Rewarding Stars in Employee-owned companies

15_sf_ballet_pairHow do we reward people who do great things? We have to reward them well. Their special contributions need to be acknowledged. Often that means giving them lots of money, much more than the average.

At the same time, they need to acknowledge – and they may not want to recognise it at the time – that their work is hugely supported by the work of the others, the work of their partner employee-owners. They could not achieve all they do without that support.

Different groups of employee-owners come up with different systems for rewarding their stars. Some companies are very happy to see big differences in cash bonuses, while keeping the share distribution equal, building up through equal allocations every year. Others devise systems to share the ownership more with the people whose work contributes more in the way of growth or profit. Some reward the individuals, others have team bonuses, with the team itself or the team leader deciding how the bonus is divided among the team members.

In companies where a few stars make a really big difference – such as in a literary agency or a ballet company – there will usually need to be a system for addressing this question.

It is important for the people involved to have a say in designing the original system, and in reviewing it and perhaps tuning it from time to time. Employee ownership is never about imposing a ‘one size fits all’ solution.

But there are common elements. The clearest lesson is that there needs to be a significant part of the ownership held in common, and managed democratically. Otherwise the system will be open to opportunist abuse by people who are influential, people who don’t care about future generations. We need to be vigilant about selfish opportunists – the most dangerous being the ones who have not got beyond the current model, the people who think that those at the top do everything that is important, and deserve all the rewards.

Most employee owners want to pass on their company strong, so that future generations can enjoy the same excitement and freedom as they have. And they recognise that the big contributors should be well rewarded.

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