(This column concludes the fictional story of Ben, a company president who has faced some tough decisions. The first installment in the series can be found here. With our next column, in January, we will forgo the appeal of fiction and return to our customary mixture of reportage, analysis, and business advice. We hope you will join us.)
Ben hit the trail early. He had a long walk ahead of him. His wife usually joined him on their hikes, but today she was visiting her sister a couple of hours away. Ben didn’t mind. The time alone would give him a chance to think back over the last couple of years and plan his next moves for Verona Engineering.
What a couple of years it had been—starting with Mr. Verona’s heart attack and Ben’s sudden elevation to CEO. He had had to think hard about what kind of a leader he wanted to be and what kind of company he wanted to create, all while reassuring employees and customers that Verona would continue to function normally.
Thank heaven for his sister, Alison, who gave him so much good advice. She had added another two restaurants to her portfolio over the previous 24 months. She made running a successful business look so easy.
Lost in thought, Ben realized he had already walked a couple of miles, and had come out on a picture-postcard vista overlooking a lake. He could see the trail stretching on ahead. Sort of like the company, he said to himself. You have to go for a while before you can see the beauty of what you’re doing and get an idea of what lies ahead. But in truth, once he had digested Alison’s lessons and applied them to an engineering firm, it hadn’t been as hard as he might have expected.
He realized early on that he wanted to create a different kind of company from the one Mr. Verona had left him. One that involved everybody in the business. One that delivered great service to customers. One where people loved coming to work. Sort of a Small Giant, he mused, borrowing the term from Forbes’s famous annual list.
Alison had helped him make that dream a reality. One step was to develop some key indicators—numbers that everyone could understand, and that were closely linked to the firm’s financial performance. For Verona, the indicator had been revenue divided by paid hours. Over time, people on the staff had learned to track and forecast that number every month. Doing so led them to ask a lot of questions about how to move it in the right direction. The more they learned, the more they were likely to take actions within their teams to better their performance.
Ben decided now that the key numbers, and the scoreboard they used to track those numbers, were the best tools for building business literacy that he had ever seen. He didn’t have a company of engineers and technicians and hourly workers, he had a company of entrepreneurs.
Another big step was developing Verona’s new incentive plan. That had taken some doing, because Mr. V. never had any kind of systematic bonus plan—he just handed out extra money when he felt like it, to anybody he had decided was doing a good job. But Ben and Jason Barnes, who had become CFO when Valerie Payne retired, had worked hard to build a plan that was transparent and generous. People agreed on targets for revenue per paid hour. If they hit or exceeded those targets, they earned a payout.
Over the past year, everyone in the company earned 12 weeks extra pay. Money like that, Ben reflected, had a way of attracting people’s attention—particularly when it came on top of above-market pay and benefits. And now? The trail Ben was following plunged into the woods, so he couldn’t see where he was headed. But he had a feeling it would turn out well.
Mr. Verona had never recovered from his heart attack. When he died, his wife inherited the company. But she had no interest in running the business. With the help of an attorney who knew something about employee ownership, Ben had proposed that she sell Verona Engineering to the employees through an ESOP, or employee stock ownership plan. She would get full value for the business, along with the satisfaction of knowing that it would survive as an independent company. She would enjoy some tax advantages as well.
As for the employees, well, wasn’t that what Ben had wanted all along? A sense of involvement, of engagement, of ownership. Ben took special satisfaction when Ed, one of the oldest and most stubborn engineers, came up to him recently, saying, “Ben, you got the best in me.” And now the ownership would be real. If he created the right kind of culture, he knew that employees would come to feel like the owners they were. It would be their company as much as it was his, and they all would share in the wealth they were creating. When the time came to retire, even the hourly workers would have a nice nest egg. And the engineers would have enough to go off and build that dream house or whatever other project they were nursing in the back of their minds.
Just then Ben came out of the woods and found he was nearing the summit of the small mountain he had been heading toward. The sun was shining. He was on the right path, and so was Verona Engineering.