North America’s foremost workplace culture expert, suggests that it is essential whenever possible, for starters, to understand the foundations plus current manifestations of the current company culture, because, culture is both a process and a state.

”…Culture is both a process and a state. In new situations shared meanings [are] constructed through a social learning process. As these meanings help the participants to make sense of their world they become stabilized and can be viewed as ‘states.’  At the same time, as the members of a group interact, they not only recreate and ratify prior meanings but also construct new meanings as new situations arise” (Schein, 2012).

A variety of consulting corporations, such as

the Ohio Employee Ownership Center OEOCLogo+Addresses

and the

RMEOCLogo+ContactInfo  

Rocky Mountain Employee Ownership Center,

 

 

specialize in focusing on the structural/technical/legal aspects of ESOP formation and maintenance.

BCS Logo (PyramidOnly) We at Business Culture Solutions focus primarily on the “process” and “state” dimensions of participant involvement and engagement (i.e., attitudinal/behavioral) as integrated with the structural/technical “process” and “state” dimensions. 

We serve as culture change guides to companies that are employee-owned or not. 

We work with ESOPs most often in tandem with organizations such as the Ohio Employee Ownership Center and the Rocky Mountain Employee Ownership Center to ensure that both the technical/legal and involvement/engagement dimensions are adequately addressed up front in the formation and maintenance of the ESOP.

Effectively operating a business with performance alchemy,” whether or not under an employee ownership structure, requires creation of an effective culture of learning with ownership.”

Under circumstances of the formation of an ESOP, company management will now typically include new players who may be “old to the scene,” but new to management.

Obviously, the need for new learning tends to be a bit more typically well understood and is more typically taken as a given, with greater buy-in by the entire organization, when forming an ESOP, due to the nature of the circumstances. 

And fortunately, for intrinsic as well as extrinsic reasons, participant buy-in in an effectively created ESOP can be integrated by the fact that organizational ownership and employee engagement now represent two sides of the same coin, as they say, “for better or worse, for richer or for poorer.”  In time, if not also up-front, buy-in to a constructive attitude of ownership with learning, to be most effective, must include the entire organization and include “when nobody is looking.”

The learning will include a focus external and internal to the organization.  In time, this “new” learning must become familiar and pretty automatic for all involved parties.

Open book management is a powerful approach to developing organizational alchemy, and can be especially relevant to the formation of an ESOP, where company finances are, literally, “everybody’s business.”

WorkplaceDevelopmentIncLogo&By-Line

WorkplaceDevelopment Inc specializes in providing ESOP trainings that can include games for employees to more quickly and thoroughly develop their understandings of the financial management of their business enterprise.

How does one assess one’s company culture?

Remember, culture can be thought of as both a process and a state.  Understanding of both dimensions is important for optimal understanding.  In fact, it can sometimes be difficult to distinguish the one from the other.  Nevertheless, it is important to understand this distinction to understand the distinctions between shared unspoken assumptions and espoused values as well as what is “cultural” versus what is simply situational.

1: Basically, one can take a “snapshot” of the culture at a moment in time according to various pre-selected dimensions understood and demonstrated by culture researchers and practitioners to be of importance for understanding company cultures from a practical standpoint.

Typically a questionnaire is provided to all organization members to complete from their individualized standpoint.  Then results and implications are discussed with the leadership and membership.  In the process, increased clarity, leadership, and more effective innovation can be developed to company advantage throughout the organization.

Denison logo > visit websiteAn example of this approach, of which we are particularly fond to use where appropriate, is the Denison Organizational Culture Survey (DOCS).  Dan Denison is former Associate Professor of Organizational Behavior and Human Resource Management at the University of Michigan’s Ross School of Business, and now Professor of Management and Organization at IMD in Lausanne Switzerland. 

“Denison and his colleagues developed a model of organizational culture based on 25 years of research linking organizational culture to performance measures including

  • return on investment,
  • customer satisfaction,
  • sales growth,
  • employee satisfaction,
  • innovation
  • and other key performance measures.

Unlike many theorists in the area of organizational culture, Denison and his colleagues have been successful in developing a pragmatic, easy to administer survey based on extensive research with over 1000 companies in 48 countries in many varied industries.

Their survey differs from a climate survey in that responses point to specific actions around the four components of culture that are directly tied to measures of performance.

The results for this survey can provide a baseline going in to a major change effort, giving leaders direction around what needs to be tended to in order to make change successful.

It can also be administered after the change is implemented to get a sense of what is working and what needs to be changed or addressed allowing the organization’s culture to be described, developed, and leveraged for success.”

~Copyright © 2010 by Gregory J. Michaud, White Paper Series: Driving Organizational & Cultural Change.

Advantages associated with use of the DOCS include:

  • Taking guess-work out of your leadership and organization development.
  • The work can be tied to your company’s triple bottom-line performance.
  • It is efficient and effective, saving you time and money.
  • You secure the most reliable, empirically- and internationally-normed, business culture performance-benchmarking that is available on the market today.
  • Behind us stand 20+ year track records of demonstrated performance, world-wide.

2: Or one can utilize a more open group oriented inquiry.  This minimizes the impact of our own preconceived ideas.  It optimizes our staying open to new experiences and concepts we may encounter: 

In the end we may well sort those experiences into the existing categories we already hold. But at least we will have given ourselves the opportunity to discover new dimensions and, more importantly, will have a better sense of the relative salience and importance of certain dimensions within the culture we are studying. The issue of salience is very important because not all the elements of a culture are equally potent in the degree to which they determine behavior. The… group oriented inquiry not only reveals how the group views the elements of the culture, but, more importantly, tells us immediately which things are more salient and, therefore, more important as determinants… (Schein, 2012).

BuildTheCultureAdvantage(book)   Tim Kuppler (2013) describes this approach well in his groundbreaking

NEW BOOK! 

Kuppler, Tim; Garnett, Ted; Morehead, Tom (2013) Build the Culture Advantage: Deliver sustainable performance with clarity and speed.

  No matter what approach to assessing culture you choose to utilize, this book provides groundbreaking clarity in description of how you specifically utilize clarity and speed to deliver sustainable performance improvements.

In his book, Kuppler describes his Accountable Culture Management (ACM)™ model, of which we make increasingly regular use.

At their website, you can obtain a FREE COPY of the BOOK SUMMARY.  You will receive 20% off if you enter the code “Norman Jentner” when you order the book and/or workbook.

3: A third approach is to study the day to day interactions of organization members with each other and with those in other organizations to clarify how given cultural assumptions are reinforced and confirmed, or challenged and disconfirmed.

An example of this approach might include the similarly groundbreaking work of Natalie Baumgartner, Ph.D. and her colleagues at Roundpegg.com.   

RoundPegLogo&ByLine2013RoundPegg provides organizations software that all employees are able to access to help in the process of understanding and leveraging their unique culture. 

RoundPegg measures the values of individual employees, how they are “hard-wired” in the present, and then “rolls up the data” to show the “core value footprint” that currently exists in the organization versus its stated values.  RoundPegg software allows the selection of values to “shift” over time and this “shift” is monitored through ongoing dashboards that directly change as employees come and go from the organization.

Such an approach might be useful when engaged in creation of an ESOP.

We can analyze the impact of these perceptual interactive events in order to understand how cultures evolve and change…  This process could be especially productive in mergers, acquisitions and joint ventures of various sorts. (Schein, 2012).

A combination of methods is typically most useful for obtaining the most well-rounded information for maximum clarity.

[It is] a matter of choice… whether one chooses to focus one’s cultural [assessment] on… categories that freeze a given organization at a given point in time, or on analyzing the moment to moment interactions in which members of a given social system attempt to make sense of their experience and, in that process, reinforce and evolve cultural elements…  Both are valid methodologies and in practice they should probably be combined (Schein, 2012).

Iceberg(alone)

There are “above surface” and “below surface” aspects to every company culture, much as we find with every iceberg.  

Cognitive dissonance theory tells us that people tend

to justify what they have done, regardless of the outcomes.

CognitiveDissonanceTheory(Festinger,1957),Cartoon;SimplyPsychologyOrghttp://www.simplypsychology.org/cognitive-dissonance.html

A truly professional focus on “company culture” will include consideration of the above- and below-surface aspects of the present culture.  

A basic need in human groups is to justify what they do. And paradoxically, the justifications often are not the same as the [unspoken] assumptions that actually determine the behavioral regularities. Thus groups create ideologies, aspirations, visions, and various other kinds of “espoused values” which may or may not correspond isomorphically with the tacit assumptions. The most difficult aspect of deciphering organizational cultures, then, is to determine to what extent the claimed espoused values actually correspond to the behavioral regularities observed and, if not, to determine what the shared tacit assumptions are (Schein, 2012).

It is not uncommon for a company’s beliefs and actions to be out of alignment.  

We work with stakeholders to bring them back into alignment or “congruency.”

Whenever there is an effort to better align above- and below-surface aspects of the present culture, we are engaged in a “culture change” effort.  

This may or may not include a major shift in above-surface goals.

Culture… evolves as a function of actual experience. That evolution can be influenced by leaders setting new examples and mandating new kinds of behavior, but the culture will not change until the new behavior produces more desirable results and, thereby, comes to be accepted and eventually taken for granted [emphasis added] (Schein, 2012).

Now here is where is gets real interesting, for us. 

Accountable Culture Management (ACM)™

We want to acknowledge our indebtedness to, and refer you to the leading-edge work of, our esteemed colleague Tim Kuppler and his Accountable Culture Management (ACM)™ model, described in his 2013 book and of which we make increasingly regular use, serving as professional ambassadors for CultureUniversity.com.

Our culture change focus, when using the ACM model, does not require a deep understanding of behavior, but instead represents a framework for results. 

Following TIm Kuppler’s lead, we consider it essential to develop early quick momentum based upon results. This is necessary to address the challenging momentum that every company culture already possesses and to address the typical paradox that “culture change” takes time.  We don’t want “culture change” to turn into a deep and complex topic.  

AlignBothBrain&Heart(perBCSHomePg)We want to keep it simple.  

Therefore, we provide strategies, systems, and methods to more effectively align both “brain” and “heart” for better results.  

Purpose and values are considered at core, along with results, to keep things from remaining superficial.

Questions become and remain manageable, such as, “How do we sequence and prioritize actions, for which purposes?”

In “Phase One” of an ACM™ focus, we focus on one compelling priority, challenge, or problem — again with a focus on results.  “What is our performance focus?  How is our culture supporting that focus?”  And, “What works for us in our unique culture?”

Now is where development of a compelling but circumscribed vision, and a linking of valued behavior shift to desired particular performance, is required. 

“How do we work together to achieve our initial vision?”  Learn more at The Culture Advantage.

Do you agree with my assertions here concerning how and why organizational ownership and employee involvement, when more fully integrated, produce “organizational alchemy”?

My best.

~Norman

Norman Jentner, Principal           Business Culture Solutions, LLC

http://www.linkedin.com/in/normanjentner (LION)

Transforming your company’s Sleeping Giant into your Wish-Fulfilling Genie, increasing your company profit, competitiveness and sustainability.

4 Comments

  1. Comment by Tim Kuppler:

    Nice summary Norman. I like that you cover clarity and alignment focused assessments (Denison), values-based assessments (RoundPegg) and group oriented inquiry. It’s important to note that the group oriented inquiry is still needed after any assessment in order to understand “why” the results are the way they are and how they are helping and holding back progress on top performance priorities. Thank you for the detailed summary.

    • Comment by Norman Jentner:

      Thank you, Tim, for underscoring the importance of group oriented inquiry to promote learning and action along with any assessment, for the reasons you mention. How a culture assessment is initially approached, of course, depends upon how an organization wants to turn on the spotlight for enhanced practical performance understandings. This might be what they are most comfortable doing, on the one hand, or most inspired to do, no?
      My best.

  2. Comment by Dick Peterson:

    Norman: I did finally get to read your whole article. I think you summarized OEOC and RMEOC quite adequately. The whole issue of culture or the involvement of the employee owners (or employees) is so important and often forgotten is the rush to move forward. So I am please to be on your list.

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