ESOP Builders Inc. - Case Studies

It's time to take a bit of a breather and enjoy the summer time. The folks at ESOP Builders wish you a safe and sunny two months. Have fun and make the most of business too! We'll be back with our September newsletter to fill you in on the latest news in the world of Employee Share Ownership as we look forward to the fall.

"SHARING" A LITTLE BIT OF ENGLAND... by Linda A. Fox

Heading into the summer vacation season, many of us are thinking of visiting the British Isles for our long-awaited break. In addition to sight-seeing, and eating, there is one other thing we all do on holiday -- shop.

But have you ever given a thought to who owns some of these stores where you are buying your souvenirs or holiday merchandise? Chances are if you in the United Kingdom, at some point, you will find yourself in a store belonging to the John Lewis Partnership. And the John Lewis Partnership is one of the biggest Employee Share Ownership groups in the UK.

The Partnership, as it is called, has more than 69,000 partners who own 26 John Lewis Department Stores, 187 Waitrose Supermarkets; John Lewis Direct, which is an online catalogue business, a direct services company called Greenbee, three production companies and a farm. That's a lot of businesses and a lot of partners.

How the John Lewis Partnership began is an interesting story. And what is a visit to the British Isles without a little history lesson? So here you go!

John Spedan Lewis was the eldest of two sons born in 1885. His father owned the John Lewis Department Store on Oxford Street in London. By the tender age of 21, John Spedan Lewis, not only had acquired a quarter share of his father's company, he also was well on his way to becoming a director of Peter Jones, the other shop under his father's control.

It was during that time that the younger Lewis, his brother, and his father were between them earning more money than the total number of employees in their shops. A riding accident laid the younger Lewis up for awhile and he spent some of that time thinking about the welfare of the employees.

With the happiness of his employees in mind he began to instigate new practices as soon as he returned to work. Intent on bettering conditions, he initiated shorter working days, the establishment of a staff committee, a third week of paid holiday (unheard of in retail at the time), and eventually a house/employee magazine, which is still published to this day.

In 1914, the younger Lewis came into conflict with his father over these new practices and in exchange for withdrawing from the Oxford Street shop, he was granted total control of Peter Jones. Within five years Lewis turned the failing company around from a loss to a profit.

In 1920, the first profit sharing scheme was launched along with a representative staff council. A reconciliation with his father took place, and young Lewis was again involved in both operations. With the death of his father, he set up the first constitution for employees and signed the first trust settlement.

This gave him practical control of the business and he started distributing profits amongst the employees. Some 21 years later, he signed a second trust settlement and the company became an ESOP, the property of the people employed within it.

The company continues to expand with an announcement this spring that it will make a three-million pound sterling investment to purchase and refurbish the Bala Lake Hotel in Bala, Wales. They are even getting into wine. The Waitrose interests of John Lewis Partnership said it is the first UK retailer to plant vines with a mind to future wine production. The vines will be planted on the firm's 4,000 acre farm in Hampshire.

So whether you are buying a jar of good old British strawberry jam at a Waitrose Supermarket or a pair of argyle socks at John Lewis department store, (or maybe staying at a hotel or drinking their wines in the future), keep in mind each employee will benefit from that purchase via the employee share ownership put into place many decades ago by this forward-thinking entrepreneur.

FIVE KEYS TO BUILDING A HIGH-PERFORMANCE ORGANIZATION

The practices of successful companies in a variety of industries reveal five characteristics that are key to making a success, according to a review by Business Performance Management magazine.

High-performance organizations seem to understand the market earlier and more thoroughly than other businesses, retain the best staff, and have less trouble responding to external pressures.

Analysts found that high-performance organizations share these five characteristics:

They set ambitious targets and consistently and continuously achieve those objectives.

They display a strong sense of purpose through shared values both inside and outside the organization (among employees) and outside the organization (among customers, suppliers and other stakeholders).

They have a strategic focus and alignment so that employees know how they are contributing to the results of the organization.

They have the agility to adapt to changing circumstances quickly.

And, finally, they have a common and shared business model throughout the organization.

HOW PRODUCTIVE ARE YOUR EMPLOYEES?

How to motivate your workforce is a question that owners and managers have struggled with since jobs were invented.

Morale is a key indicator of productivity and vice-versa. Productive, engaged employees are likely to be enthusiastic and creative about their work. Satisfied workers are also likely to have a positive impact on the bottom line.

Why not give your employers a little quiz to find out how your employees feel about their productivity quotient. Make the quiz anonymous for your workers - that's when the truth comes out! Urge them to share the negative along with the positive. Once you understand what drives your company's productivity, it will help you start to identify the bigger issues and work to improve your management systems, communicate better, and position your firm to take advantage of an uptick in the market for your service or product.

Here are six comments to give to your employees. Have them score each phrase by points (2 points for Agree, 0 points for Neutral and -2 points for Disagree).

Calculate the average score and see where you stand in your employees eyes.

Score: 8+ Excellent! The communication in your company is strong, and your employees have the support they need to make your company a success. If your company is having productivity issues, you can look to other potential causes.

Score: 4-7 Caution! Areas need improvement. Reviewing answers to the quiz will point you in some new directions with your employees.

Score: Below 3 Beware! The Productivity Quotient may have pinpointed the source of your company's problems. Consider the answers to each question as you review the analysis, and closely review the communication process between management and employees for areas to improve.

Here are a few steps to follow if you received low company scores for each question.

If employees do not understand your strategy, you have two choices. Communicate better or rethink it. Your employees may see holes in your thinking that you do not.

If employees do not know their responsibilities, do the managers? Times for a "roles and goals" chat - be sure the manager and the employee both walk away with a written summary of the understanding.

If people do not understand their how their jobs relate to the company objective, you may have a communication problem or an ineffective performance management system. Do you have a system in place? Do managers understand the system and use it effectively? Are they motivated to use it?

Are employees expected to do too much or too little? From time to time, take a look at the responsibilities of each person on the team and rebalance the workload if necessary.

Take advantage of the talent you have. If your employees are not empowered to implement solutions, they won't bother trying to find them. If you're not taking advantage of your talent, now is the time to start taking steps to figure out the best way to do so.

If your employees would not recommend your company to others, it is important that you find out why not.

-- From NCEO newsletter

EMPLOYEE OWNERSHIP GROWS IN EUROPE

According to Marc Mathieu of the European Federation of Employed Shareholders, the 2,500 largest European companies now have 8.2 million employee owners holding 260 billion Euros in assets.

NOTABLE QUOTABLES

"One must care about a world one will not see." Bertrand Russell

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