Is it the Right Time for Canadian Employee Ownership?

It is no secret that our Canadian economy is changing. How does this relate to Canadian employee ownership?  A great question.

In Alberta, as in many other places across Canada, thousands of oil-related jobs have been lost. Downtown Calgary was almost impossible to drive through a year ago, yet now, rush hour is quite manageable – and it’s not because people are riding bikes.

With the current situation, we often hear from business owners that now is not a good time to consider an Employee Share Ownership Plan (ESOP).Canadian employee ownership

Is that true?  Let’s explore several points and I invite you to ponder.

Stock Market

Billions of dollars are invested daily by smart investors who purchase stocks in great companies that, for some reason or other, are devalued. As the company regains value through enhanced management, increased productivity, greater efficiency, and possibly a positive turn in the economic environment, these investors sell their stocks at a huge profit.

Conversely, billions of dollars are lost daily by those who purchase stocks at the top of the market.  Then as conditions change and the stocks drop in value, they hold on, hold on, hold on, pray, dance, scream and worry.  Eventually, in a panic, they sell when the value of their stocks are at, or near the bottom.  Bummer!

These cycles happen.

In your business, how does this relate?

Even if economic conditions have kicked you in the a… (the body part you sit on), now may be a great time to allow your great employees to participate in the next upward cycle – through Canadian employee ownership.

And although you may be passing on a minimal percentage of your company at a reduced price, you also get to participate in the longer-term growth and profitablity when the situation turns around.

Your great employees have worked diligently to allow your company to succeed so far.  How might they continue to do so when they own part of it?

Ahh, another point – accountability.

Accountability

Accountability is a buzz word that gets thrown around in lots of circles.  It is a powerful concept, but I don’t think most people really understand accountability and how it differs from responsibility.

As a business owner or executive, you can confer or demand responsibility from your employees.  As a condition of employment, they are responsible to show up, to perform tasks in certain ways and to create results for the company. However, they may just do the job as required, collect their pay cheque, and wait patiently for retirement.

Accountability is a frame of mind whereby the employee owns their own thoughts, words, actions and results. Because of this ownership mentality, they look for solutions and enhancements.  They see the business as much more than their own daily duties; they see the bigger picture and how their daily decisions fit into this picture. They view their part in the business as an important cog in the wheel that allows the machine to produce at optimal levels.  They understand that if one cog is deficient, it can be catastrophic for everyone.

This is the mentality that Ownership Thinking creates, whether your company is employee owned or not. The program shines for you with Canadian employee ownership.

On this note, I invite you to read the exceptional article by Loren Rodgers from the National Center for Employee Ownership (NCEO).  It’s the first article in the ESOP Builders recent newsletter.

I invite you to check out this great article on Entrepreneur Magazine which also describes this accountability in a slightly different way.

The best way to stimulate true accountability, is through providing employees with the opportunity to own actual shares in the company through an ESOP.  This naturally fosters a slight shift to greater accountability because they have skin in the game.

Which shifts us to another important point right now – resilience.

Resilience

The Merriam-Webster dictionary defines resilience as “an ability to recover from, or adjust easily to misfortune or change.”

Resilience is important all of the time because, as you know, there are continual bombardments of “misfortune” on any business – almost every day. A significant joy for many entrepreneurs is the creative and innovative process to leverage their resources to profitably and beneficially move beyond these events.

Canadian employee ownershipThere are dozens of research papers which demonstrate that companies who are owned by employees have much greater resilience. Tough times often require tough decisions.  A group of co-owners can generate amazingly creative ways to overcome any misfortune or obstacle.

It may mean that each owner makes some personal sacrifices.  That’s the way it works as an entrepreneur and business owner.  The flip side is that when business is once again going exceptionally well, the entrepreneur thrives.

Coming back to the original question.  When is the right time for Canadian employee ownership?

You’ll know the best time for you.  And the ESOP Builders team are here to support you in the process; to make it efficient, effective, value-full, and affordable for you.

In closing, I invite you to consider this metaphor.

Implementing a Canadian Employee Share Ownership Plan is much like planting a tree.  There are two best times to do it.  The first was twenty years ago.  The second best time is NOW!

by Dan Ohler, Employee Ownership Specialist

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