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Workshop: Employee Ownership and Governance: How Putting More Power in Employee Hands Affects Performance in Turbulent Times
Moderator: Christian Rangen CEO & Co-Founder, Strategy Tools and Engage // Innovate. Faculty, strategy & transformation
Toshio Gotō Research Professor, Japan University of Economics
Christian Stadler Professor of Strategic Management Warwick Business School
Radoslaw Kedzia Vice President of Huawei CEE & Nordic Region
Moon Jérin Co-Founder- Chief Marketing Officer at Vlinder, Industry Associate at UCL CBT
Drucker Forum 2021
I have always found the most inspiring roundtable talks to be those where the speakers have diverse perspectives on an issue that is critical, even existential. That was the case for the digital workshop on 10 Nov at the 13th annual Peter Drucker forum.
The official title was “Employee Ownership and Governance: How Putting More Power in Employee Hands Affects Performance in Turbulent Times”. The existential question is: What is the impact when employees have strong influence in decision-making? The answer from the workshop is resoundingly positive: It helps organizations thrive, from both financial and human dimensions.
Underlying themes of the conversation reflect deep changes needed in order to wisely benefit from employee power:
- Redefine the role of business in society to achieve sustainable, long-term, people-oriented values
- Rethink corporate structure and governance to make the new values real and actionable
- Recognize and enable the new mindset of seeking purpose, to ensure that top talent is energized and engaged
Evolving from shareholder to stakeholder value: the talk is not yet walked in most cases
It came up early in the discussion that the top leaders of organizations are not necessarily the strongest vectors for change and building value in today’s turbulent times. Incidentally, this corresponds to my own data over many years of surveys about the organization in the digital age where one of the top obstacles has been and still is senior management, rated in 2021 as a “serious concern holding us back” by 18% of the organizations and another 35% calling it a “manageable concern requiring special effort”. https://www.netjmc.com/senior-management-holding-us-back/
A widely publicized attempt to reform organizations starting from the top was carried out in 2019 by CEOs of major corporations, members of the Business Roundtable, who redefined the corporate mission to give it a stakeholder orientation after years of shareholder dominance. They stated that companies needed to invest in employees and deliver value to customers, protect the environment and deal ethically with their suppliers. However there were few specifics in the statement. The real impact of this initiative is debatable, as doubts emerge whether or not member companies have lived up to their joint mission statement.
In 2020 US Conference Board did a study with 1316 CEOs from 44 countries around the world that confirmed that the corporate mission was still lacking in relevant focus: Over 60 percent agreed that “redefining the corporate mission for the benefit of all stakeholders, including customers, employees, suppliers, communities and shareholders” is a post-corona major issue.
I prefer a stronger term than “issue” which I consider to be an easy way to avoid confronting problems head on. Issues are concerns with agreement and disagreement, and that’s not the case here. We have a clearly defined problem and need to look at how we can re-orient the focus of business from shareholder to stakeholder and to the employee in particular.
Several approaches were proposed in the workshop discussion. They are not options to choose from, but rather approaches that potentially fit together and can help organizations reach higher goals beyond what we traditionally call “doing business”.
Involve more voices at the table when defining strategy
As cited by one member of the workshop, “companies are made by and for people”. The people dimension has long been neglected in decision-making in most companies and countries. We need to reach the higher levels in the Maslow hierarchy of needs: sense of belonging, recognition and self-actualization.
Part of the answer is to include employees in strategy discussions and process. Strategy and implementation are usually separate but if we open up and involve people, the separation is no longer there. People can think “what do I have to do in my spot, in the role I’m in, to make the strategy operational?”.
Ensure that people have a sense of real ownership
From a tangible, monetary approach, employees can be shareholders, actual owners of shares in the company. From an intangible, but equally, if not even more powerful approach, employees can be direct participants in the governance structure. This may be from being part of decision-making bodies as well as having employees elect board members.
Organizations that genuinely involve employees reap benefits through better organizational performance. An example discussed was that of Huawei, a company that is owned and governed by the employees through their Representative Commission, its highest decision-making body.
Enable the purpose mindset
The search for purpose has emerged more than ever before because of the pandemic. It may be that people are reflecting about the why behind their work. Many have had a new vision of their work since, often based at home, they have reconnected with family more, and avoided long commutes. Some may have simply rethought what they want from their lives.
They may have decided to re-orient their work lives, which is not easy inside companies organized by functions and operational units. Most organizations do not encourage people to learn new skills in new environments or disciplines. You may call it reskilling or upskilling but whatever the term, giving people the freedom and opportunity to evolve is a means of keeping them motivated and committed.
Involvement, ownership and purpose
These three short words sum up the focal points of the deep and fast-moving discussion about putting more power in employee hands. I only wish we could have continued the conversation longer! I’d like to close this brief summary by combining two quotes from Peter Drucker. The first, and theme of this 13th annual conference is “Management is about human beings” from The New Realities, published in 1989. The second is “The task of management in the knowledge-based organization is not to make everybody a boss. It is to make everybody a contributor” from Post-Capitalist Society, published in 1994.
The two quotes meld beautifully.Instilling a means of involvement, a sense of ownership and a context to live one’s purpose will result in people becoming genuine contributors, which will in turn ensure their organization thrives in turbulent times.
About the Author:
Jane McConnell, author of The Gig Mindset Advantage: A Bold New Breed of Employee, has conducted 12 years of research on organizations in the digital age, and has worked as a digital strategy advisor with large global organizations for 18 years. She can be reached via her website https://www.netjmc.com and @netjmc on Twitter.
This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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