Connor couldn’t let go, and it cost him
NB names and details are fictional. Any resemblance to actual persons or events is entirely coincidental!
Background
Connor had run his manufacturing firm for 20 years. He was a micro manager, but was well liked. Staff appreciated that he was always there to help when they needed it.
Occasionally he rubbed people up the wrong way. They’d either learn to deal with it (no boss is perfect, right?), or move on elsewhere. That was fine, there were always new recruits to take their place.
Connor liked the idea of the EOT. He was in his 50s, too young to retire. He could cash in the value of the business now, and enthuse staff with benefits of future profits. He’d continue to run the business despite not owning it, for another decade or so until it was time to retire.
He didn’t go into detail re his plans, but told his senior team of the plan to EOT in a year.
They were delighted! Connor had set them up well, but they felt it was time he moved on. They loved the business, and loved the customers.
An EOT seemed perfect. Connor would get paid a decent amount, whilst they’d gain control of the business.
What happened
The sale date came, with big celebrations. Everyone was happy!
Over the next few weeks, Connor came in every day, acting like nothing had happened. He continued to monitor staff closely. He gave them unwanted tips on how to do things better. They’d roll their eyes, but didn’t say anything to him.
This continued for a few months. The senior staff got increasingly resentful that reality wasn’t aligning with their expectations.
Financially things were fine. They could see they were going to do nicely out of it profit-wise. But they didn’t have the control they thought they would.
He had been their boss so long. Even though he no longer legally was, they struggled to ask him to back off. They didn’t want to upset him. But he was driving them nuts.
Connor was blissfully unaware of all this. In his head the EOT just meant staff got a profit share. He still considered it “his” company. He still acted like the boss, and nobody had complained.
Connor sat in on all the formal meetings. He remained a director of the company, and was also a trustee. He dominated everything.
The senior team organised an informal meeting with the staff member trustee and independent trustee. They gave an ultimatum. Kick Connor out, or they’d quit.
This was a very awkward position for the two trustees to be in. After listening fully, and carefully considering what was best for the business, they reluctantly agreed with the senior team.
Connor was also a trustee, but just one of three. The other two formed a majority. They used their powers to appoint two of the senior team to be new directors. Connor had his directorship removed. The newly appointed directors then made him redundant.
In Connor’s eyes, he’d been generous. Giving staff profits, whilst he kept the stress. They’d responded by booting him out. He was devastated.
What he could have done differently
Possibly it might have worked had Connor been clear of his intentions from the outset. If expectations were set that he’d still lead for another decade, but the EOT would give staff a formal right to profits. In practice he’d said little, and staff had wrongly assumed he’d step away quickly.
Possibly coaching could have helped. Someone mutually respected, who would listen to both sides and feed back where appropriate. Maybe if Connor was aware his behaviour was irritating, he could have stopped it.
Moral of the story
Don’t assume everyone has the same idea of what employee ownership means.
Whilst founders can remain in the business, it can cause problems. As a minimum they need to fully understand it is NOT their business anymore.
Employee ownership is about right to profits, yes, but it’s also about control/power. When people are used to you being the boss, and you’re used to being the boss, it can be very hard for both sides to act differently. Don’t let politeness cause problems to fester until they’re unsalvageable.
Other Go EO founder flops:
- Vanishing Vanessa
- Generous Jenny
- Greedy Greg
- Premature Pete
- Terrified Terry
- Tracy’s Terrible Trade Sale
Summary
There’s two very separate sides to employee ownership.
- The financials – sharing profit.
- The power – sharing control.
- Staff can be dissatisfied if either are withheld.
- Founders can continue to work for the company…
- …but need to be careful if they still act like they’re in charge.