Creating a company of owners
Posted January 23, 2012on:
Nick Clegg is urging more small companies to give staff the opportunity to be part of a share option scheme. I salute this, we have done this at Mind Candy since the company was founded, and continue to do so today.
Companies that offer employees the chance to be shareholders are just plain smart in my opinion. There are many of them and they aren’t just start ups, I mean look at John Lewis!
I also know that there is controversy around whether this idea actually works or not…my response…it is all in the communication and education.
I run six monthly share option workshops internally giving staff the chance to understand and ask questions about their options. I have seen a greater bond between staff members and their options since showing them that there is value in them. Staff are empowered when they realise that they own a part of the company and that they can move the needle as to the company’s value and ultimately create a greater ROI in their own stockholding.
The rather large caveat being that the whole mechanism is built around larger chunks being given out to staff that join at the beginning when the company concept is yet to be proven and salaries are relatively low, therefore it is harder to show value at an early stage as it is all potential. It is worth doing though, the sense of ownership and being a big part of something unknown that staff believe in is truly unifying.
At MC we could have stopped giving out options by now as many start ups do, but chose to still give a piece of the company to everyone who starts with us in a bid to continue making sure we build a company of owners rather than just an organisation of employees. We have truly talented people working for us, it just makes sense.
Now for the moan, and to be fair the tone of this post means that there has to be a moan.
It is all very well that the government is encouraging us to incentivise our employees and that they are also giving entrepreneurs a nice deal when it comes to tax relief and visas, but what about all of those senior staff members that build a company alongside a CEO sometimes for years? Basically I mean the largely invisible management team that work with the founder to help them to realise their vision?
As the COO/CFO at Mind Candy and having been around in start ups and small companies for a while, I always get asked what measures the government should take to help entrepreneurs to build their companies into successes in order to boost the economy. The answer is to help the people who support the entrepreneurs to realise their dreams. Give VCs and angels incentives to fund start ups and make sure there are continued incentives for employees via share option plans by all means, but honestly make sure those senior staff members who support entrepreneurs tirelessly and work every hour that god sends get their own tax incentives and a little bit of love back.
The wonderful Robin Klein recently posted a great article along the same lines on The Accelerator Group blog.
I say “hear, hear!”.