How about employees all the way down the line and through the corporation? How do we align them to the goals and strategies of the enterprise? Obviously for the appropriate individuals, a bonus program aligned to the department’s goals is appropriate. But how about awarding stock options for all employees?

I discovered the power of ownership early in my management career, establishing an employee stock ownership plan (ESOP), once popular as incentive compensation as well as a tax write-off for corporations and even a way to slowly transfer ownership of a company from the founders to the employees. These plans are not as popular today because of their complexity and difficulty to manage, lost in favor of simple stock option plans.

Each month, at the monthly company lunch for all, I’d greet everyone with “Hello shareholders,” and proceed to show the assembled throng slides of high level financial statements, pointing out progress against plan. That form of open book management surprises many, but if the employees are stakeholders with a taste of equity, why not underscore the value of that equity by treating them as cohorts? Yes, sometimes the news is not good. They should know this, and from you not from the rumor mill.

Your fear that the confidential information may get out to the industry competitors should be tempered by the fact that you are not giving out the secret sauce, just the results of the past period’s performance. All public companies including your public competitors must do this in greater detail each quarter, and it rarely damages their ability to sell into the marketplace. Would bad news drive your best employees out the door? Perhaps. But it is my experience with many companies that empowered employees, treated with respect and shared knowledge, will go far beyond expectation in remaining loyal to their associates and their employer.

And think of the time saved around the virtual water cooler if there are far fewer rumors to pass among your employees.

SOURCEBerkonomics
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Dave Berkus
Dave Berkus is a noted speaker, author and early stage private equity investor. He is acknowledged as one of the most active angel investors in the country, having made and actively participated in over 87 technology investments during the past decade. He currently manages two angel VC funds (Berkus Technology Ventures, LLC and Kodiak Ventures, L.P.) Dave is past Chairman of the Tech Coast Angels, one of the largest angel networks in the United States. Dave is author of “Basic Berkonomics,” “Berkonomics,” “Advanced Berkonomics,” “Extending the Runway,” and the Small Business Success Collection. Find out more at Berkus.com or contact Dave at dberkus@berkus.com

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