First, Clean the Toilets
Some call it company culture. Others call it company personality. Everyone who knows anything calls it the most important component of truly successful companies. For many companies, the highest bar is an effective “ownership culture.” But what does that really mean?
Can we build an ownership culture by granting it or selling it? Is it possible to communicate our way to this impressive goal? If it’s compensation that can do this, why is it so elusive?
The story in the article found here gives a visceral example of what it really means to be an owner. A school principal in Dallas had a dilemma. The custodian had to leave for an emergency. Kids continued to use the facilities. It was either blame the situation or be an owner. Principal Davis chose to clean the toilets. That is ownership.
I have never seen the owner of a company walk past a piece of garbage on the ground. They always stop and handle it. Owners don’t pick up garbage because they are paid to, they do it because garbage on the floor doesn’t make the business better. If you leave one piece, then why not leave 3, or countless pieces.
I have seen executives volunteering in the evening or on the weekends at their kid’s football or theater practices, or fundraising events. I have seen these same highly paid leaders unblock a toilet without thinking twice. Some of them would do the same thing at their place of work…most would not. That is the challenge.
For at least three decades it has been argued that the solution for this challenge could be found in various equity compensation plans and Employee Stock Ownership Plans (ESOPs.) I am here to tell you that the plans by themselves will do little for your culture. They almost certainly fail in getting someone to scrub the porcelain. Simply making someone an owner will make them act like an owner. The ownership must come first.
This starts with the top of an organization. If the CEO acts like an owner, you have a chance. If not, the plan will be mediocre at best and an abject failure at worst. If the CEO is not inspired to do the little things that an owner does, there is no way to convince anyone else. This doesn’t mean the company will fail, it just means you will need to use something other than equity compensation to support your success.
The HR department or Director of Compensation who roll-out a program without a passionately supportive CEO are swimming against a killer riptide. Even the very best designed plan and communications have no chance to succeed. But if the CEO is honestly supportive, even a less than stellar plan can have an impact beyond its cost.
Before you decide to roll-out a new long-term incentive plan make sure you know who you are as a company. Creating a culture of ownership can be as easy or as hard as getting your CEO to clean the toilet. If you know the answer to that challenge, you have already done the hardest part.