The Real Promise of Empowerment
Michele McGeoy, Founder and CEO, RH Solutions
After earning a degree in computer science, I spent seven years growing my company, Tailored Solutions, into the nation's primary provider of law-school administrative software packages. Demand for these products grew exponentially—so much so that I received an offer for the company that I couldn't refuse. West Publishing acquired Tailored Solutions in 1993. For three years I stayed on with the parent company until it, too, was sold to another enterprise that decided Tailored Solutions was no longer a good strategic fit. The division was resold and moved to another state.
Many would call my experience a success. I sold my business and made a lot of money. But it was a failure in that ultimately my employees were all laid off, my clients were left with no support and the local community lost the benefit of our volunteer programs.
When I made the choice to sell, I believed I was doing the best thing for all of the stakeholders. By having more resources available, the employees would benefit from better training and higher compensation and the clients would benefit from more employees. But what I did not realize was that giving up ownership was giving up control. I thought that the fact that they wanted me to stay on meant we could continue to operate with my vision and values. Ultimately, however, ownership is the foundation that defines control, and when you give that up, you sacrifice the ability to make the final decision on what you think is right.
Addressing the Digital Divide
That's not to say I wasn't pleased and grateful to have made a lot of money on the sale. The freedom of choice that wealth has afforded me is an incredible blessing, which I feel privileged to experience. After all, building that company and its excellent reputation was not easy. We did it the old fashioned way, with no funding—just a lot of hard work, great products and a commitment to bend over backwards for the clients.
But now, with the money in hand, the work behind me and the lessons learned, I wanted to do something to make a difference in the world. Having for a long time regretted the lack of opportunities for minorities and women in the high-tech field, it seemed a natural to found a nonprofit to address what is now referred to as the Digital Divide. The organization—Access to Software for All People, or ASAP—is based on a unique model, a kind of hybrid of a nonprofit and a business, in which young people are trained in computer skills and then run a business using those skills. Several years later, thanks to a great staff and wonderful participants, ASAP is thriving.
Getting ASAP going was hard but satisfying work, yet, somehow I still felt that I wasn't having enough of an impact. I was glad to have done something to bring more people into the digital economy, but another problem continued to nag at me: the fate of my employees at Tailored, whose lives had been thrust into uncertainty after the sale to West.
Build a Different Model
As the world of high-tech finance and Internet IPOs dawned, I saw the same thing happening to many people in my community. Yes, some company owners, deal makers and investors were getting rich, and a few employees were cashing in stock options and retiring at the age of 30. But I also saw people losing jobs they depended on, venture capitalists forcing people of vision out of the companies they had founded and customers being left in the lurch.
Perhaps most tellingly, I saw a widening divide between the haves and the have-nots. According to United for a Fair Economy, in America today one percent of the population owns 95 percent of available assets. The owners, the big investors, hold all the cards in most companies, and the employees who do so much of the work are, whether they want to believe this or not, at the whim of the one percent. News reports keep telling us about all the successes in this business. But many people have been burned--financially, spiritually and physically--by technology company failures. And that happened, not because the technology wasn't excellent, the employees not committed or the customers not happy, but because there wasn't a big enough, fast enough return on investment.
There's not much anybody can do about this issue in the nonprofit world. I gradually came to realize that the place I could have the greatest impact was as a business owner, using my energy, ideas, and computer skills to build a company based on a different model. And so, RH Solutions was born.
Creating Opportunities for Ownership
Working with like-minded investors and a group of employees interested in ownership, we have begun to build a company for the long haul, one that is concerned with the well-being of all its stakeholders: investors, employees, customers and community—a company that, in the end, will be owned by the very employees who build and sustain it. We want to create an opportunity for people without extraordinary financial resources to gain financial ownership. As owners, our employees have not only a say in the direction RH Solutions takes, but the power to implement their ideas, and to grow the company as owners, with a vested interest that goes beyond their individual jobs.
Fiscal ownership for employees is the goal, but so is the creation of a culture of ownership at the office, in our everyday work lives. Studies have shown that when employees are given real influence, real responsibility for their domain and for the direction a company takes, productivity rises. Employee satisfaction rises. Knowledge is power, and power is energizing.
As we work to develop our products and build our company, our employees are involved in decisions, are informed about budgets and have a say in hiring. This is not to say we're embracing anarchy; we have a management structure and strive for clear lines of authority and responsibility. But we also seek to make everyone who works here a part of RH Solutions, to establish a vital connection between the people and the corporation.
Solid Structure for Healthy Growth
We're going against the tide. Our plan is not to grow as fast as we can, faster than we can handle, then sell out to the highest bidder. And believe me, we could do that. We could all commit to sacrificing our present lives, our families, our health, our interests away from the office to create an attractive investment for another publishing conglomerate. Then we could sell, I could make millions, my investors could make millions and some employees could cash in their stock options and retire. Then they could go and reacquaint themselves with their spouses and their kids, their golf game or the home they love. And those who represent the other 95 percent of our population, those who had come here for the security of a good job, would be faced with the task of moving on, with little or nothing to show for their work.
Our model is built around steady, healthy growth that allows our employees, most of the time, to work a normal week, to pursue outside interests and still make a good salary. Don't get me wrong--there is a ton of work to do here. But there is always the acknowledgment that people have a life to lead beyond our Berkeley offices.
At this company, we see employee ownership as a contribution to a fairer economy and a solid business structure. Real ownership increases the motivation of our staff to make this company a success. The real promise of empowerment through ownership attracts good people to our company, and allows us to serve our customers while setting an example for the business community.
I'm an entrepreneur at heart. I love the challenge and work of building a successful business. I want to make a profit and so do my investors, but I don't want to repeat past disappointments. By having all employees think and act like owners, we will succeed in the marketplace and have happy stakeholders. Everybody wins.