OA Ownership Associates Employee Ownership Training and Education in the USA Christopher Mackin, Ownership Associates, Cambridge, MA EOLE Conference – sponsored by EFES Brussels, Belgium - June 16, 2005

OA Ownership Associates Involvement is not inevitable. Expectations about involvement are inevitable.

OA Ownership Associates Four Steps toward the creation of an Ownership Culture 1.Set the Context 2.Build Skills 3.Agree on Meaning - Narrative 4.Initiate Organizational Change

OA Ownership Associates Four Steps toward the creation of an Ownership Culture 1.Set the Context – Why is the seller selling to employees? 2.Build Skills - Foster the development of “ownership skills” concerning how your employee ownership structure works and how your business works. 3.Agree on Meaning – Construct your theory of what ownership means – your ownership narrative. 4.Initiate Organizational Change - Initiate a process of organizational change – Becoming a “Company of Owners”

OA Ownership Associates 1. Set the Context

OA Ownership Associates Why did the Sellers choose to sell to employees?

OA Ownership Associates Outside Purchaser OurCo Stock Founding Shareholders Smith and Others The Transaction: Option A What happens to OurCo, Inc.? OurCo Employees? Our “OurCo Culture”?

OA Ownership Associates 2. Build Skills

OA Ownership Associates Four Stages of ESOP Participation Participation Distribution Vesting Allocation

OA Ownership Associates Total allocation = 850 shares If the total allocation is 850 shares, ESOP Eligible Payroll Suppose eligible payroll is $2,500,000 Total payroll = $2,500,000 Beth’s $25,000 and Beth earns $25,000 John’s $20,000 and John earns $20,000. Beth’s 8.5 shares Beth gets 8.5 shares John’s 6.8 shares and John gets 6.8 shares. Stage 2: Allocation

OA Ownership Associates 3. Agree on Meaning

OA Ownership Associates

OA Ownership Associates

OA Ownership Associates

OA Ownership Associates

OA Ownership Associates 4. Initiate Organizational Change

OA Ownership Associates unpublished data from the Ownership Culture Survey™

OA Ownership Associates 1.Physical Working Conditions 2.Election of Employees’ Committee 3.Speed of Production 4.Job Assignments 5.Safety Rules and Practices 6.Quality Standards and Measurement 7.Hiring 8.Promotions, Performance Evaluation 9.Equipment Layout 10.Asset Purchases 11.Employee Compensation and Benefits 12.Firing 13.Marketing and Advertising Strategies 14.Raising Capital, Relationships with Banks and Investment Groups 15.Product, Technology, and Investment Strategy 16.Lay-off Policy, Employment Levels 17.Management Compensation 18.Distribution of Profits (dividends, reinvestment, debt reduction) 19.Selection and Oversight of Senior Management 20.Constitutionalism: Setting and Moving Decision-Making Boundaries 21.Selection of Board of Directors 22.Fate of the Company: merger, sale, major location change Standard List of Corporate Decisions

OA Ownership Associates

OA Ownership Associates

OA Ownership Associates

OA Ownership Associates Six Steps of Decision Making 1. Initiate Process 2. Gather Information 3. Generate Alternatives 4. Make the Decision 5. Inform Others 6. Review Decision

OA Ownership Associates Questions and Answers