Ownership Thinking Keys to Commitment and Motivation in Closely Held Companies John G. Mathers 2014

Contents Motivation – Negative and Effective The Earning Environment Two Approaches to Growth Performance Plans and Work Reviews Systems Thinking The Task Grid Ownership Assumptions Ownership Thinking Model Page 2 Building an Ownership Organization

“Negative” Motivation Stress from various negative stimuli … Diminishes frontal lobe activity Page 3 Surviving (4Fs) Creating Meaning PERFORMANCE TIME Negative Feedback Punishment Advice Sources: Federal Reserve Study 2009; MIT Incentives Study 2010; Wharton Study 2010 Building an Ownership Organization

3 Keys to Self-Motivation Autonomy Choosing what to do, when to do it, where to do it and how to do it - goals, tasks, work schedules and work methods Greater responsibility for work, investing more time and energy, developing more efficient and innovative processes ultimately leads to producing higher quality and quantity Mastery Developing specialized knowledge, skills and expertise Given opportunities for mastery, employees naturally pursue them in order to learn and contribute more Purpose: Contributing to a meaningful effort or cause When employees meet clients, customers or end users who benefit from their work, they gain a clearer understanding of the purpose of their jobs, which motivates them to work harder and smarter Page 4 Sources: Drive: The Surprising Truth About What Motivates Us by Daniel Pink 2012 Building an Ownership Organization

Earning Environment Key ingredients: – Purposeful, disciplines energy – Requires realistic opportunities – Pressure to perform (parameters) – Preference for accountability – Respect as a result of accomplishments (from the outside world and within the company) Page 5 Sources: Danger by Judith Bardwick Building an Ownership Organization

Approaches to Growth PERSONAL RELATIONSHIPS PROCESSES GOALSROLES&RESPONSIBILITIES TASK - ORIENTED TASK - ORIENTED - overarching goal - Focus is on an overarching goal - interdependence - Assumes interdependence - Ability to perform against the plan - Ability to perform against the plan is the key variable.CLASSIC - Focus is on people - Assumes independence - Satisfying relationships is the key variable PERSONAL RELATIONSHIPS METHODS GOALS Page 6 Building an Ownership Organization

Staying on Track ORG Performance Plan Objectives Done/Not Done Work Review Work Review Page 7 Building an Ownership Organization

The Systems Model QualityFeedback Output PaceFeedback Process Input Customers Internal/External Building an Ownership Organization Page 8

Delay Tolerance Hi Lo Hi Predictability Measurements/Metrics Page 9 Routine Quantity Timeliness Completeness Accuracy Project Change Implemented Deadline Trouble- Shooting Response Time Average Solution Time First Pass Success Manner Negotiable Project or Trouble- shooting Building an Ownership Organization

Ownership Assumptions Characteristics of great companies: – They care about their people, community, environment and their product/service – They have fun – They have high expectations of performance Assumptions about People (Abraham Maslow): – Assume all your people have the impulse to achieve – Assume an active trend to self-actualization – Assume that people can take it (tough, stronger than most give credit for) – Assume that people are improvable Page 10 Building an Ownership Organization

Ownership Thinking The Right Incentives The Right People The Right Education The Right Measures Sources: Ownership Thinking by Brad Hams 2012 Page 11 Powerful Results Building an Ownership Organization

Partnership Contract We want and provide a work environment that is: – Enjoyable and rewarding – A place to learn and grow – Filled with continuous financial opportunities We are all adults who: – Respect each other rather than shooting one another – Help one another – Don’t hide problems and don’t argue with reality Page 12 Building an Ownership Organization

Ownership Implementation 1.Discuss process with leadership team 2.Provide a current assessment 3.Survey employees/partners 4.Complete financial trend analysis – historical/near future 5.Develop KPIs – define value-driven organization 6.Design incentives 7.Implement a Rapid Improvement Plan (RIP) Page 13 Building an Ownership Organization

A Model of Strategic Planning Performance Plans Programs/Projects ResourcesVisionMissionStrategy Strategic Analysis Adapted from Below, et. Al. Executive’s Guide to Strategic Planning, 1989 Building an Ownership Organization Page 14

System of Strategic Alignment Core Values & Beliefs Purpose Mission Core Values & Beliefs Purpose Mission VISION Performance Plans What is Going to Be Done by Whom by When Work Reviews Ahead, On Track, Behind or At Risk Recommendations Performance Plans What is Going to Be Done by Whom by When Work Reviews Ahead, On Track, Behind or At Risk Recommendations TACTICS STRATEGY à Internal Assessment à External Assessment à Strategic Decisions & Objectives Customers Capabilities Products and Services Finance People and Organization Systems à Internal Assessment à External Assessment à Strategic Decisions & Objectives Customers Capabilities Products and Services Finance People and Organization Systems Page 15 Building an Ownership Organization Adapted from Below, et. Al. Executive’s Guide to Strategic Planning, 1989

Internal Assessment ¦ Resources and Internal Capabilities ¦ Core Competencies ¦ Strengths and Weaknesses External Assessment ¦ Industry, Market and Technological Trends ¦Competitive Analysis ¦Social, Demographic and Regulatory Environment ¦ Key Opportunities and Threats Strategic Decisions ¦ Customers ¦ Capabilities ¦ Products/Services ¦Finances ¦ People and Organization ¦ Systems Strategic Objectives ¦The Vital Few VISION STRATEGY TACTICS Strategy Development Page 16 Building an Ownership Organization Adapted from Below, et. Al. Executive’s Guide to Strategic Planning, 1989

Huddle & Work Review Huddle: – This is not a results meeting but a forecasting meeting – Include as many as appropriate to size of company, assuring that those responsible for results are present – Schedule regularly based on normal workload – Key participants must attend and be prepared to contribute – Do not fill in forecasts before the meeting – Have specific agenda and short timeframe – Cop and scribe for each meeting Work Review: – Regular review of performance against goals – comparative – Issue focused and exception based – Graphically represented – Action oriented – all issues come with recommendations – 30 minutes or less Page 17 Building an Ownership Organization

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