My Library and Courses
Last Update: Friday December 15, 2017

Key Idea: Turn Employees Into Owners

Employees at XTO Energy are given stock as part of their compensation.

Key Question:

A: 

Give employees ownership.

Q: Why does stock ownership work as a motivational tool for XTO Energy / Cross Timbers when it often doesn't work for big companies?

A:
By comparison with the ExxonMobil's of their industry, XTO / Cross Timbers is a still small business in a sea of sharks. They see themselves as the underdog. Most of the people who started the company are all still involved. The newer employees catch the enthusiasm of the older employees and buy stock because the stock has done well since they've gone public. As we see so often, when a company gets too big, the enthusiasm of the founders is diluted. Employees don't feel close to the pulse and don't feel they can personally affect the price of the stock.

There is pride in ownership. This is just one of the things that Karl Marx got wrong, and it just could be at the heart of the next great debate between capitalism and socialism: "What is the power within ownership?"

Though we may only dance on this earth for a short time, while we are here, something remarkable happens when you actually "own" a piece of it. The nature of one's stewardship changes. It is as though we are saying, "Here I stand." And, then we go about the process of improving the quality of life in that place.

So much of our self-definition seems to be contained in what we believe we own. As children, possession is truly 9/10 of the law. As teenagers, our clothes and cars, tangible possessions, help to define us. As adults, our home. For an increasingly large number of people, "the company, and the company we keep" helps us to answer those basic questions about life.*

Q: What is that power within ownership?

A: Roots. We all need to be grounded, to believe in something bigger than ourselves. Ownership gives us a sense of stability. It is a way to define the present moment. It pulls the past, present, and future together. When we own some of the assets of a business, we have grounded ourself to its past and we anticipate participating in the unfolding of its many-possible futures. Balance.

Although starting, running and growing a business can throw anyone off balance, there is a place for seeing ownership as a means of providing balance in one's life. This is a difficult discussion. We need to talk about first principles. About the foundations of foundations. As a culture it seems we have become reluctant to seek to define and use first principles. We have forgotten that there is a structure to thinking, to good thinking and poor thinking. And certainly if we are ever to achieve any balance within our global family, we need to find a structure to thinking, a conceptual groundwork, that we can all affirm.

Of course, with several factions that believe the capitalist model is wrong, that seems to be a long way off. But maybe not. Let's look at two groups in particular that believe we are most out of balance.

First, there is one group who seems to have utter disdain for personal ownership. These are the folks who now make it a habit of protesting at the G8 conferences; many believe capital and property are the antithesis of their communitarian ideals. These folks are drawn to the wisdom of people like Thoreau, Gandhi and Buddha, and their philosophical, historical, and theological insights into universals, including understanding the concept of nothingness. However, I would argue that they really have misusunderstood even that concept.

The other group are the literalists among religious groups. Within one particular religious faction, their protests have taken a different form; 9/11 was their declaration of war against our basic ideals, rights, and freedoms; and they appear to be absolutely assured that their own sense of probity is utmost. Most of their utterances reveal a profound disdain for capitalism.

To find a common ground with each of these two groups seems to be quite remote. However, if they were to understand the power of ownership, at least we have a starting point for an alternative to the madness we seemingly face in our forthcoming years.

So let's have them all fess up to one fact: It is all about business. All of us are moved and challenged by our respective business. We understand much of life in terms of our business. Every business is first a system of beliefs, and those beliefs have got to sustain a certain economy. If we allow our language to have a little fluidity, each person in each group "buys into their business." They "own a piece of the action" and they are associated with "a group of people with a common cause."

Now here is where we begin to get into balance and roots: What happens if we define business as "the sustained creation of something of value, relations with people who value that value creation, and dynamics that encourage these relations to be extended through time"?

Of course, we exclude many so-called businesses in the world, the Enrons, and we exclude the most radical of the literalists where killing is part of their value statement, but we may open enough common ground to really begin considering first principles together. Now, this is a working document. We have a ways to go yet. We'll be looking at ownership as stewardship. We will also be looking at why this dicussion is important.

One of the reasons is that we want to encourage international export among small business owners, especially into some of the places where people seem to dislike America most. If we are ever to live in peace in the world, each of us has to take a part. And we believe that small business can have one of the most influential roles in settling down so much of the misunderstanding about who we are and where we are going. There are hints of where we are going with this discussion in a document about incorporating a business.

*The four Kantian questions, "Who am I? Where did I come from? Where am I going? And, what is the meaning and value of life?"

Think about it

Why does it seem, at least in the USA, that truly within one's lifetime, we all have ideas for businesses?  Can you find ways to make your employees owners?  Have you considered an ESOP? 



 

Clip from: XTO Energy (aka Cross Timbers)

"I'll be back."

Fort Worth:  Remember when oil was $9 per barrel?  Bob Simpson and Steve Palko do.  They founded Cross Timbers Oil & Gas in Fort Worth at the same time others were getting out of the business. These two visionaries with a long range plan  teach us all what it means to take calculated risks.

Palko was the  VP of Engineering for Southland when there was a hostile take over of the company.  As a reminder to everyone in their newly-formed venture, one of the first things he did was to buy the "I'll be back" bronze (above).   And, surely, they did come back with a vengeance!

Today, know as XTO Energy, the business has quickly grown out of the ranks of a small business, but we believe the spirit of small business will permeate this business forever.  These people dream the impossible dreams then turn them into multi-faceted realities with deep-seated values.

Go to all the key ideas and videos of this episode...
Go to the homepage for this episode...

XTO Energy, Inc.

Gary Simpson, Senior Vice President

810 Houston St.
Fort Worth, TX 76102-6298

Visit our web site: http://www.xtoenergy.com

Business Classification:
energy, oil and gas

Year Founded: 1986

Turn Employees Into Owners

HATTIE: How do you motivate employees who work here to work harder to make money for other people? You just said the goal is to increase the shareholder value.

LOUIS: Most employees are owners of the company. They own the stock, either through outright purchases, through our stock-incentive plans, or through the 401(k) where they can buy stock or any other investment for that matter, and we match it. We give them dollar for dollar. So we encourage employees to do that, and it makes a real difference.

BOB: The worst problem you can have anywhere is people problems. Nobody likes to fire anybody. And so if you've got to fire somebody, your mind becomes preoccupied with it; you dread it. You spend the week doing that. So if you have people that are great in what they do -- no personnel problems -- you don't get distracted from the mission, you're running together, and you know the company hits the ground running.

RICK SEEDS: This is the best collection of people of any company I've ever seen.

HATTIE: A friend of Bob's for 25 years, Rick Seeds has just joined Cross Timbers.


RICK: I think at some organizations, they've been stifled so much. Their creativity is taken away from them . . . if you come up with an idea and no one wants to do it, why come up with another idea?

HATTIE: Is there a way for you to reward ideas?

RICK: I don't think there's a way to reward specific ideas. I think there's a way to reward general performance and accomplishment of corporate goals that everybody's working toward. And I think that's one thing that Bob and Steve have done a great job of, is making sure that everybody in this company knows exactly where we're all headed. And so you don't have people in the boat rowing in a different direction.

Not a member yet? Learn!  Be empowered! Join us!