It’s even more difficult when you’re meeting lots of brilliant successful people; there’s so much wisdom and experience flying around that you feel you ought to listen to everyone. But just because you respect some one for having a great business career doesn’t mean you have to listen to everything they say.
A couple of years ago, when Asperity were thinking about introducing an employee share scheme, a well-respected mentor of mine advised me that it was a really bad idea in his experience. He was quite unequivocal in cautioning me against it, believing that it was loads of work for not much return. Not only that but allocating a huge chunk of the business costs a lot of money, and his feeling was that his staff just didn’t value it at all.
In retrospect, I know it’s because so much time goes in to the legal side of setting an employee share scheme up that communicating the value to employees is almost an afterthought. Everyone gets briefed, the documents get signed and then it’s so much of a relief that the hard part’s over that it can just get forgotten about.
What you end up with is staff that have got a vague idea that they’ve got some shares in the company, but can’t see the share prices on the stock market so have got no idea what those shares are really worth.
I thought, if I can convey the real, tangible value of these shares to our staff, then it will be a worthwhile investment in terms of time and money. But we’re going to have to work really hard to do that.
Against all advice, from my mentors, financial advisors, the works - it was made very clear that it was a bad idea to publish an indicative share price. I’d planned to update all our employees on what we thought their shares might be worth at every Quarterly Business Update, based on our business model and predictions. The consensus seemed to be that I must be mad - to unveil profit numbers when our predictions could be wrong would be a complete disaster.
I thought, hang on a minute - what’s actually important in all this? If your staff don’t believe in the value of what you’ve given them then you might as well not have given them anything at all. We wanted our staff to understand that the piece of paper could turn into a tangible reward. One reason to do it was to connect them to the business, to make sure they work that extra bit harder and go the extra mile.
So we took all of our staff off-site to a hotel just outside London, and we announced the introduction of the employee share program. We told them that at some point over the next three years we were hoping to find an investor to buy part of the company and that they would receive money for their shares. We made it clear that this was something to be excited about, not concerned. We went through what it would be like to be bought by a trader, what it would be like to be bought by private equity, and made sure every department knew what they had to do to contribute to make that valuation high.
And it worked. Everyone understood it. No one panicked, no one went running. And as it turned out, we didn’t sell two years later for seven times the current share valuation, we sold six months later for something like fifteen or sixteen times that amount. Subsequently, we shared just over a million pounds between our employees and only three people left the company in the following year out of a hundred staff. So overall - it worked out a lot better for the business that I didn’t listen to any advice.
I’ve come to the realisation that advice can be really helpful, but it’s just a product of one person’s experience. If it didn’t quite work out for one person, it doesn’t mean it never will. You’ve got to look at the facts and make your own decision for what’s right for the business, on your terms. Ultimately, if you ask lots of questions and find out what went wrong, you can think - how can I do it better? And if you get it wrong, don’t worry just be honest and fix it.