Top RESEARCHER: How To Cash Out of Your Small Business While Empowering Your Community

Ellen Frank-Miller, PhD, is the Founder and CEO of WORC (Workforce & Organizational Research Center), an applied research and evaluation consultancy creating an inclusive economy for worthwhile jobs. She has spent her 30-plus year career collaborating with employers, investors, national advocates, and community-based organizations to enhance jobs and make them more accessible. 

As an organizational scholar, Ellen spent 15 years in human resource consulting, creating evidence-based programs and policies. Before launching WORC, she founded and led the Workforce Financial Stability Initiative at Washington University’s Social Policy Institute.

Here’s a glimpse of what you’ll learn: 

• [0:00] Ellen Frank-Miller, PhD, returns to discuss boosting the economy by empowering workers
• [3:00] Ellen’s recent research into human capital management and value creation
• [5:27] The barriers to creating employee ownership programs and how to execute them
• [12:38] How executives can empower frontline employees
• [16:36] Employee ownership’s impact on organizations’ bottom lines
• [22:55] Tips for frontline supervisors to pitch employee ownership programs to executive leadership
• [30:57] Investing in workforces to create opportunities for employees
• [35:58] How to align employee incentives with organizational goals
• [40:28] Why high-paying frontline jobs benefit organizations

In this episode…

Decades of research have shown that higher-paying jobs and profit-sharing programs for frontline workers lead to increased engagement and retention and a healthier bottom line for organizations. Yet, many companies hesitate to implement these incentives, not recognizing their widespread value. How can frontline managers effectively communicate the advantages of these initiatives to executives while aligning them with company goals?

According to workforce researcher Ellen Frank-Miller, companies that align employee ownership programs with performance observe frontline workers taking responsibility for their contributions. These incentives encourage employees to pursue professional development opportunities and further their careers. Ellen advises frontline supervisors to communicate openly with their team and collaborate with them to solve problems. They can then convey the results to executives to foster a dialogue about profit-sharing and employee ownership plans. While implementing these incentives into larger corporations may involve legislation, smaller, locally owned businesses can integrate them into their succession plans.

Welcome back to What The Teck? as Ellen Frank-Miller, PhD, Founder and CEO of WORC (Workforce & Organizational Research Center), returns to talk with Rolando Rosas about how employee ownership programs benefit companies and workers. Ellen explains how to align employee incentives with organizational goals, her research into human capital management and value creation, and how to invest in frontline employees and give them opportunities.

Resources mentioned in this episode:

• Rolando Rosas on LinkedIn
• Dave Kelly on LinkedIn 
• Global Teck Worldwide
• Circuit Loops
• Ellen G. Frank-Miller on LinkedIn 
• WORC
• “Why employees still matter – How Chick-fil-A Dominates. Spoiler: It’s not the food.” with Dr. Randy Ross on What The Teck
• Institute for the Study of Employee Ownership and Profit Sharing
• National Center for Employee Ownership (NCEO)
• Good Jobs Institute
• The Aspen Institute Economic Opportunities Program

Quotable Moments: 

• “When leadership assumes workers don’t care, you design very different jobs, and the research demonstrates that’s not effective.”
• “Providing an ownership stake isn’t enough. Managerial practices ignite an ownership mindset, creating behaviors that drive operational outcomes.”
• “It’s all about creating autonomy in jobs and collaborative management that enables people to do the best job.”
• “If you start with the assumption that workers can add value, you design very different jobs.”
• “Nobody gets out of bed in the morning and says, ‘I really want to do a terrible job at work today.'”

Action Steps: 

1. Promote employee ownership: Encourage businesses to explore employee ownership models, such as ESOPs, to foster a sense of responsibility and investment among employees. This approach aligns the interests of workers and the company and has been shown to improve business outcomes and employee satisfaction, addressing challenges of turnover and engagement.
2. Enhance communication and worker autonomy: Implement practices that give employees more autonomy and involve them in decision-making processes. By listening to employee feedback and empowering workers to contribute solutions, companies can leverage frontline insights to improve efficiency and morale, tackling issues of disconnect between management and staff.
3. Revise incentive structures: Rethink and design incentive structures that reward creativity and problem-solving on a regular basis, such as monthly profit-sharing. This approach continuously motivates employees to contribute to company success and shifts the focus from output to sustained engagement and innovation.
4. Invest in human capital: Advocate for changes in tax and accounting standards to incentivize companies to invest in employee development and training. Shifting financial incentives to value human capital over physical assets can lead to a more skilled, motivated workforce, addressing structural barriers to creating better jobs.
5. Foster a stakeholder capitalism mindset: Encourage companies to adopt a stakeholder capitalism approach, which considers the well-being of all parties involved, not just shareholders. This mindset can lead to improved financial and social outcomes, aligning business practices with the needs of employees and the broader community.

Sponsor for this episode…

This episode is brought to you by Global Teck Worldwide. 

We are a full-service online retailer of professional headsets, webcams, and speaker phones from top manufacturers. 

Since 2002, Global Teck Worldwide has provided affordable, high-quality communications equipment and customized telecommunications services to organizations of all sizes.

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Episode Transcript:

Ellen Frank-Miller  0:00  

Nobody gets out of bed says, I really want to do a terrible job at work today, when leadership assumes that workers don’t care, they’re just there to pick up a paycheck, you design very different jobs. And the research demonstrates 

Intro  0:14  

Dr. Ellen Frank-Miller is back, and she’s at the forefront of groundbreaking behavioral and organizational science dedicated to catalyzing a thriving economy where every worker has a job worth having.

Rolando Rosas  0:24  

Why are good paying jobs good for business? 

Ellen Frank-Miller  0:29  

We know from decades and decades of research that good jobs are strongly correlated with lower levels of turnover, higher levels of engagement, lower levels of burnout and

Rolando Rosas  0:40  

IRS, legislative, state, federal. Who would you invite that would have the most impact right now, you’re gonna

Ellen Frank-Miller  0:45  

hate my answer. There is a bill the congressman. I’m gonna tell you the names of the co sponsors. We have a silver tsunami coming with baby boomers who are small business owners and they’re gonna be retiring. What if I could cash out of my business, but my employees would be the ones taking over. Now the jobs don’t leave my community. If that could happen, everybody wins,

Rolando Rosas  1:08  

isn’t this what Patagonia did. That’s exactly right. Whenever

Ellen Frank-Miller  1:11  

I hear somebody say, Well, it sounds nice, but there just isn’t any science behind it. I’m like, there’s so much science behind it. Please. Let me talk to you about it. How do we make these jobs better? How do we create more opportunities for employees? How do you get employees engaged? Well, there’s a huge body of literature, and it all points back to

Rolando Rosas  1:34  

Welcome to What The Teck? your gateway to business strategies and tech secrets shaping today’s workplace. There’s nothing hotter right now than talking about what’s happening on the employee front. How is AI changing things? How are unions changing things? How are employees interacting and reacting to the ever changing environment we’re in such a pivotal moment in time, and knowing where the hockey puck is going, as Gretzky would say, is where you want to be. You don’t want to be behind the puck. You want to be ahead of it, and knowing where it’s going. And that’s why I love who we’re talking today. Dr. Ellen Frank-Miller, but before she comes on, let me tell you a little bit about her. Dr. Ellen Frank-Miller is founder and CEO of the Workforce & Organizational Research Center. Let’s welcome back to the podcast. Dr. Ellen Frank-Miller.

Ellen Frank-Miller  2:35  

It’s a pleasure to be here. Thanks for having me again.

Rolando Rosas  2:40  

I am so looking forward to our conversation. There’s so much I want to ask you, because since you were here last, a lot has changed in almost a year since, since you were here. But what I really want to know is what exciting research is on your plate right now?

Ellen Frank-Miller  3:00  

Well, our most recent research, we have two studies that we completed recently. One is looking at the role of human capital management in private equity value creation with very large firms. And the major finding from that study is that human capital management in large PE value creation is all about the C suite until it isn’t. So that was a very big finding that when the fulcrum for value creation in a particular deal relies on frontline workers, then deal teams are all about frontline job. It just sounds like an afterthought. Well, it was interesting, you know, during the interviews with these seven very large firms, and then also with just other deal teams that I’ve talked to when you ask about, well, human capital management and value creation, how does that play a role? And they’ll talk all about recruitment for the C suite and getting the right leadership team in place. And then inevitably, they’ll go but there was this one deal. There’s always one deal. And the one deal is some kind of a company. And an example was an extermination business, so family owned business, they closed the deal, and then the founder says, Okay, well, what are you guys gonna do about my guys who go in the basement, and team’s like, What do you mean? He’s like, Well, you said you’re gonna solve my biggest business problems, my biggest business problems, I got 40% turnover among my guys who go in the basement. What are you gonna do about it? And suddenly you’ve got these private equity deal teams going, Oh, what do we do? We got to retain those people. And initially they’re like, well, we’ve got to just find better people. And eventually they discover, No, we just need to make these jobs better. So that was a super big finding. And you know, private equity has also really begun this trend. There was huge news from KKR and from Blackstone about offering employees some form of shared ownership, some kind of equity interest in the company, and that is another form of making these jobs more attractive at all levels. And sharing equity at the highest level of companies is nothing new but bringing it all the way down to the front line. Is a super exciting trend.

Rolando Rosas  5:03  

What’s stopping companies like, well, KKR, you mentioned blacks, but there’s many you know, Procter and Gamble, Philip Morris, you know, Coca Cola, Pepsi. There’s a bunch of companies that we could rattle off. What’s stopping them from doing this and bringing the employee ownership or ESOP programs down to the front line worker,

Ellen Frank-Miller  5:27  

it’s such an important question, because while there certainly are, there are structural barriers, right? Things like the complexity of setting up an ESOP the financial know how that’s required to create these kinds of Shared Equity programs. There is also a sort of a barrier in terms of folks not understanding the research and the impactfulness of having an employee owned structure. So a lot of companies are, you know, they, they may recognize that they need to get their employees engaged. They may want to see employees, you know, acting in a way where they’re going above and beyond on the job. And they’ll, they’ll do all kinds of things to try to create that but, but the research demonstrates that a really powerful mechanism for that is to give employees some kind of stake in the business and the financial outcomes of the business. And there are many ways to do that right. You can have profit sharing. You can have an actual, you know, Co Op structure and ESOP structure, the kind of models that KKR and Blackstone are using. But the research shows that when folks have that type of financial incentive, plus, which I’ll get to in a second, that they are more invested in the outcomes, and they will bring their creativity and their resourcefulness to their jobs every day. One of the interesting things, though, is that folks who are trained in business, when they do see, you know, the business case for offering some kind of ownership stake to the front line, they often think about it in terms simply, in terms of financial Well, if we give people the chance to earn more money, if the business does, well, then you know, that’s what we need to do. People will have the incentive. There’ll be utility maximizers in economic terms, and then they will perform in these ways that will make us a better business. But interesting research, that’s a growing body of research, demonstrates that actually, in addition to the financial incentive, there’s another factor that actually may have more of an impact on whether employees behave in these ways that we care about, and that has to do with both organizational identification, which is whether I feel like this is my company, and also what we call an exchange obligation. So if my company has done something for me that creates a social obligation for me to do that in return, right? I borrow a cup of sugar from my neighbor. My neighbor asked me for a cup of sugar. I’m giving it back. And that mechanism really matters,

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