AUA: How Do You Make Employee Ownership Actually Feel Real?

**Rodney Evans** (0:03)
Hey, y'all, welcome back to At Work with The Ready. I'm Rodney Evans, and that guy is Sam Spurlin.

**Sam Spurlin** (0:08)
Hello, everyone, and hello to you, Rodney Evans.

**Rodney Evans** (0:10)
Hi, Sam. Every other week, we tackle one tough, thought-provoking listener question and share a few ideas that might help. So let's dive on in. Sam, what do you have for us today?

**Sam Spurlin** (0:20)
All right, this week's question is, if a company moves from a single or a few owners to an employee-owned model, what other areas of the operating system would you examine first to move past the basic financial transaction of selling company shares?

**Rodney Evans** (0:37)
So, love that you asked. I have enough thoughts on this to fill several podcasts and maybe a book. This person gave us a little bit of extra context and said they've seen a few companies move to ESOPs and EOTs to transition. And basically, there's a little bit of a struggle in creating the quote unquote ownership culture. So, I think a couple of things happened in these transactions. So, I have first-person experience because The Ready is an EOT and we went through this process of essentially buying the company from Aaron.
The first thing is that I think people try to do this the same way they try to do anything else transformational, which is basically comps. They're like, we're going to tell you about our new values and our new purpose statement and then we think you're going to give a single shit on that basis, which they are not.
I think the two real fields of the OS canvas that you have to change to bring this to life are sort of like, actually maybe three, are the least soft ones and they're structure, compensation and authority.
I'm going to just start for practical purposes with structure. When you're doing the design work around employee ownership, you have a really cool opportunity to create checks and balances inside of your own company. And so like in our EOT, for example, the Trust Stewardship Committee, which is elected and the members of that can be anyone at the ready, their job is to basically protect the purpose of the trust. So the established purpose of having this trust, which is a very long, stable view. Whereas the board, which is a different group of people, is responsible for the operational and financial health of the ready in the nearer term. Those things are intentionally designed in tension with each other. And both of them are vested with real power. Like both of them have to consent to any major decisions around investment or a sale or an acquisition or a buyout or anything else. It's an authority move, but it's also a structural move to basically say, we are going to create ownership of the decisions as a proxy for ownership, quote unquote, of the company. Because like, what do you really own when you own the company? Like, what is it? Like, the thing that makes it meaningful is power. And power rests in what you can call the shots on. And so we did a lot of thinking about how to distribute authority over the decisions that matter, and decided to have this sort of structural way of keeping the long-term and the short-term intention with each other.

**Sam Spurlin** (3:31)
Yeah, that makes a lot of sense. Another place where my mind goes, and kind of thinking back to my time at The Ready, is information and mastery, particularly around financial stuff. So if you are now an owner of the company, do you understand? First of all, do you have access to the finances, which you need to and should? And do you understand what you are looking at? And I think that is a whole body of work that takes real effort to get good at, and people need to care about it. And I think the more literate, financially literate you are, the more you can start to feel like an actual owner in this thing that you are an owner in.
And then the last thing that came to mind for me is around, you had mentioned comp, but the way that I was thinking about comp is that I think something like moving to an EOT feels more real the first time you experience like profit share. And then we can have a conversation about why this was less or more than we thought it was going to be. And what we do next time around to either get more of this good feeling that we're having or to shift it so that we can have a better, more fun time a year from now.