A Stake in the Outcome

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A Stake in the Outcome (2002) is a book by Jack Stack and Bo Burlingham (an editor at Inc. magazine). The book describes the practice of building a culture of ownership within one’s business, aiming for long-term success. The book gives an overview of how to foster employees' enthusiasm, intelligence, and creativity in their positions.

Stack is the president and CEO of SRC Holdings Corporation (formerly Springfield ReManufacturing Corporation), an employee-owned supplier of renovated engines to auto companies. In 1983 Stack and twelve other managers bought the poorly performing factory from International Harvester that they managed. They bought the company with $100,000 in cash and nearly $9M in debt.

"In a company with a strong culture of ownership, stock is more than compensation. First and foremost, it's a vehicle for change," is quoted from Jack Stack and Bo Burlingham's "A Stake in the Outcome", "Equity is used to involve people in the process of making a difference." In a successful ownership culture, they said that every employee had to take the fate of the company as personally as an individual owner would.

Business Week magazine called SRC Holdings "a management Mecca" for its innovative employee ownership program. Employers must retrain employees to think like owners for equity plans to work, Stack says. "Owners do not just follow a job description," write Stack and Burlingham. "They don't just put in their time. They have something bigger they are working toward."

Conversely, management must change the way it thinks about workers. "Most managers, for example, assume that a major part of their job is to manage people. But you can't manage owners," the authors say. "The alternative is to have a system that allows people to manage themselves."

To foster a culture of ownership, the authors suggest these steps:

  • Be transparent with your employees. Open-book management ensures that employees have access to the same deep background material executives have.
  • Identify performance targets.
  • Educate all workers about the targets. Be sure everyone knows what the goals are, why they are important and how each worker contributes.
  • Encourage people to come up with their own innovative ways to reach the goals.
  • Celebrate successes. Then "you do it again, and again and again-steadily refining the process, adding new mechanisms, looking for ways to improve the system."

The authors provide a number of case studies that describe innovative programs employers have created, often after initial attempts at employee participation failed.