DEVELOPING AN EMPLOYEE-OWNED ORGANIZATION

DEVELOPING AN EMPLOYEE-OWNED ORGANIZATION
Winston Riley
Winston Riley
Chief Executive Officer @ International Services Management | BPO Management

In this article I’ll explain the reason we decided to turn our company into an employee owned organization and what other leaders and business founders may want to consider, when thinking of building a company legacy based on giving back to the people who make your company what it is, your employees.

What is an Employee-Owned Company?
Employee ownership refers to an arrangement where no one person owns a majority of shares or holds control over an organization. An owner can grant workers stock shares or you can create a more elaborate business structure. You can form an employee-owned company during startup (which we hadn’t considered) or transition to it after owning your business for a while (which is how we’re doing it). Or creating a type of governance that gives voting privileges within a democratic system and letting that vote stand as policy. In this way, employee-owners have ownership decision-making ability.

Usually employee-ownership structures include one or more of the following concepts:

Members have governance rights, giving them control over operational or strategic decisions.
Employees own a substantial percentage of stock shares and benefit financially.
The business mission focuses on worker benefits.
Why ISM is transitioning to being employee owned
Here’s what is behind our decision to become an employee owned company.

First, it may be helpful to know that initially, when I started this company a few years ago, I did so by entering into a partnership with a large Filipino corporation. Now we’re independent and our only partners are our staff, management and by extension, our customers.

Our former business partner essentially ran the organizational side of the project management. We hired Filipino workers to do work for U.S. healthcare organizations. We had not yet expanded into offering other services besides within the healthcare industry. At that time, I was barely educated about the labor pool of the Philippines, or for that matter, with very little knowledge of their cultural conditions, both as citizens, and as employees, as parents, and as care-givers to their parents.

I had no real understanding of the great hardship to survive in the Philippines with a very harsh economic climate, where workers generally make far less than American workers. Regardless of profession or industry, often even when the Filipino worker is better trained with additional skills, there is a great divide between salaries of American workers vs. Filipino employees. I had not even learned yet that, in spite of earning far less than workers in the West, Filipino workers tend to maintain a humble attitude and hold their employer in great esteem.

Within less than a year, I fully grasped the hardship that Filipino citizens must endure. Life is not only difficult because of the incredibly high rate of poverty, but because the conditions they must endure, beyond their low wages, is shocking. Most Americans will never know how extremely lucky we are to be born and raised with true freedom and liberty and access to a living standard that far exceeds what over 90% of the Filipino population can only dream about.

But beyond my relatively naive understanding of the “plight” of the Filipino worker, I was also constrained by my own reluctance to be transparent about our business model. . What we did was hire Filipino workers but what we said was, “we outsource staff positions.” It is a subtle difference, but my own reluctance was based on my fear that employers hold it to be “anti-American” to hire workers in foreign lands.

I’ve learned now that in all cases, it is better to be straight forward in your messaging. We hire Filipino workers. Or I should say, we source extremely gifted and well trained and educated Filipino workers to help US companies and US businesspeople. But there is more to the “sales proposition,” than just reduced costs. But those other benefits will be better discussed in other articles. My point is that to arrive at the decision to transition to an employee-owned organization has been an evolving process, with many factors.

Give more than Credit. Share the Wealth
The principle reason to transition to an employee-owned organization is to be a better company, to be a stronger company. It isn’t simply a principle of morality, though that is an organic circumstance that compliments the decision. It is truly an economic process. The company equity and income is diverted and shared. Instead of the typical model of a corporation where either the stock-holders or the company founding principles reap most of the financial rewards and salaries are “just a number” on a spreadsheet, and considered as the biggest expense to a company.

In our employee owned model we have created a structure with generous sharing of both income and company ownership.

A business founder, such as myself will need to do a lot of soul searching because it requires letting go. If you own less than half of the voting shares, it means that the rest of the owners could circumvent your decisions and essentially go against your vision and plan. So, in designing an employee-owned structure, you need to “rethink” your position.

Instead of being “the man,” you need to be the coach. You need to seek deep wisdom, with true empathy. You need to really know your staff and you especially need to encourage management and staff to lead and develop the company. You need to be ready to step back, almost watch with binoculars with your hands tied behind your back.

You need to trust and you need to encourage and compliment and love.