How to Win Employee Mindshare

An IT veteran, Ancona was on the verge of starting his own company, but not in technology.

"I absolutely had the intention of buying a small manufacturing company, and I was one signature away before realizing it wasn't what I wanted," Ancona says. "I couldn't stay away from the IT industry." Thus, Ticomix was born.

The second pivotal moment came a couple of years later when Ticomix was struggling in a post-dot-com recession. "We were having a bad year in 2002, and a lot of people were frustrated and asking for raises," Ancona says. A key employee left the company, and both morale and sales had sunk. That's when Ancona picked up a popular book that would revolutionize his management style and the solution provider's operations and culture: The Great Game of Business, by Jack Stack, a best-seller that advocates open-book management, employee-bonus systems and stock-sharing plans.

Ancona was fascinated by the alternative management style, to say the least. He began to adopt Stack's advice and management plan at the end of 2002, and by the following year was seeing positive results. Employees were more involved in the company and no longer uninformed about Ticomix's financial structure. That helped keep costs in line. In addition, performance reviews and bonuses helped boost productivity. Suddenly, Ticomix was like an all-new solution provider. The company grew its sales to $5 million in 2003 and posted a modest profit as well.

VARBusiness takes a look at Ticomix's transformation, how the rules of business in the Great Game of Business helped Ancona revitalize his company, and what Stack's advice on open-book management can do for your business.

Learning the Rules of the Game
Nearly a decade before publishing The Great Game of Business in 1992, Stack had revolutionized his own company, which builds automotive engines, industrial power units and electrical components. In 1983, Stack and a handful of other employees at International Harvester purchased that company's struggling remanufacturing unit, Springfield Remanufacturing, with $100,000 of their own money and nearly $9 million in borrowed funds. As founder and CEO of Springfield Remanufacturing, now called SRC Holdings, Stack decided to instill healthy competition among employees to raise performance by developing a game-like atmosphere for the company. In addition, the chief executive opened up the company's books to employees and taught them the nuances of the financial structure so they could better understand and appreciate how the company was run and where the money was going.

The results of Stack's management style and business plan speak for themselves: After two decades, the value of SRC has jumped from a mere 10 cents a share to approximately $87 last year. In addition, SRC, which has remained a private entity, has spun off dozens of subsidiaries, including a management-training company, also called the Great Game of Business, based on Stack's teachings.

As the economy nosedived into a recession, Ancona found himself and Ticomix in a similar situation to Stack's. There was obvious discontent among Ancona's IT professionals, and that's when he found himself between a rock and a hard place.

"There's a terrible lack of understanding of how money is generated and where it goes in a business," Ancona says.

After reading Stack's book, Ancona set out to school his employees as much as he could about running a business. He opened up all the company's financial records and showed his employees virtually every detail, including the heavy losses the company was taking.

"I told them to get ready because we're losing money," Ancona says. "We had a decent capital structure to keep us going, but I had to open up everything--our $500,000 line of credit, travel and expense budgets, office expenditures--to explain the situation."

Indeed, Ancona was taking quite a risk, and he was initially worried that his candid disclosures about Ticomix's finances would spark a mass exodus and hurt the solution provider even more. Ironically, just the opposite occurred, he says. Ticomix's weak financial condition helped the company adopt the "game" much quicker and ultimately benefited the solution provider and its staff; instead of bailing out, the majority of his employees appreciated Ancona's honesty and efforts.

Thus, Ticomix had successfully implemented a crucial part of what Stack calls the "Pre-Game Warmup." Alexis Brown, general manager of the Great Game of Business, says painting the big picture for employees is a must if they are to truly invest themselves in the company.

"You have to teach employees to care about the company, and you can't do that if they don't fully understand the business," she says.

Playing the Game
Ancona then implemented the next part of Stack's game plan: devising a bonus system and performance "scorecard" for everyone in the company, including himself. Again, he was concerned that scoring the company's nearly 20 employees and rewarding them would lead to ill will among the staff and an every-man-for-himself philosophy, but quite the opposite happened. Teamwork was cultivated and productivity increased. Ancona says he carefully developed a unique scorecard system for each type of employee--sales, engineer, manager and receptionist alike. Employee scores are kept confidential. Brown says one client assigned each employee a secret code name from a TV show.

"You don't want to isolate people by grading them in public," Brown says. "Sometimes you have to keep the game on a personal level."

The bonus system and scorecards gave Ancona a vehicle to increase his employees' financial and personal stakes in the company, which is perhaps the most important component of The Great Game of Business. Brown says giving employees a stronger sense of ownership in the company and rewarding them with bonuses and equity in the company's profits will boost morale, confidence and performance among the workforce; Ancona supports that claim.

"My employees care [as much] about the business as I do," Ancona says. "I wasn't sure if they would grasp it at first, but I was ultimately surprised by the buy-in."

Finally, The Great Game of Business recommends that companies have a weekly team "huddle" or regular staff meeting, where department performance is discussed as well as the company's sales and financials. Ticomix's weekly meetings have been surprisingly beneficial to the company, according to Ancona, making management more accessible and interactive, and enhancing communication between co-workers.

"The only person that can cancel the weekly meeting is me. They've been hugely important," Ancona says.

Naturally, there are challenges in adopting the book's rules, such as familiarizing new hires with the management style and performance-rating system. Still, Ancona attributes much of Ticomix's financial and cultural improvements to Stack's book; he even highlighted The Great Game of Business during a best-practices presentation at Tech Data's TechSelect conference in Washington, D.C., last fall.

"In a company that's closed-book management, you might get paid more," Brown says. "But will that culture make you happy?"

For Ancona and Ticomix employees, the answer is a resounding no.