The Secret Ingredient of Business Success | Pete Stavros | TED

TED

26 Apr 202413:07

Summary

TLDRThe speaker, an experienced investor, recounts his first job at 24 and the profound impact of stock ownership on employees, from CEOs to mid-level staff. He shares a touching story of an assistant treasurer whose payout meant a college education for his children, sparking a vision of universal stock ownership. The speaker's father, a union worker, dreamed of worker ownership to address wealth inequality, lack of incentives, and voice in the workplace. Through his career, the speaker has promoted employee stock ownership, leading to significant improvements in company culture and performance. A case study of Chi Overhead Doors demonstrates how giving all employees stock ownership, coupled with transparency, education, and a voice in decision-making, can transform a company and community. The resulting wealth creation can have a lasting positive impact on local economies. The speaker's nonprofit, Ownership Works, aims to expand this model to a million workers, advocating for Employee Stock Ownership Plans (ESOPs) to foster an inclusive and sustainable form of capitalism.

Takeaways

🎓 The speaker's first job as an investor involved overseeing wire transfers for a business sale, highlighting the importance of shareholders receiving their money.
🏢 Companies of all sizes have shareholders, and as the company's value increases, so does the wealth of those who own shares.
🤝 The speaker's company extended stock ownership to employees from the CEO to mid-level roles, aiming to align employees' interests with the company's success.
📈 The emotional impact of stock ownership was evident when the assistant Treasurer, who received a smaller payout, was deeply moved by the potential for his children's college education.
👨‍👩‍👧‍👦 The idea of broad employee stock ownership can significantly impact employees' lives and the community, leading to a more inclusive and sustainable form of capitalism.
👷 The speaker's father, a union construction worker, dreamed of worker ownership to address wealth building, productivity focus, and a voice in the company.
📊 Stock ownership, or the lack thereof, is the primary driver of wealth inequality, with only a small percentage of workers granted ownership in their companies.
🌐 Globally, a significant number of employees are disengaged at work, which the speaker aims to change through broader employee stock ownership.
📚 The speaker has been researching and advocating for employee ownership for over 25 years, starting with a paper in 2002 and later implementing it in various companies.
🚀 A successful case study is Chi Overhead Doors, where all 800 employees were granted stock ownership, leading to improved productivity, quality, and a tenfold increase in company value.
💰 The financial success at Chi Overhead Doors resulted in life-changing payouts for employees, with the most tenured workers earning significant multiples of their annual income.
🏆 The speaker and his wife started a nonprofit called Ownership Works to promote employee ownership and help companies adopt this model, aiming to impact a million workers and create tens of billions in wealth for working families.

Q & A

At what age did the speaker start their first job as an investor?
-The speaker started their first job as an investor when they were 24 years old.
What was the speaker's initial task related to company sale?
-The speaker's initial task was to oversee wire transfers related to the sale of a business, ensuring all shareholders received their money.
What impact did the assistant Treasurer's ownership payout have on his family?
-The assistant Treasurer's ownership payout meant college education for his kids, which was a significant emotional and financial impact for him.
What three issues did the speaker's father want to address with worker ownership?
-The speaker's father wanted to address the inability to build wealth on $20 an hour, lack of incentive to care about productivity, and having no voice in the company.
What percentage of employees globally are disengaged on the job according to Gallup surveys?
-According to Gallup surveys, 77% of employees globally are disengaged on the job.
What is the speaker's belief about broadening Employee Stock ownership?
-The speaker believes that broadening Employee Stock ownership is the single most important thing that can be done to lift up workers and make companies stronger, potentially leading to an inclusive and sustainable form of capitalism.
What was the key takeaway from the speaker's early efforts in sharing stock ownership with employees?
-The key takeaway from the speaker's early efforts was ensuring that stock ownership was free and incremental for workers, not a trade for wages or other benefits.
What was the name of the company the speaker invested in, which was based in Central Illinois?
-The company the speaker invested in was called Chi Overhead Doors.
How did the company Chi Overhead Doors change its culture and improve employee engagement?
-Chi Overhead Doors changed its culture by granting stock ownership to all 800 employees, educating them about the business, keeping them informed, sharing financial information transparently, and giving them a voice in company decisions.
What was the financial impact of the ownership program on the company Chi Overhead Doors?
-The financial impact was significant, with the company being worth 10 times what it had been worth in 2015, making it the single best investment for KKR since the 1980s.
What was the community impact when Chi Overhead Doors was sold?
-The community impact was substantial, with $340 million of wealth injected into the community, which could lead to more tax revenue, better schools, new business formations, and a more robust local economy.
What is the mission of the nonprofit 'Ownership Works' started by the speaker?
-The mission of Ownership Works is to ignite a movement around employee ownership and to help CEOs and companies who want to implement such programs, with a goal to reach a million workers over the next 10 years and create tens of billions of wealth for working families.
What does the acronym ESOP stand for and what is the speaker's goal related to it?
-ESOP stands for Employee Stock Ownership Plan. The speaker's goal through a new organization called Expanding ESOPs is to pass legislation in the United States to make ESOPs easier and faster to form, particularly with larger businesses.

Outlines

00:00

💼 The Impact of Stock Ownership on Employees and Companies

The speaker reflects on their first job as an investor, overseeing wire transfers for a business sale to ensure shareholders received their money. They discuss the importance of stock ownership, which extends from CEOs to mid-level employees, and its potential to impact employees' lives positively. The speaker's father, a union construction worker, dreamed of worker ownership to address wealth building, productivity focus, and a voice in the company. The lack of stock ownership is identified as a significant driver of wealth inequality, with most employees feeling disengaged. The speaker argues that broadening employee stock ownership could create an inclusive and sustainable form of capitalism, sharing stories of implementing this idea in companies, including Chi Overhead Doors, and the profound effects on employee engagement and company performance.

05:01

📈 Transforming Company Culture with Employee Ownership

The narrative focuses on the transformation of Chi Overhead Doors, a company where initially only a small percentage of employees had stock ownership. After the business was bought, the new policy granted stock ownership to all 800 employees, leading to increased engagement and productivity. The company's culture evolved with transparent financial information sharing, regular updates on business performance, and employee participation in decision-making. Employees were given a budget to invest in their workplace and received financial coaching. The positive outcomes included improved quality, reduced waste, and increased market share, culminating in the company being worth ten times its original value. The employees' payouts upon the company's sale were substantial, leading to life-changing impacts and illustrating the power of employee ownership in wealth creation.

10:14

🌟 Expanding the Reach of Employee Ownership

The speaker shares their vision for the broader implementation of employee ownership, discussing the establishment of a nonprofit called Ownership Works. The mission of this organization is to promote employee ownership and assist companies in adopting this model. They aim to impact a million workers and create tens of billions in wealth for working families within the next decade. The speaker also mentions their collaboration with a coalition advocating for Employee Stock Ownership Plans (ESOPs), which were initiated by Congress in the 1970s. The goal is to pass legislation to facilitate the formation of ESOPs, particularly in larger businesses, to significantly expand the number of employee owners. The speaker concludes with the sentiment that their father, who had long advocated for worker ownership, would be proud of these efforts, albeit wishing they had come sooner.

Mindmap

Keywords

💡Investor

An investor is an individual or entity that commits money, capital, or resources to an endeavor with the expectation of deriving some profit or benefit from it. In the video, the speaker's first job as an investor involved overseeing wire transfers related to a business sale, which is a common task for investors ensuring financial transactions are completed correctly.

💡Stock Ownership

Stock ownership refers to the possession of shares in a company, which signifies a proportionate ownership and a claim on the company's assets and earnings. The video emphasizes the impact of stock ownership on employees, suggesting that broader employee stock ownership can improve both individual lives and company performance.

💡Employee Engagement

Employee engagement is the emotional commitment, passion, and involvement that an employee has towards their work and the organization. The video discusses the low engagement scores at a company where only a small fraction of employees had stock ownership, highlighting the need for a more inclusive ownership model to improve engagement.

💡Wealth Inequality

Wealth inequality is the disparity in the distribution of wealth among different members of a society. The video points out that the lack of stock ownership is a significant driver of wealth inequality, as it excludes the majority of workers from participating in the wealth creation of their companies.

💡Ownership Culture

An ownership culture is an organizational culture where employees feel a sense of ownership and responsibility for the company's success, as if it were their own. The video describes how creating an ownership culture involves more than just distributing stocks; it includes communication, financial transparency, and involving employees in decision-making.

💡Chi Overhead Doors

Chi Overhead Doors is a company that serves as a case study in the video. It was a business where initially only a few employees had stock ownership. After implementing a broad employee stock ownership program, the company saw significant improvements in productivity, morale, and financial performance, leading to substantial wealth creation for its workers.

💡Dividends

Dividends are payments made by a corporation to its shareholders, usually as a distribution of profits. In the context of the video, all employees of Chi Overhead Doors were granted stock ownership and participated in the company's growth through dividends, which contributed to their overall financial gain.

💡Financial Coaching

Financial coaching involves advising individuals on how to manage their finances effectively. In the video, employees at Chi Overhead Doors were provided with free financial coaching to help them save and invest the money they received from their stock ownership wisely.

💡ESOP (Employee Stock Ownership Plan)

An Employee Stock Ownership Plan (ESOP) is a retirement plan where a company provides its employees with stock ownership in the company. The video discusses the ESOP as a legislative creation that offers tax incentives to companies that share stock ownership with their employees, and the speaker's efforts to expand ESOPs to include more workers.

💡Ownership Works

Ownership Works is a nonprofit organization mentioned in the video with the mission to promote employee ownership. It aims to help companies and CEOs adopt employee ownership models and has a goal of reaching a million workers, creating wealth for working families.

💡Community Impact

Community impact refers to the effects that the actions of an organization or individuals have on the local community. The video illustrates how the wealth creation through employee stock ownership at Chi Overhead Doors had a profound impact on the community, including increased tax revenue, better schools, and new business formations.

Highlights

The speaker's first job as an investor involved overseeing wire transfers for a business sale, ensuring shareholders received their money.

The importance of stock ownership extends beyond financial gain to creating wealth for company stakeholders.

The emotional impact of stock ownership on employees, as illustrated by the assistant Treasurer's reaction to his payout.

The concept of universal stock ownership within a company, from the CEO to factory workers, as a means to impact lives and communities.

The speaker's father, a union construction worker, dreamed of worker ownership to address wealth building, job alignment, and voice in the workplace.

The stark reality of wealth inequality driven by stock ownership, with a minority of workers granted such benefits.

The disengagement of employees globally, with a significant percentage expressing dissatisfaction with their jobs.

The belief that broadening employee stock ownership is critical for uplifting workers and strengthening companies.

The speaker's 25-year pursuit of the idea of employee ownership, including publishing a paper and leading initiatives at KKR.

Learning from early efforts in employee stock ownership, emphasizing the importance of free and incremental stock for workers.

The transformational impact of an ownership culture, demonstrated by the case study of Chi Overhead Doors.

All 800 employees of Chi Overhead Doors were granted stock ownership, leading to improved morale, productivity, and business performance.

The company's shift to an ownership culture included transparent financial information sharing and regular updates on business direction.

Employees were given a budget to invest in their workplace, fostering a sense of agency and visible improvements to the work environment.

Financial coaching was provided to employees to help them save and invest their earnings effectively.

The tangible benefits of the ownership model for both employees and the company, with Chi Overhead Doors becoming a highly successful investment.

The life-changing financial payouts to employees upon the sale of the company, with some earning multiple times their annual income.

The ripple effect of wealth creation on the local community, leading to economic growth and improved quality of life.

The establishment of the nonprofit 'Ownership Works' to promote employee ownership and assist companies in adopting this model.

The collaboration with employee ownership advocates to push for legislation making Employee Stock Ownership Plans (ESOPs) more accessible.

The ambitious goal of expanding ESOPs to millions of workers, aiming to transform the economy and create a more inclusive form of capitalism.