What World Class Companies Can Teach Entrepreneurs About Trust And Letting Go

Published by 14 Comments

“How to make anyone do what you want, while they feel extremely happy doing it! Discover the forgotten currency, which is more precious at times than money.”

To my astonishment, I got a B- in my Business Strategy case analysis paper! I am astonished because B- is a bonus for a school slacker like me. I procrastinated til’ the night before the due date to complete the paper.

The professor was disappointed with the class because the average was pretty bad, so he gave the class another chance by allowing everyone to retake the case analysis paper (if students were not satisfied with their grade).

Although I hate traditional schooling, and hate homework assignments, business strategy interests me, especially when I get to analyze, dissect and understand the basis behind half-a-billion dollar companies. So I volunteered to redo my case analysis, this time for another company.

The professor assigned me a company called “Egon Zehnder”! Gosh, I can’t still pronounce the name right. I swear!

Well, for the sake of communication, I’ll call this company EZ, sounds so cool and easy, EZ!

So EZ is an search consultancy firm – fancy way of saying headhunters for extremely high paying jobs. Yet a more fancy way of saying that companies like Pepsi, Apple, Microsoft, Walmart, Pizza Hut etc would hire them to find them a capable CEO, CFO, CIO, Leader, President, etc.

HERE IS THE SNEAKY PART:

EZ (and other players in the industry) would go out and steal these executives from its clients competitors. This way the competition got weak, and the client would get an awesome employee who would know insights about the market place.

Hey, don’t blame EZ for doing this sneaky thing. This is what the business is basically about, stealing the competition’s key players and recruiting them to your firm.

Back to the story, after reading two case studies of EZ, done by Harvard business school and conducting my own research, I realized that the Search Consultancy business was a multi-billion dollar industry.

EZ had grown three times in a decade and was the largest privately held company in the market with annual revenue of over half a billion.

While EZ had prospered over the years, its competitors had either grown a little or had lost loads of business. EZ’s closest competitors were doing $599 million and $414 million in annual sales with an average of 1700 consultants, and public funding.

EZ was doing similar digits with the help of merely 370 consultants and no public funding.

THAT’S $1.35 million revenue per Consultant.

And its closest competitors were not even producing a quarter of the kind of productivity that EZ enjoyed so “ezily”.

How Did They Do It?

Let’s recap:

  • EZ is the largest Privately held search consultancy company in the market.
  • EZ grew 3X while its competitors either lost business, or grew a little.
  • EZ uses 370 consultants to generate $500 million in revenue, while its competitors generate the same revenue with the help of 4x more consultants (1400-2200 consultants).
  • EZ has less than 2% employee turn over.

This is an AWESOME employee turnover rate by any standard. (Since the biggest asset a consulting firm has is its consultants itself, EZ encourages and rewards long-term loyalty to the firm, which has resulted in less than 2% employee turnover per year.)

The Super Power Of EZ

EZ attained such phenomenal success as a result of a counter intuitive move made by Egon Zehnder (founder of EZ… duh) himself, when he gave equal partnership share to all of its prime consultants.

WHAT THE HECK!!! REALLY?

I thought exactly the same thing.

“I would never sell shares of my baby to my employees no matter how good they are.”

But I was not being wise at first, Mr. Zehnder understood a primary motivator of humans…

Ownership!

When he let his handful of consultants in the early days become equal partners in his company, he exponentially supercharged the potential EZ had.

Every partner put every ounce of its heart, soul, and mind into the company they equally owned.

Let me ask you a few questions:

What do you take more care of?

  • Your workplace OR your home?
  • The public lunch room in your workplace, OR your personal work desk/office?
  • Your car, OR a rent-a-car?
  • Your children, OR someone else’s children?
  • A business where you are an employee, OR a business where you are an equal partner?

I think you get the point. The idea of something being owned by us is so close to us humans that we go out of our way to nurture, grow and take care of it.

Pretty straightforward, and a logical point, but a really really bold and risky decision made by Mr. Zehnder.

Warren Buffet (The world’s richest man) employs a similar strategy in managing leaders of the businesses he owns. Instead of giving outrageous bonuses, Buffet relies on giving recognition and praise to his business managers as a method of motivation, satisfaction and high workplace moral.

And it WORKS.

How To Make This Work For You

Make it a ritual to give room for experimentation in your workplace.

Once you instill the idea in someone’s mind that they are responsible for all the success (not failures) that come as a result of a project, they are going to take ownership of that baby. They are going to protect it, nurture it, experiment with it.

They will get excited about it, they’ll come in early and stay late to make it work. Money can never buy such deeply routed motivation that ownership brings to humans.

Did I say it’s easy? No, it’s not easy for entrepreneurs to do that. We want our nose in everything, and we like to micro-manage everything, which simply kills creativity, and organic growth of yourself and your company.

My advice is to Trust your people and just let go and you will begin to see life within your company. Things will begin to workout themselves, because now every person in your organization is working at their full potential.

Which is going to ultimately make you a rich man/woman.

- Aziz Signing out

About Aziz Ali

Aziz is an internationally acclaimed marketing whizkid and most commonly called a genius by his fan-base. Always working in the trenches, Aziz knows how to optimize marketing systems to produce exponential results as he did for several billion dollar companies and popular Internet Marketing Gurus.

Aziz is currently giving away two [2] tools & nine [9] strategies that has helped all of his clients find customers online EASILY!
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14 Comments

  • Hey Aziz,
    I worked for Corporate America for the majority of my adulthood and I get the idea of businesses wanting their employees to have a sense of ownership in the business.

    I participated in profit sharing for the company I worked for so if I saw another employee being wasteful in any area of course I would say something because that would effect my profit sharing revenue.

    • Sam

      Justin, this profit sharing programs might work in some instance. But mostly it fails. Just because the overall profit isnt gonna change too much because of our work. It lies with the top management.

  • when we let go of limiting beliefs of the ego (wanting everything for ourselves) miracles happen! This is awesome! Just shared.

  • Great post – reminds of all of giving people ownership in the vision so they really give their all – too often we want to control too much and therefore never get the best our of people.

  • Great post, it’s happened to me before as well. Everybody slack off in class.

  • Definitely a daring and gutsy move by Mr. Zehnder to go ahead and sell shares of his company to the employees but like you said, nothing motivates an individual more than improve something he has some sort of ownership of, even in a small way. I can see how it would have almost instilled a sense of being in a family amongst the employees.

    -Jean

  • I agree it is good to let your good employees in on the company. It gives them ownership and with that more pride in the company and what they do for it. I am not surprised it worked in their favor.

  • I got the point from concept this concept and this is like rent to own, for a simple explanation, we should let employee feel that they have also the big part of the company and later on they can be owner of it. From this concept they will work more passionate and dedicated.

  • Sam

    I like the part where you mentioned about Warren. Yes, I have experienced the same in my life. My market is a highly competitive one and at any point of time people switch from the companies and get 30% bonus. So you can never satisfy a person with money. Give him what he want. Recognition, leadership, training etc., and he will stick with you.

  • “stealing the competition’s key players and recruiting them to your firm.” Sneaky and morally wrong.. yes, effective yes :)

  • I totally agree with your points here, giving a share of your business to your employees is certainly a big motivation for them to work harder and really want the success of the business.

    Additionally it makes them feel that they are playing an important role in the operation of the business so they will feel responsible for every success or failure and they will do their best to avoid failures

    Kostas | Opportunities Planet

  • Hi Aziz,

    Pretty good topic you got here, anyway, corporate piracy is done by almost every large scale business firms in every country. To be able to dominate the market you have to be gutsy and cutthroat sometimes. These kinds of strategies are accepted in the business community. As for my opinion, this could also leave a mark to your credibility and may have an impact on future dealings.

  • It would really be a good thing to INVOLVE people more into your business and this is really one of those rewarding systems whereby every employer needs to implement towards his or her employees.

    One tend to find that most companies are too unfair and that’s exactly why so many employees go on strikes etc. all of the time.

    Building a great relationship like this example you’re giving here, Aziz, I guess, will make those companies the most successful ones.

  • Stealing the competition’s key players and recruit them sounds wrong to me but in reality, big companies do this and i must say that it’s effective. The only way to retain these key players is making them feel that they are an asset to the company and that you appreciate their effort. It can be done by giving out incentives and bonuses. Just like what happened with Google. Well, Facebook and Google are in silent war lately. Facebook was trying to get this one engineer that’s working with Google. So in order to retain that employee, Google offered $6 Million to that engineer. Sounds unethical but still effective.

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