Turning Employees into Stakeholders

by Mark S. Fulton

I was a TV Western junkie as a child. Gunsmoke, Maverick, the Rifleman, Wanted Dead or Alive, Rawhide, Wagon Train, Have Gun, Will Travel—I could go on—lassoed my imagination and taught me valuable lessons about playing fair, righting wrongs and resisting the wiles of frontier women.

My all-time favorite was Bonanza. I loved the characters: Ben, Adam, Hoss, Little Joe and Hop Sing.

Have you ever wondered why the Cartwright clan was seldom occupied with the actual work of running a huge cattle ranch? Yes, they probably had hired hands who helped. But they also had Hop Sing.

Think about it. Hop Sing apparently did all of the household chores, cooked the meals, laundered the family’s clothes (which mysteriously never changed from week to week), offered sage counsel with an oriental flair and occasionally stood up to bad guys while brandishing a meat clever.

Hop Sing was certainly a trusted employee who obviously felt that the Ponderosa was more than just the place where he worked. He was a stakeholder in the ranch’s success.

The “stakeholder theory” of business management maintains that employers should view employees not as mere hired hands but as partners, whose interest in and commitment to the company’s success should be cultivated. Proponents of this approach to employee relationships argue that turning workers into stakeholders produces a bigger bottom line.

The key difference between hired hands and stakeholders lies in how they perceive their jobs. Hired hands typically possess an "I just work here" attitude that becomes evident when a problem arises. Rather than find a solution that serves the company’s best interest, a hired hand will often choose an expedient, even self-serving response. Hired hands complain about things without suggesting alternatives. They do only what is required and they are the first to gripe when asked to pitch in during a predicament.

On the contrary, stakeholders confront a problem from an owner’s perspective. They believe that the best solution is one that upholds the corporate mission statement and serves the interests of all other stakeholders. Employees who are stakeholders take the initiative for finding more efficient and productive ways of doing things. They go the extra mile to complete a task well and they don’t disappear when a challenge crops up.

So, how can you create a culture in your firm that promotes a stakeholder mentality among employees? Here are some tactics that will energize your workplace and improve your profits:

• Demonstrate a commitment to high ethical standards. We all like to root for the good guys, especially when the time comes for a showdown. If you will lead by example and personify your corporate credo, your employees are more likely to join the cause emotionally and stand shoulder to shoulder with you through thick and thin.

• Show respect. Do your employees feel invisible when you’re around? Or do they believe that regardless of their rank, you value them as people? Take every opportunity to demonstrate your trust in their integrity. Stakeholders should be treated with fairness and kindness, even when they mess up.

• Communicate regularly and meaningfully. Information is a powerful tool for building an attitude of ownership. Many successful organizations espouse “open book management,” which means that employees have access to the same policies, decisions and financial data that owners have. The more face-to-face, two-way communication there is, the more employees will feel engaged as stakeholders.

• Recognize achievement and outstanding performance. Rewards can take many forms. Check out “1001 Ways to Reward Employees” by Bob Nelson for ideas. Perhaps the most effective form of recognition is simple praise. Genuine and specific commendations should be accompanied by expressions of appreciation for the employee’s contribution to the organization.

• Encourage personal and professional development. Organizations that provide training, coaching, retreats, educational materials and other tools for enrichment send a clear message to employees: We want you to grow and excel. Employee stakeholders will plow their new proficiencies back into the corporate soil to produce a more abundant harvest.

• Enable employees to participate financially in the firm’s success. Nothing is more detrimental to an employee’s sense of ownership in his or her job than a disconnect between corporate profits and paychecks. If your business is prospering, your employees should share in the bonanza through raises, bonuses or benefits.

The preceding is not an exhaustive list of stakeholder-building tactics. With a little creativity, you can undoubtedly think of other ways to encourage your employees to take ownership in your business.

What kept Hop Sing from tossing in his apron and opening a Chinese restaurant? He was an emotional stakeholder in the Ponderosa. He cared about the Cartwrights. He felt more like a family member than an employee. You could do worse than having a host of Hop Sings working for your company.

Copyright 2001 © Mark S. Fulton