1. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC The Ownership Incentive Designed by Ownership Associates, Inc.

2. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC ESOPs change the deal Everyone has a relationship with the company they work for. We dont think about the relationship much because it is so commonly understood. Relationship In the Soviet Union, employees often talked about their relationship with their company by saying: We pretend to work and they pretend to pay us. In the United States, that sort of relationship would lead to economic failure of the company, and the employee. (And it may have contributed to the failure of the Soviet Union.)

3. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC In the Soviet Union, employees often talked about their relationship with their company by saying: We pretend to work and they pretend to pay us. In the United States, that sort of relationship would lead to economic failure of the company, and the employee. (And it may have contributed to the failure of the Soviet Union.) ESOPs change the deal Everyone has a relationship with the company they work for. We dont think much about the relationship because it is so commonly understood. This program is about how the Employee Stock Ownership Plan (ESOP) changes the relationship between the employer and the employee. Relationship

4. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC 8 hours pay 8 hours work Standard Employment Deal The Standard Employment Deal is the one we are most familiar with. It is the reason we all went to work at our first job. We started working because we had something the company wanted – our time and effort, and the company had something we wanted – money. In exchange for our work (time and effort) the company paid us money. For many employees, this is the extent of the relationship between them and their employer. They show up, work for 8 hours, and the company pays them 8 hours wages.

5. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC 8 hours pay 8 hours work Standard Employment Deal The Standard Employment Deal sometimes encourages certain behavior that might not be most productive for the employee or the company. The employee wants to increase his/her pay as much as possible, while expending the least amount of energy. The employer wants to increase the productive output of the employees, while maintaining the lowest possible costs. How can I make the most money? In both cases, the motive is to make money, but it leads to conflicting behavior.

6. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Ownership rewards ESOP 8 hours pay 8 hours work Standard Employment Deal The ESOP adds another connection to the employees relationship with the company. In addition to receiving pay, the employee can make additional money through the long-term success of the company. The employee still wants to make the most money. But now, he/she can make money through ownership, too. How can I make the most money?

7. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Ownership rewards ESOP 8 hours pay 8 hours work Standard Employment Deal The ESOP adds another connection to the employees relationship with the company. In addition to receiving pay, the employee can make additional money through the long-term success of the company. The employee still wants to make the most money. But now, he/she can make money through ownership, too. How can I make the most money? This additional interest in the company is what transforms an employee into an employee-owner.

8. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Ownership rewards ESOP 8 hours pay 8 hours work But the company doesnt just give away ownership to employees for the fun of it. In general, the company hopes and expects that the new employee-owners will contribute to company success. To help the company be more successful, the employee-owner needs to share his/her ideas and effort. How can I make the most money? Employee-Ownership New Deal Ideas and effort

9. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC ESOP 8 hours pay 8 hours work So the new relationship between employee-owners and the company includes the old relationship, The employee contributes 8 hours of work and receives 8 hours of pay. How can I make the most money? Employee-Ownership New Deal

10. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Ownership rewards ESOP 8 hours pay 8 hours work How can I make the most money? Employee-Ownership New Deal Ideas and effort Employee-owners share ideas and effort, and they receive the rewards of ownership. So the new relationship between employee-owners and the company includes the old relationship, but builds upon it.

11. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC How does the New Deal work? To make the new relationship work, employees need three things, the: Now that we know what the new relationship is, and what it looks like, how does it work? Opportunity to make the company succeed Motive & Means

12. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Department Performance Individual Performance Means Employees have the means to make the company more successful through their jobs. Employees have immediate control over how they individually perform in their jobs. Their personal performance also helps determine the success of their department, which influences the success of the company.

13. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Stock Value ESOP Motive Employee-owners have the motive to make the company more successful because they share in the future success of the company. When the company is successful, the value of the company usually increases. So does the value of the companys stock. As the companys stock value increases, so does the value of the stock in the ESOP, meaning employees benefits increase in value, too. For more information about how employees benefit from company success, see Ownership Associates Ownership Facts curriculum.

14. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Opportunity The opportunity to make the company successful happens in different ways at different levels. Employees have immediate control over how they individually perform in their jobs. The degree of control depends on a number of factors related to employee autonomy. Individual Performance

15. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Opportunity The opportunity to make the company successful happens in different ways at different levels. Employees can also influence their colleagues and team to improve procedures, processes, and teamwork. This influence is cooperation or collaboration that improves department performance. Department Performance Individual Performance

16. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Opportunity The opportunity to make the company successful happens in different ways at different levels. At most companies, employee-owners have some form of influence over company policies as well. At some companies, it is simply a suggestion box. Other companies have more extensive procedures, and, in a few cases, even democratically elected company leaders. For more information on these levels of influence, see the Ownership Associates Frontiers and Boundaries curriculum. Department Performance Individual Performance

17. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Opportunity The opportunity to make the company successful happens in different ways at different levels. At most companies, employee-owners have some form of influence over company policies as well. At some companies, it is simply a suggestion box. Other companies have more extensive procedures, and, in a few cases, even democratically elected company leaders. For more information on these levels of influence, see the Ownership Associates Frontiers and Boundaries curriculum. Department Performance Individual Performance

18. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Stock Value ESOP Employees Return on Effort Department Performance Individual Performance When employees take advantage of these opportunities, the company is likely to be more successful. In the end, the employees share in this success. Investors seek a good Return on Investment. These opportunities allow employees to earn a Return on Effort.

19. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Stock Value ESOP Summary Department Performance Individual Performance Employee-owners have an additional interest in company success through the ESOP. Instead of just seeking increased wages, employees want to earn their Return on Ownership. Employees have the means The ESOP gives the motive Employees need to take advantage of their opportunity, and managers need to find ways to expand employees opportunities.

20. . www.ownershipassociates.com © 2003 Ownership Associates Home Standard Deal How it works Three Pieces Return on Effort The Deals Summary New Deal < Go back Advance > OA INC Conclusion In the end, many factors influence the success or failure of the company, and at work employees react to their peers, supervisors, managers, and many other issues. Economy Products Competitors Customers Supervisor Managers Colleagues Personal life Research has consistently shown that employee-owned companies with effective employee involvement are more successful than their competitors. However …