Can employees truly become Owners!

Most CEO's I meet, have one consistent grouse-My employees don't think like owners, they don't think as if the company is their own. They are often indifferent to the outcome and most often task/activity based. Though they may be aware of the financial difficulties and the business environment they still insist on increments at the end of the year and that too anything less than 15% is reciprocated  with raised eyebrows…

Per se there' nothing wrong with entrepreneurs thinking on these lines and most entrepreneurs are tempted to think some time or the other in this direction especially when frustration from business takes the better of them(I mean us, I too am included).

Calmly we should pause and ponder on whether there is legitimacy in thinking on such lines with sustainability or are we being merely opportunistic and desperate to tide over the present economic realities. While I shall not sit in judgement on this aspect, I may have some insights to offer....

If we were to examine the definition of ownership, out of several dimensions involved in ownership one aspect is the possibility of an infinite upside and even the reality of a significant potential downside!!! I think we would all agree out here on this aspect. That’s also one of the main elements that differentiates an employee from an owner.

For an employee, rarely is there any downside in the form of penalties for things not happening right or for not achieving even the base expectation for which he /she was hired. The upside for an employee is more in the form of increments, incentives (generally limited) which in most cases is generally semi-structured in SMB's.

In quite a few traditional, family run enterprises, the incentive is extended to employees during Diwali as a Bonus. Invariably the employee is unaware of how much he will receive...and it’s given towards a mixture of loyalty, obedience, good performance etc. Rarely are there structured KRA’s against which payouts are made.

Another observation is that immaterial of the debtors situation/outstanding and cash flows, most owners pride themselves to pay on time for the past 20 years without delay. Hence immaterial of the cash position, immaterial whether the owner has to borrow to fund the payroll-employees must be paid. The best part is that there is a high possibility that the situation was created by employees in the first place for wrong billing, not completing work as per the phased development to bill, weak collections etc

So while most owners take a Raja/Praja view we still expect the employee to be owners in the format?? Incidentally this term of Raja/Praja was shared during one of my interactions with an owner….

Now while the thinking is magnanimous and not for a moment, I am advocating that it is incorrect, does it weaken the argument of employee ownership!!!. One may argue that employees must be paid on time which is not something that should be debated and indeed there may be merit! but does this not also apply to owners, should they not be paid on time????

I know of several instances when the owners draw salaries less that the top executives employed. Owners generally take their compensation last, they have no fixed remuneration and generally take drawings as and when there is a requirement or scope to draw cash.

So the moot question is can employees become true owners within the perimeter of their operations. 

The answer is "YES" but it needs to be structured and crafted within certain riders and within a culture that fosters ownership. Ownership within an enterprise at the minimum would mean making employees being accountable for the outcomes of the job they manage. As the levels increase ownership must graduate to include P&L responsibility. 

During my recent discussion with the Managing Director of one of our esteemed clients, he mentioned that he wanted his senior management to be more of owners whose compensation is aligned with the output they produce. The higher business they achieve, the higher amounts they can earn. Moreover if they can't fit into this system of thinking either they should downgrade their role or refrain from requesting for annual salary increases. Strong views and approach but this is one thing which plagues entrepreneurs immensely...Employees are always in a queue to ask for increments immaterial of the realities of the market or business. In this matter they are extremely persistent (wish the same extended to business!!)

In fact when I quizzed him further he mentioned that senior management should look at it in a way where he was providing them space, infrastructure, clients and a certain minimum guarantee on compensation but beyond that they should earn it. Wow…It’s sounding quite like a variation of a franchisee system. Interesting perspective…. and the rigors of the market are forcing all of us to align in this direction. Bluesky is working on providing him with a viable solution which we hope to leverage across the portfolio of the clients we service…

These are real issues before HR and the concept of ownership will only advance from here. Top level executives must be tied to the top line and bottom line of business and must have something to lose if they don't meet the numbers. If businesses can have penalties in the form of SLA's why not these getting appropriately passed to employees. 

Bluesky has implemented the Incentive and Penalty structure for quite a few clients with encouraging response. Of course these things will take time as it goes against conventional mindset. But the business environment globally is forcing entrepreneurs to be unconventional and instilling ownership among employees is not only unconventional but also a strategic advantage to business. 

Do share your thoughts, views, perspectives including your disagreements.

OK.... But do you know why I have to do things that I am not supposed to!-Part II

So the dialogue with Shradha continues....with a tone of irritation, I rebutted saying "look, I can't have these things fall apart just because you are not attending to them". At best in 6 months to 1 year, you may walk out of the door flashing your resignation with a one month notice(That too is hardly given nowadays)...So what do I do.. the monkey will be on my back and I will have to manage the mess"
Shradha seemed indifferent and probably didn't seem to understand why I was making a big deal.

However every entrepreneur must have encountered this situation sometime during the life cycle of their enterprise. We often put our faith in the employees and often invest both financially as well as in resources; we think employees will manage everything with full ownership, with all the passion, zeal and commitment but unfortunately this rarely happens to our expectations and invariably the ball is chucked back to us...So with the existing balls already in our hand, we also add this one. Does this situation ring a bell. May be, may not for some fortunate entrepreneurs.

Another most common observation is similar to the game of volley ball... CEO's often handle multiple roles, One of the entrepreneurs I work with calls it P2P(Peon to President). As long as the owner handles it normally nothing goes wrong after all most entrepreneurs rarely sleep..but as the enterprise grows there are specialists and employees entrusted with these roles. So like in Volleyball where the owner was manning more than 2-3 positions; Now, since he has hired a "Manager-Accounts" he leaves it to him thinking he will clear the ball.... he will pay the taxes on time, he will follow up for outstanding, he will bill accurately.... But since we are not in a perfect world invariably such seamless working does not happen and mistakes, slip ups will happen drawing the entrepreneur/owner back into these activities. Sometimes the entrepreneur also expects too much from the employee-perfection, commitment, flexibility. In fact I wonder why employees fall sick and why entrepreneurs rarely miss a day of work!!

At Bluesky we have studied that there are many reasons to why this happens, it could be competence, training, delegation of authorities and most important accountability and ownership. Ownership is one of the most misunderstood words in employees dictionary. For an employee ownership means he/she can only earn incentives but never gets penalized for the slip ups. In fact in many cases it's earning incentive to do their basic jobs?? Is that fair, if not, are we fooling ourselves to think they are truly owners.....

Stay tuned in and do share your experiences

What I love to do.... vs What I need to do... Dilemma of every Owner!

Two days back I was admonishing my Senior Manager-Shradha(name concealed) stating that she was not doing what she was supposed to do according to her role and more often than not, I had to get into it filling in this gap for her which indeed was not my job. I also went further to state that because, I was doing her work, I was unable to give time to things I needed to focus on from a business point...

Shradha looked at me in the eye and with a pause mentioned something which shocked me--"Don- that's because you love to do such things". Now whatever we may say, we as CEO's, generally don't like being wronged and often we get into defensive justifications to disclaim such expressions from employees. But I held back and told Shradha, "I have the option of getting upset but will choose not to get defensive and retort if she explains and justifies her comment and if she could not convince me, I would attempt to convince her!!
No prizes for guessing who got convinced in the process, of course the CEO always wins such bouts, that's a privilege and a perk for all the risks we take as an entrepreneur, but Shradha's comment began to sink into me to comprehend what she really meant and often this happens with most of us; the dilemma between What we love to do vis a vis what we should be doing ..

As entrepreneurs, the biggest disadvantage is that there is no one to correct us, we often get into a zone of doing things we like doing or are habituated, this could be different things for different people, like some entrepreneurs like excessively going into micro details of controlling the last penny, some like to excessively get into administrative tasks including why attendance of people on a given day is low, or attendance and punctuality with reports and calls to be made including sophisticated setups like CCTV for surveillance, expenses of people, seeking perfection in policies which really don't carry such significant impact etc etc etc Of course all these are important, undoubtedly... the question is, Is it worth your time!

I can go on with several examples but often a lot of time expended on such aspects means that other things are not getting the deserved attention which would strategically benefit the company, These are the "Need to Do" actions like aggressive marketing and business development strategies, rigorous review systems, branding, improving the quality of MIS, Embedding good behaviors as a culture, talent audit and review, digitization maturity etc Invariably and naturally we procrastinate such matters for a later date when everything is streamlined.

This reminder of what I should be doing vs what I am naturally polarized to is something that every CEO needs to remind oneself and the best starting point is have KRA's and goals for the CEO itself which cascades from the strategic/operating plan. A dashboard is another good example..

Bluesky's association with several CEO's convey that some indeed get it right and never get their eye off the big picture, some know they need to change but are not clear how to come out of the day to day trivia and some are blissfully unaware or in self denial..
I do hope you will start today assessing this aspect sooner than late. Tough times need tough actions and this indeed is a tough action....

Do share your views and experiences

Entrepreneur, managing Human Resource for the Mid-SME Sector : Blue Sky...

Everyone wants to go to Heaven but no one wants to Die....

Some time back I heard the above phrase from a Priest at a Sunday mass during his sermon. . The statement left a deep impact when I relate this to SMB’s. Every entrepreneur want to scale but no one wants to change!!

Most CEO’s of mid growing enterprises are excited and ambitious of the next level Growth but unfortunately are not ready to retire their present set of practices and methods of doing things to achieve results. Many imply, though not explicit-that let’s continue with these practices and still make it to the next level. Often the situation is more of bad habits dying hard. They believe that should change but just don’t find the resolve and urgency to adapt to the environment and systems that are aligned with next level growth. Those that demonstrate the rigor to change generally see results but that too after significant patience because such changes do not bring instant results. Often entrepreneurs  have limited tenacity and patience and the first sign of results not forthcoming is a good enough reason to revert to the previous system. Such approaches are regressive and slow down a Company’s growth momentum and at times even dwarf them to a size that they are unable to breach. In such cases a competent and experienced HR function or a change agent in the form of a Coach can help such corporations move forward from such a inflexion point.

Digitization in HR...HR is no longer joining formalities, final settlements and payroll processes

Pick a resume of any HR professional with an experience base of 1-5 years and invariably you will observe that the experience is inundated with trivial operational matters like joining formalities, master trackers, final settlements, induction, payroll and recruitment coordination.

While some of these tasks are essential and needed to be performed , the real problem is in this being the end in itself. Most of these HR professionals do not know much beyond this elementary work and hence are unable to provide solid value adds to the companies they advise.

Fortunately at Bluesky all these mundane tasks are handled by our in-house HRIS software called Bluebuddy which is introduced free of cost to our clients. Bluebuddy is more of a decision making support system for HR and CEO's informing you of the strategic decisions needed to be taken and also simultaneously relieving the HR professional of the operational chores.

Digitization in HR is finding great favour and initially while it focuses more on the operational chores like payroll and compliance's, going forward it would focus on aspects like talent pool, competency development and performance system.

SMB's do not have heavy budgets for HR and the budgets that they can expend get consumed in hiring HR professionals that relegate themselves doing such base level work leaving them with no time to handle the crux of HR challenges. In fact SMB's need support systems and advisory services on talent acquisition, accountability of people, measuring systems, compensation aligned with performance and talent depth.

I wonder if the present HR set of professionals are able to fill in these shoes...