Christopher Mackin, President, Ownership Associates, Inc.
Cambridge, Massachusetts, USA
International Conference on Employee Ownership and Business Success
Bled, Slovenia, October 23 - 24, 1997
The Technical Challenge
The Psychological Challenge
The Ideological Challenge
The Structural Challenge
I would like to begin my remarks today by outlining what our firm sees as four general
challenges that face employee owned firms that are committed to fostering what we refer
to as an "ownership culture," which we define as a specific form of organizational culture
where workers and managers alike can be found to "think and act" like owners. These four
challenges are introduced here in the sequence in which, from a training point of view, they
are best confronted and in order of the difficulty one can expect in confronting them, from
the least difficult to the most. The challenges are as follows: First, Technical, Second,
Psychological, Third, Ideological and Fourth, Structural. Our focus today will be on the
third of these challenges, which we refer to as the ideological challenge of building
consensus in a workforce about the meaning of employee ownership.
The training objective of this first overall challenge, what we have called the technical challenge with its distinct legal and business/financial components is to create a basic level of competence about the fundamentals of ownership. It is a challenge that is fundamentally about learning the what might be called the "facts and figures" or the "rules of the road" of your business.
1. The Technical Challenge
The first challenge is what we refer to as the technical challenge. This is the challenge of mastering the facts of employee ownership, starting with first with the legal circumstances surrounding the ownership relationship. Those circumstances can be summarized by reference to a series of questions -- who owns the company? what is the currency of ownership (presumably stock)? how is it acquired? what are the legal rights and responsibilities that face stockholders? how can stock be transferred or sold, if at all? and what benefits and risks do stockholders assume as result of their stock ownership. A second dimension of the technical challenge pertains to mastering the technical language of business, that is the variety of financial and business concepts such as income statements and balance sheets profitability, cash flow, that underlie business decision-making. This challenge is obviously a potentially large one insofar as it involves an understanding of concepts that make use of at least a modest understanding of mathematics. It can, however, be introduced in stages. This subject matter is the focus of considerable training interest in the United States of late. Perhaps the best known of the training efforts that focus on this particular challenge is something called the Great Game of Business associated with a gentleman by the name of Jack Stack and a company by the name of Springfield ReManufacturing Corporation in Springfield, Missouri. The Great Game of Business is an effort to introduce business concepts through a variety of interactive training methodologies.
2. The Psychological Challenge
The second ownership culture challenge moves out from a focus on training content and into the realm of psychological theory and practice as applied to the workplace. This challenge we call the Psychological Challenge. It's objective is to treat a complex social psychological phenomenon summarized as "Resistance to Change." Of the four challenges summarized here today, this second Psychological one is perhaps the most vast and complex. For our purposes here I will limit my description to the ancient Newtonian principle known from physics that 'bodies at rest tend to stay at rest.' In this context, however, the Newtonian description applies not to rocks but to managers and workers. While technology and markets may be changing our worlds with lightning speed, the habits of human beings -- to accumulate authority and privilege to minimize risks and to do things 'the way they have always been done' is a notoriously difficult framework to change. And the creation of a true ownership culture most often requires changes in these domains. The work of overcoming resistance to change in organizations has been the subject of many articles and books. From those we can discern certain general principles to guide the process. There is also, however, a vast particularity to this challenge. So much depends upon the context and on the personalities and histories of individuals and groups. Tools used to help overcome resistance to change vary from the relatively benign, such as encouraging a process of critical self-reflection in individuals without pressure or the threat of sanctions to the dynamic, where subtle forms of persuasion from education to discussion to group or peer pressure might apply to the more forceful, such as the use of voting and referenda. For today we can only acknowledge important role of this challenge and see in it a series of distinct problems and riddles which the advocate of change must confront.
3. The Ideological Challenge
The third challenge, which we call the ideological challenge, brings us to the major topic of my time with you today. It has significant social psychological dimensions that will remind us of the second challenge but it nonetheless can be viewed as distinct. We see in it the challenge of sorting out or "unpacking" the range of meanings that western cultures in particular bring to the language of ownership and, its related and in some sense senior concept, property. Because these meanings and this general challenge speak to a core of what are often described as "political" questions about what is possible and/or desirable in structuring arrangements of property and power, we refer to this challenge as an "ideological" challenge. Ideological challenges are among our most difficult challenges. They are pregnant with the possibility for simplification, attribution and accusation. They therefore must be approached extremely carefully. Before they are taken on, before they are applied to the complex question of how we organize ourselves in employee-owned companies we believe they must first be "unpacked" or "defused."
3.1 The Cultural Meaning of Ownership
I would like to contend here today that "ownership" is one of the signal concepts of Western culture, the flag and religion being two others, that most everyone claims to understand. Everyone seems to have a "theory" of what ownership should and should not mean. The apparent accessibility of the ownership concept to workers and managers, experts, and non-experts alike, is the quality that makes it most interesting. It is also, however, the same quality which underlies both the enormous constructive and destructive potential of the ownership idea when applied to the workplace setting. Because while everyone has a theory about ownership, not everyone has the same theory. And while it may be perfectly acceptable for different and contending theories to remain unresolved in a university seminar room, the closer quarters and financial contingencies of the workplace require at least a modicum of consensus in order to achieve successful commercial results.
In order to approach the idea of employee ownership in the workplace context, I would suggest that a first distinction be made between "perceived" ownership and "actual" ownership. "Perceived" ownership consists of the accessible impressions or definitions that employees of any rank in an organization bring to the employee ownership setting. Those definitions are rooted in social life and in personal experience with the idea of owning proper of various kinds. "Actual " ownership is subject to debate. Lawyers, economists, and philosophers may agree or disagree about what actual ownership might be. For us, actual ownership consists of a formal model about the various dimensions of the ownership idea that we will describe further in a minute.
Effective consulting in this field requires a clear understanding of how workers and managers perceive ownership in a particular setting. No two settings are entirely alike. Understanding the differences between perceived ownership and a logically defensible model of actual ownership is what informs much of our consulting to the employee ownership community. Our model of ownership is constructed from nearly two decades of listening to workers and managers talk about the meaning of ownership. The model helps to define a common vocabulary, a common point of departure about ownership. At the most general level, we claim that "business ownership" involves two fundamental domains of "organizational" and "economic" life. Organizational life involves membership or people issues. Economic life involves business and money issues. Businesses exist simultaneously in both domains. Businesses are social organizations but they must be distinguished from other kinds of social organization such as churches or clubs which are not subject to the pressures of a competitive marketplace. On the other hand, businesses are not just profit machines; they are also imbued with all the complexities of personality and power and social psychology that accompany life and work among human beings.
3.2 Balancing Rights and Responsibilities
The organizational life dimension of business gives rise, we believe, to a whole set of distinctions about the rights and responsibilities of ownership. The economic life dimension, on the other hand, gives rise to a second and related set of distinctions about the risks and rewards of ownership.
What is the relationship of these concepts to each other? Borrowing from western political and legal traditions, we believe that the imagery and the metaphor of the scales of justice provides a promising way to understand and discuss these issues. That is to day, for every right of ownership for which you, as an owner, may feel a sense of entitlement, there is a commensurate or balancing responsibility. So if, for example, employees are interested in voice or influence over decision-making, then there must be a commensurate responsibility to distinguish among different kinds of voices. Not all voices are the same on all issues. There is a responsibility to make that distinction, to recognize when voice must also be accompanied by or balanced by expertise. On yet another dimension or organizational life, we suggest if you, as an employee owner, are, understandably enough interested in new levels of fairness from the workplace you own, well, it is also legitimate for your workplace to expect a new level of commitment from you as a member of that organization.
On the economic side of the ledger, in terms of risks and rewards, if you are interested in the rewards of ownership there needs to be a corresponding understanding of risk. In other words, if you're interested in getting that bonus or a share of the profits, it's fair for the organization to expect you to have to innovate and invest to earn it. This is again what distinguishes workplace organizations from community organizations. Workplaces don't exist in social time, they exist in economic time. They exist in a thoroughly contingent context of risk taking. Here today may be gone tomorrow.
This preliminary description of our ownership culture model attempts to build both a logical framework and a common vocabulary through which we can talk to one another about the nature of ownership. The scales of justice imagery we use suggests that a positive ownership culture is one which is balanced, where rights are balanced with responsibilities and rewards are balanced with risks. From our research and consulting experience, we generally find there are a lot of people who neglect this balance.
To illustrate, the rights-only and rewards-only folks are people who tend to look at ownership from an individualistic or egoistic perspective. They tend to ask, "What's in it for me?" On the other hand, the responsibilities-only or risks-only people tend to see ownership in a paternalistic way. Those with a balanced perspective on ownership, however, look at ownership as a "membership" or "partnership" concept.
Finally, there's this whole ocean of people surrounding these categories, people we might call "ownership skeptics." These are people who don't necessarily declare themselves one way or another, and who are, in effect, waiting to see genuine evidence of how leadership and management will treat this issue before they decide to get into the boat and begin to row.
The most revealing data we have gathered from this rights-and-responsibilities/risks-and-rewards framework is that the two major workplace populations, management and workers, often occupy different, unbalanced ends of the spectrum on these ideas. Management, we find, is generally negative about the rights of ownership but positive about responsibilities; they are positive about risks but negative about rewards. Their message to their workers can be characterized as the following: "Act like an owner, sit down, and be quiet." Workers, on the other hand, are often positive about the rights of ownership but negative about responsibilities; they are negative about risks but positive about rewards. Their message to management is, "Reward me like an owner but treat me like an employee." They want all the righteous new "good stuff" of ownership while still being able to externalize and blame, without assuming new levels of responsibility.
3.3 Applying Rights and Responsibilities
At United Airlines and at other client companies, we have begun to help management and workers engage these different perceptions through something we call "R&R Groups" or rights and responsibilities groups. We go into companies and listen to how worker ownership is discussed around the water cooler, the lunchrooms and the board rooms. From that data we proceed to write sample cases that capture how ownership is actually being talked about in those settings. The cases are then fictionalized a bit to protect our informants and then used as a practical tool to initiate discussion, to get managers and workers who "role play" various characters that are depicted in these cases to talk to each other, and confront the limits of their various interpretations about the ownership idea. This approach to training is part classroom and part psychodrama, it is partly serious and partly theater. What it does is encourage a kind of exchange between workers and between workers and managers that is not often experienced in conventional training sessions. Due in part to the device of role playing, in Rights and Responsibilities Groups workers and managers get to say things to each other that they would not ordinarily get to say. They get to assume perspectives, or roles, they do not ordinarily assume. And by doing so they get to see what the world looks like, or more particularly, what the organization looks like from a different vantage point.
With adult learners, the research is pretty clear: if you're going to try to build a consensus, you can try to do it through a charismatic CEO, or a charismatic consultant who may shed light where there is no darkness, but that will only take you so far. If you're going to try and change the hearts and minds of adults, you have to get them talking to each other. And you have to find a method, a technology if you will, for pushing the ownership conversation forward, while using their concepts and their words and not just the formulations of so-called experts. Rights and Responsibilities Groups are one such technology.
4. The Structural Challenge
The fourth and final challenge of building an ownership culture is what we call the structural challenge. This is the challenge that goes beyond training and into the machinery of corporate decision-making. While this is a distinct challenge, it is a challenge that involves technical, psychological and ideological content. The structural challenge, after all, is the challenge that deals most squarely with issues of power, authority and accountability. It is the challenge that speaks to the expectations of employees -- who are now being called owners -- to be heard and to be able to influence events at "their" firm. More specifically, this challenge speaks to the design of various decision-making arrangements. Who gets to make decisions in an employee-owned firm? Do the employees get to make any decisions? And if they do, do those decisions ever reach beyond the scope of their immediate work area?
These questions strike that the heart of most management anxiety about the idea of employee ownership. For it is the idea of ownership that seems to embolden employees to pose these larger questions, pose them more sharply and consistently than would be the case if the organizational intervention being discussed was a total quality program or even a program emphasizing team decision-making. Our response to this anxiety, to this challenge, like our response to what we call the ideological challenge of ownership language, is to try and "unpack" the problem to see if it is possible to reduce it from its ominous largeness to a more manageable and understandable set of issues
When going about that process of unpacking the structure problem, we have recognized that given the high stakes that are up for grabs, the first step is to figure out how to create conditions of "psychological safety" both for workers and managers so that the conversation about structure can begin in the first place. The problem which this fourth challenge, the structure challenge, presents is not first and foremost a challenge about the viability of any particular theory or model of participation, it is a challenge about the necessity of having at least one clear theory or model that can be contested. The enemy of progress in this realm we have found is not theory, it is ambiguity. Ambiguity breeds paranoia. Paranoia consists of the most colorful and usually ridiculous assumptions which each side has about what the other side wants. When paranoia is present, the structure discussion gets nowhere.
To further illustrate what we mean by this notion, or more particularly what is needed to overcome it, we have taken to quoting a twentieth century American poet, Robert Frost, who asserts in one of his more famous poems called Mending Wall the simple notion that "Good Fences Make Good Neighbors." If one listens closely to that idea, it becomes clear that it is a statement not in favor of drawing boundaries anywhere in particular, it is, instead, a statement in favor of drawing boundaries somewhere.
What the structure discussion in employee owned companies should be about is, in essence a constitutional process, a kind of constitutional convention if you will for drafting or designing a set of boundaries which clarify divisions of labor and the responsibilities of different groups. The result of that process should be a set of clearly drawn boundaries backed up by clearly presented arguments that explain why boundaries are drawn the way they are drawn. Those arguments should not, of course, be presented as a 'fait accompli.' They should be presented in a way that invites discussion and differences to emerge, and for the "constitutional design team" that is responsible for drawing them to be prepared to go back to the drawing board to take into account the comments of employees. What the structure discussion also requires are two additional and final commitments. First, a commitment to the principle that it is possible and even desirable to change boundaries -- through future constitutional conventions -- when experience has taught us that they no longer fit, and second, and just as importantly, a commitment by groups of employee owners to abide by a given set of agreements, a given constitution, for definite intervals of time even if the limits of a given model have begun to show themselves early.
The success of a participatory approach to the challenge of structure may ultimately not be in its precision, in its ability to capture just the right amount of participation that is desirable or possible at a given company. That success instead will lie with its legitimacy of a constitutional process, with the degree of respect and identification the architects of these structures can ultimately evoke from their participants.