The Equity Model: Principles

Three Key Elements

1) Equity itself — stock ownership significant enough that it matters to employees' financial future.

2) A culture that helps people think and act like the owners they are

3) A shared understanding of key business disciplines, and a common commitment to pursuing them

The Equity Model: Principles

“…our model has two ancestors : employee ownership, on the one hand, and what has been called participative (or participatory) management, on the other. The combination of the two makes for a particularly powerful change in employees' attitudes and actions, hence for a dramatic improvement in business performance.” (42)

The Equity Model: Successes

Development at Stone Construction Equipment ESOP (Employee Stock Ownership Plan) Retirement Plan (one person working for 24

years had $100,000 in stock equity) Increased productivity, decreased labor needs:

from 300 employees down to 200 Versatile, flexible, and innovative workers Still thorough planning and disciplines, especially

lead production Fast-paced work and high expectations of

employees

The Equity Model: Successes

Other Examples: W.L. Gore & Associates, King Arthur Flour (Norwich, Vermont, 100

employees)Taking towels home to wash

SAIC (San Diego, $7 billion in revenue)“As an employee owner, I think we should…” (29)

Scot Forge (Chicago, 500 employee shop)Work weekends if need to get the job done, but not

asked to Southwest Airlines

The Equity Model: Quotes

“The central phenomenon we observed in the businesses we visited-in fact, it may be the defining characteristic of an equity company-is a particular attitude, a turn of mind that most of the people at Stone Construction Equipment seem to have taken to heart . It might be de- scribed with the phrase This is our company, and we will do whatever is necessary to help it succeed. This attitude shouldn't be idealized or taken lightly. It is difficult to engender and to maintain . It typically entails a ton of hard work and extra effort.” (25)

The Equity Model: Quotes

“…we heard versions of this attitude not only at Gore, but at companies large and small, in many different industries, from veteran employees and those more recently hired, from professionals with PhD's, from managers with (and without) MBAs, and from frontline workers with high school educations.” (27)

The Equity Model: Quotes

“It should be noted that this attitude turns a couple of centuries of capitalist history on its head. Employee ownership and equity-based management, if we can call it that, establish a rough unity of interest between management and labor, and between owners and employees. It puts people who traditionally have fought with each other, or at least regarded one another with perpetual mistrust, on the same team.” (31)

The End