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Bob Zarlengo CPA/ABV, CVA, CExP

RJZ Inc.
11907 W. 48th Avenue, Suite A
Wheat Ridge, CO 80033
(303) 589-1613

Ownership Thinking

The term “Ownership Thinking” (OT) is likely best known as the title of a book. But it’s also a business, and a mindset.

The Denver area business came first, founded by Brad Hams in 1995 after several years of developing the Ownership Thinking model. Its goal was to help businesses unleash their potential by providing the training and tools to develop a culture of "ownership thinkers" – employees who think and act like owners and become active participants in their company’s financial success – versus a workforce that simply shows up for a paycheck. Hams authored a book in 2011 based on his experience and the extraordinary results clients of his business had achieved using his methodology to change the mentality within their organizations.

The mindset is based on a conviction that most employees truly want to engage and contribute, that they build self-esteem when they are enabled to achieve and are more fulfilled by their work in an environment that cultivates these opportunities. It advocates transparency, which leads to trust, then engagement – which is necessary for a healthy culture and thriving enterprise.

The Ownership Thinking model consists of the following four components:

The Right People: The practice of Ownership Thinking creates an environment that promotes learning and development, while increasing visibility and accountability, inspiring employees to become engaged and to care.

The Right Education: Employees receive training in the fundamentals of business and finance, equipping them to make financially sound decisions and become active participants in the financial performance of the business.

The Right Measures: An emphasis is placed on identifying the most critical leading, Key Performance Indicators (KPIs), tracking quantifiable outcomes, and using them to forecast results on a regular basis.

The Right Incentives: Hams demonstrated that with employee education and a focus on the right metrics, in an environment of high visibility and accountability, profitability is increased. Greater profitability opens the door to self-fund an incentive plan that aligns with your business and its short and long-term financial objectives, and is tailored to the needs, values, priorities, and roles of your employees.

Hams saw “ownership thinking” as the path to a mentality of creating wealth, out of which grows more opportunity. Elements of the mindset and program include employee incentive programs, employee empowerment, employee ownership training and opportunities for ownership. Companies that practice Hams’ OT program have consistently seen increased productivity, profitability, and employee retention by up to 200%.  

A natural progression of ownership thinking is the identification and development of key employees. These individuals, who will become the anchors of the company, are critical to building the value of your business. In fact, in general, the number one value driver is workforce – stable, motivated management and a high performing staff.

It’s obviously essential to maintain and build value for business success in general. But achieving your value objectives is foundational to being able to exit your business, on your terms, when that time comes. Ownership thinking can mean more potential buyers and broader options for those who step into your business when you transfer it. With a culture of ownership thinking and key employees in place, your company is not owner-dependent to continue to operate seamlessly.

Contact me to discuss how you can implement ownership thinking to build your business now and incorporate its many attributes into your exit strategies.  

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The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

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Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.