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Getting Employees to Think Like Owners

Digital Library > Building and Inspiring an Organization > Delegation of authority “Getting Employees to Think Like Owners”

Empowering employees leads to higher productivity, quality — and morale.

Want your employees to take greater initiative, be more productive and turn out higher quality? Empower them.

Employee empowerment gives workers the necessary tools, training or authority to make critical decisions and do their best work.

"Empowering employees makes enormous sense when you want a flat organization because then you need employees to think like owners," says Sam Goodner, founder of Catapult Systems Corp., an Austin, Texas-based e-business consulting company with $13 million in revenues.

"Many of our employees work off-site in clients’ offices and need to be able to make decisions on their own," Goodner explains. So he adopted "five rules of empowerment" to encourage greater initiative. If employees have an idea or need to take action quickly, they have an automatic green light to proceed when they can answer "yes" to these questions:

  1. Is it right for the customer?
  2. Is it right for Catapult?
  3. Is it ethical?
  4. Is it in line with Catapult’s core values?
  5. Are you willing to be held personally accountable for your decision?

"Every once in while, someone might get carried away — and it’s important to let them know when a decision wasn’t appropriate — but 90% of the time, they’re going to make good decisions," says Goodner.

When you give employees greater authority, they feel like an integral part of the company. That alters their sense of commitment, which, in turn, increases productivity and quality.

Employers who practice empowerment view it as an important recruiting and retention tool. "It’s another way to differentiate yourself from competitors," says Goodner, noting that turnover at Catapult is less than half the industry average.

Empowerment can take many forms:

  • Group brainstorming or decision-making.
  • Rotating jobs or responsibilities.
  • Education.
  • Open-book management.

Indeed, information and involvement go hand in hand, say experts. Employees need to know how they fit into the bigger picture — what their role is and how their work is measured — otherwise, they can’t connect personal goals with company goals.

Outline expectations. Boundaries are the basic building blocks of empowerment, says Robert C. Rhodes, founder of Systems Evolution Inc., a $2 million technology consulting company in Stafford, Texas. "You’ve got to give people something to shoot for," explains Rhodes. "Most people want to do a good job. If you set parameters — here’s what you can do, here’s what you can’t do — then you don’t have to worry about micromanaging."

At Systems Evolution, job descriptions spell out both minimum and expected performance criteria. Example: Account managers are expected to generate at least 1.5 times their base salary in revenue each month, but Rhodes expects them to generate 2.5 times that salary. "By giving employees clear goals, you’re giving them the information to manage themselves," he says. "That allows you to step into a greater leadership role and help employees accomplish things they didn’t think they could do."

Communicate constantly. "You can never have enough communications. It helps you sandpaper the edges of your company," says Randy Cohen, founder of TicketCity.com, a $12 million online ticket business in Austin, Texas, with 32 employees. Every morning, Cohen gathers his six managers for a "10-minute huddle" to share any information that may have an impact on their day; managers then update their respective departments. "We have longer meetings during the week, but that daily huddle is important," explains Cohen. "When employees have the proper information, they make better decisions and fewer mistakes."

Learning curve. Sometimes your efforts to empower employees may require some extra steps. When Gorell Windows and Doors, a $32 million manufacturing company in Indiana, Pa., decided to improve communications by getting all employees online — even production line workers — it meant more than buying extra computers. "We had to give lessons not only on Word and Excel programs, but also typing because many employees didn’t know how," explains founder Wayne Gorell.

Showing appreciation

Bernie Ringer-Britz, founder of Live Wire Inc., an Orangevale, Calif., company that installs perimeter-control systems, uses financial incentives to empower his workers. But all incentives are not equal, he stresses: "There have to be two important conditions for the incentives to work — fairness and control. With many incentive programs like profit-sharing plans, employees have limited or no real control over the end result. And if that control is outside of their realm, they feel cheated."

So Ringer-Britz sets realistic expectations for completing a job. If workers finish the job in less time, the unspent dollars allocated to labor are split between workers and the company. Quality is also a factor: If something is done too quickly and has to be redone, it counts against the incentive bonus.

Resulting increases in productivity have saved Ringer-Britz more than 12% in labor costs alone. "Not only are workers faster, they’re happier and more careful because they know that attendance and safety are tied into the reward," he explains. Incentives also reduce the need for management intervention because of resulting peer pressure. "If one worker starts slacking, the others will set him straight," says Ringer-Britz. "The bad people leave on their own without me having to step in."

Likewise, Jessica Lee believes in the power of financial incentives. As founder of L.A. Productions, a $2 million sales organization that represents female artists and designers, Lee has 10 employees. By following rules and exceeding goals, employees become eligible for bonuses that can double their weekly salaries.

Verbal recognition is as important as financial rewards, adds Lee: "I’m very conscious of the need to praise people. When I started my company, I wanted to be a different kind of boss than I ever had. Simple things like being thanked would have gone a long way with me."

Getting employees to think like owners doesn’t happen overnight. For one thing, workers may be skeptical.

"It takes continual reassurance and reminding that taking initiative is part of your culture," says Goodner of Catapult. "I like to get everyone in the same room at least once a month to share stories of employees who took initiative — and how the customer responded. It serves as an example to reinforce desired behavior."

Writer: TJ Becker.

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