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(“…How to Get Workers to Think and Act Like Owners…”

(“…How to Get Workers to Think and Act Like Owners…”. Covel, S. (WSJ, Feb. 7, 2008). Management Activities (from Montana and Charnov). Planning Leading Motivating Organizing Coordinating Staffing Controlling. Article Summary. Van Meter Co. Multiple locations in Iowa

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(“…How to Get Workers to Think and Act Like Owners…”

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  1. (“…How to Get Workers to Think and Act Like Owners…” Covel, S. (WSJ, Feb. 7, 2008)

  2. Management Activities (from Montana and Charnov) • Planning • Leading • Motivating • Organizing • Coordinating • Staffing • Controlling

  3. Article Summary • Van Meter Co. • Multiple locations in Iowa • HQ in Cedar-Rapids, IA • Electrical-parts, 340 employees • Employee Stock Option Plan (ESOP’s) • Principals • CEO, Rod Reinertson • CFO, M. Slinger • Account Manager, Greg Tigges

  4. Planning • It’s a five-year process—culture changes slowly—so combine short-term and long-term planning • First thing is that we, the ESOP committee, needs to understand how the ESOP program works ourselves • Executives should incorporate measurable improvements into strategic planning system • Reduction in personnel turnover (from 18% to 8%) • Stock price is up 78% • Augment above quantitative data with qualitative feedback (ws)

  5. Leading • CFO--Enough self-awareness to learn that different individuals view the ESOP program differently ( “culture”) • CFO--Further, intuitively knows that those differing perspectives are likely to be negatively impacting financial performance (“norms”) • Change communication semantics • From dollars in income and stock value to “work 10, get 5 for free” • from annual “percentage growth” to equivalent “number of weeks worked” • Individuals take responsibility for life-long learning (including principles of finance, for which, even many college students didn’t take)

  6. Motivating • Initiate a new “guess the ending stock price” competition for employees • $300 (“extrinsic motivation”) • Employees—some just want more “beer and cigarettes” (but at least he is honest) • Encourage employees to think about cost reductions (“intrinsic motivation”) • CFO’s job “went from a one-man show to a lot more joy and satisfaction working with others.”

  7. Organizing • CFO--takes himself off of the committee (he is the “technical expert”, but this is fundamentally a management issue, not a technical one) • Committee of Peers (results over ego—so let the respect of the committee members drive the performance) • Democracy, even in a for-profit firm—let the staff vote on who should even be on the committee

  8. Staffing • Revisit new employee training strategy • Implement new six month “I am in” reward system (plus you get a nice jacket to wear) • Make intangible reward system more tangible

  9. Coordinating • ESOP Committee talks with other peer companies to get “best practices” and avoid “worst practices” • Use small-group sessions; not just one-time, annual large-group stockholder meetings • Also use small-group meetings to discuss cost savings ideas (“quality circles”)

  10. Controlling • Keep focused in increasing shareholder (owner) value • Often through cost reduction • Cut expenses • Improve Debt Collection

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