Research Reveals Employee Ownership Leaders Are Unique
Richard Elsner, Founder, Pivotal Moment Leadership Development shares his recent findings, revealed at the EOA Annual Conference, on common features in leadership practice shared amongst employee owned businesses.
There is something different and special about leadership in employee owned (EO) companies. And it is almost impossible to copy unless you are an EO company. How about that?
In an enquiry into leadership in five well-established and successful EO companies in October 2014, I found a number of common features in their leadership practice, which are more than just good leadership. They are distinctive features, which are only found in companies which have made the jump to being EO. And this leadership is absolutely central to how these EO companies behave and to why they achieve the outstanding success they do.
Sound implausible? Read on. You will probably recognize the five companies I met with, CSH Surrey, Golder Associates, Gripple, John Lewis Partnership and Make Architects as outstanding performers in their fields. In the interviews he conducted, I found that their leaders displayed the essential “entry ticket” features of good leadership practice that one can also find in a well-managed non-EO firm, such as high visibility, a capacity to engage colleagues, to craft good strategy and to communicate effectively but I found that EO firms have something additional in their leadership, which is distinctive and of a piece. I found that:
- Not only are employee-owners given greater accountability for results by managers, but managers are regularly held to account by employee-owners for the policies and strategies of the company. That is big news.
- Because of less hierarchy in an EO company, the quality of interaction between leaders and frontline employees is very honest. Telling one’s truth is the rule.
- Leadership is more devolved in EO companies than in non-EO companies. This means people at every level are expected to lead teams, direct their own work and contribute to others’ work. This gives customers a far better experience.
- Leaders in an EO firm continuously seek to achieve a workable balance between profit and people. This is not fixed once and for all, but shifts emphasis from one side to the other, depending on circumstances. Too much priority to sales and profit will depress the customer experience over time; too much priority to customer or employee-owner needs will depress financial performance over time. To obtain this balance by the firm overall, every employee-owner needs to balance profit and people in their decisions on a daily basis. Is that empowerment or what?
- Leadership is subtly but deeply ethical in an EO firm. Being ‘ethical’ means working from the inner conviction that a firm’s purpose must be to create better and happier lives for all whom it touches. The finality of business cannot be business itself. Business needs to contribute to society and to the environment, much as without society and the environment a business could not exist.
I believe that EO firms are defined by this leadership, and because of the way they interact with their customers and their community, they offer the promise of a more deeply successful and sustainable form of capitalism.