Developing a High Performance Ownership Culture

1. Developing aHigh PerformanceOwnership Culture The ESOP Association New South Chapter Fall Conference Orlando, Florida October 18, 2012 Alex Moss Praxis Consulting Group, Inc.

2. Agenda • Attendee demographics • Success Drivers & Employee Ownership Foundation • Ownership Culture framework & tools • Discussion TEA New South Chapter | Ownership Culture

3. Who’s Here? • Size: employees • Over 1,000 • Over 500 • Over 100 • 100 or fewer • ESOP % • 100% • Majority (50%+) • Minority (under 50%) • C-Corp / S-Corp • Leveraged / Unleveraged • ESOP age • Over 20 years • Over 10 years • Over 2 years • 2 years or less • Board of Directors • Internal / external • ESOP Trustee • Internal / external • Professional advisors • Guests TEA New South Chapter | Ownership Culture

4. ESOP Success Drivers TEA New South Chapter | Ownership Culture

5. Employee Ownership Foundation: Silent Auction • Goal • $4,000 • Progress: $2,000, so far • Drawing: coming right up! • Impact • Jobs research • Other performance research, Kelso (& other) Fellowships • UPenn CEO program • Case studies: www.caseplace.org, CLEO • Edmunson Scholarships TEA New South Chapter | Ownership Culture

6. Future Vision [From Southwest Chapter, September 2007] • Imagine that it’s October 2012, and you are celebrating the past 5 years’ achievements under employee ownership • In what ways does your company look the same? • In what ways do we look different? • Stories that illustrate our success? • So: what are you learning? TEA New South Chapter | Ownership Culture

7. The Big Picture:Alignment Drives Performance Strategy High Performance Culture Leadership TEA New South Chapter | Ownership Culture

8. Employees Generally Value: • Payroll • Cash: today • Security: next month / next year(s) • Job quality • Work environment: people, physical • Learning / advancement opportunity • Making a difference • Short term benefits, e.g. vacation, health care, profit sharing, etc. • Retirement benefits, e.g. Pension, 401(k) • Ownership = ESOP TEA New South Chapter | Ownership Culture

9. Intrinsic Motivation: Daniel Pink “There’s a mismatch between what science knows and what business does.” • Extrinsic motivators work for narrow, fixed, known tasks • Intrinsic motivators work for the kinds of problems that increasing define our work and our economy • Autonomy • Mastery • Purpose TED talk: www.ted.com/talks/dan_pink_on_motivation.html Book: Drive TEA New South Chapter | Ownership Culture

10. Ownership Culture • Running your company so that employees think, feel and act like co-owners • Employees at all levels • understand who decides what and why • have access to structures, training, information and management support for participation • participate actively, effectively and appropriately to continuously improve company performance TEA New South Chapter | Ownership Culture

11. ESOP Governance…and Opportunity ESOP Committee: Promote Ownership Shareholders Individual Owners ESOP Trustees select elect are represented by Board of Directors appoint and oversee ESOP Participants CEO / President hire and oversee when meet eligibility requirements Leadership Team hire and oversee Employees TEA New South Chapter | Ownership Culture

12. We Know It Works: Sample Research Findings • Dramatically lower job loss during Great Recession: ~4:1 • Improved worker productivity • Increased sales growth rate • Reduced employee turnover • Substantial individual account balances • Better retirement benefits: ESOP + other TEA New South Chapter | Ownership Culture

13. How do ESOPs Affect Business Performance? TEA New South Chapter | Ownership Culture

14. Bottom Line • The ESOP creates an opportunity for you to share the wealth you help create • The data is on your side: it can be very successful • There are no guarantees, success is up to you TEA New South Chapter | Ownership Culture

15. What Kind of ESOP Do We Want? Level of Engagement Culture Change Fantasy ESOP Change Supporting Pillar Benefits Only TEA New South Chapter | Ownership Culture

16. How: Step 1 • Formulate “Ownership Vision” linked to business strategy: what’s the value of being employee-owned, what does “good” look like? • Finance • Independence • Operational • What evidence would tell you that it’s working? TEA New South Chapter | Ownership Culture

17. How: Step 2 • Clarify “Ownership Behaviors” • What should employee-owners do? • What do leaders & managers need to do to support this? • Learning goals • What knowledge & skills does each group need to support these behaviors? • What will you track / measure? TEA New South Chapter | Ownership Culture

18. How: Step 3 • Assessment & gap analysis • What are we already doing that is most successful? • What is consistent with ownership culture…we just don’t call it that? • What do we need more of? • What do we need less of? TEA New South Chapter | Ownership Culture

19. How • Step 4: Planning & ongoing execution • Education & communication • Incentive alignment • Participation structures / mechanisms • Step 5: Monitoring & evaluation • Periodically review data • Corrective action • Learning & continuous improvement! • Step 6: Lather, rinse, repeat TEA New South Chapter | Ownership Culture

20. It’s a Balance • Passion • Planning • Resources TEA New South Chapter | Ownership Culture

21. Discussion / Questions TEA New South Chapter | Ownership Culture

22. Contact Information Alexander P. Moss Principal Praxis Consulting Group, Inc. 9 West Highland Avenue Philadelphia, PA 19118 www.praxisCG.com alex@praxiscg.com 215.753.0303 Article: “Building Long-Term Value: Developing a High-Performance Ownership Culture” www.praxiscg.com/published-work/building-long-term-value-developing-high-performance-ownership-culture TEA New South Chapter | Ownership Culture