I was lucky enough to interview a number of captains of their industry including Stuart Hornery seeking to understand the important attributes of a CEO of a high performing enterprise.
Unsurprisingly, Stuart spoke at length about the employees owning a large stake in the company. This came up strongly a few times but not always with others.
Owning the business was reinforced in many ways:
- Profit share. Each 6 months there was declaration of profit share (5% of profit) that was shared equally from the CEO down to every employee. It was an expression of success, thanks, contribution and egalitarianism. A very highly prized symbol.
- Bonus paid in Lendlease shares with a difference. Employee Share Acquisition Plan (ESAP) was a reward and recognition for great work done. It was not like the short term incentive schemes of today where the quantity is built into your personal employment contract. It was paid 50% upfront and balance over 5 years.
- EIT and other earlier schemes of employee purchasing the shares which were paid by future dividends.
- We would be reminded about the generosity of shareholders and the percentage of the company owned by the employees. It was very substantial!
Stuart was very proud that this approach enabled all employees from the switchboard operators to executives to accumulate considerable wealth. However other real benefits accrued to the company and shareholders.
- Being an active owner was a licence to act on things that were not right. Inappropriate push back on challenge would be met with ‘I am a shareholder too’. I never saw it used but it was definitely in the psyche of every employee.
- Reinforced the other attributes of the culture such as win, win, win, 5 ways of management and the AFR test (the subject of previous articles)
- Reminded us of the importance of our work and that others depended on us. We learnt that this was not a burden but an privilege. Preparing us to take on bigger and bigger challenges in the leadership journey
- It reinforced that success was a team sport
I have learnt recently that the share ownership schemes were terminated due to changes in tax treatment. This is a tragedy and damages one of the fundamental principles of win, win, win discussed in a previous article.
I remember a conversation with a nurse about me joining Lendlease. She was very tuned into how Lendlease operated. Such was its place in the Australian corporate scene.
Please share your thoughts on owning the business
